The Mexican government, which announced on Thursday that it had arrested the son of the world’s most powerful drug dealer, has now apparently backtracked and admitted that it captured the wrong person.

According to reports, including this one from CNN, the person paraded as Alfredo Guzman Salazar, son of Joaquin “El Chapo” Guzman, was not Guzman but reportedly a car salesman. The nation’s navy announced Thursday that it had arrested Guzman’s son in western Mexico. A day later, after doing more identification tests, it said it had not arrested Guzman’s son.

According to an AP report from Friday, the Mexican Attorney General’s Office issued a statement saying information identifying him as son of Guzman came from the U.S. The U.S. Drug Enforcement Agency said the information came from Mexico. Calls to the DEA were not immediately returned. Forbes could not reach Mexico’s Attorney General’s Office.

The mishap shows the pressure that the Mexican government is under to arrest El Chapo or his relatives in its ongoing war against drugs. It also suggests just how hard it will be to capture the elusive “El Chapo”, the cocaine drug dealer who has been in hiding for years.

For more background on this story, read this recently published piece on El Chapo, tied to the supposed arrest of his son.

UPDATE: CASE OF MISTAKEN IDENTITY: MEXICAN AUTHORITIES NOW SAY THAT THEY DID NOT CAPTURE JESUS ALFREDO GUZMAN, BUT SOMEONE THEY THOUGHT WAS HIM. MEXICO CONTINUES TO SEARCH FOR THE ELUSIVE GUZMANS. READ THE LATEST AT FORBES.

Jesus Alfredo Guzman , the apparent son of the world’s richest and most powerful drug  dealer “El Chapo,” was arrested in Mexico on Thursday, according to numerous news reports. Apparently a Drug Enforcement Agency official was present during the arrest.

The arrest was the latest in a series of events that suggest that his father (pictured) is under increasing pressure, and that authorities may finally be closing in. Joaquin “El Chapo” Guzman, the leader of the illegal drug smuggling Sinaloa cartel responsible for an estimated 25% of the illegal drugs trafficked from Mexico into the U.S. , has been in hiding for years.

He was nearly caught in February, according to Mexican police, the same month the leader of the cartel’s armed wing was captured.  In December 2011 one of his top Sinaloa lieutenants was arrested.

Even as he keeps authorities at bay for a while longer, Guzman is believed to be spending more money to defend the cartel than in previous years due to stepped up enforcement efforts by the Mexican government, and has expanded cartel operations to Central America, particularly Guatemala.

Forbes first ranked El Chapo among the World’s Billionaires in 2009 after extensive research and numerous talks with DEA officials, analysts and others. One of our sources, Bruce Bagley, chairman of international studies at the University of Miami, described him at the time as a “sociopath willing to engage in high levels of violence, but skillful in managing turbulent waters.”

Though it was not our first time including a drug lord among the world’s richest – Pablo Escobar and the Ochoa brothers were listed years ago –it provoked strong reactions. Mexico’s president, Felipe Calderon, was furious, demanding a response and accusing the magazine of glorifying the criminal.

Still, he has appeared on our billionaires list for four years straight, not because we view his business as legitimate but because we believe he has amassed a large fortune through his illicit enterprise. Below is the original article from 2009, the year he first appeared among in our worldwide ranks.

March 11, 2009 Forbes Article, by Jesse Bogan

For eight years Joaquín Guzmán Loera reportedly managed his international drug smuggling operation from behind bars while enjoying a lavish prison life with access to booze, women and a home entertainment system. Then in January 2001, facing extradition to the U.S., Guzmán slipped into a laundry cart and escaped.

Since then “El Chapo,” or Shorty, as he is called, has tightened his grip on Mexico’s drug trade as head of the Sinaloa cartel, one of the biggest suppliers of cocaine to the U.S. It is a lucrative business to be in these days. Thirty-five million people in the U.S. use narcotics or abuse prescription drugs, spending more than $64 billion annually. The Drug Enforcement Agency and other industry experts believe Guzmán, 54, has controlled anywhere from a third to half of the wholesale Mexican drug market over the past eight years. In 2008 Mexican and Colombian traffickers laundered between $18 billion and $39 billion in proceeds from wholesale shipments to the U.S., according to the U.S. government. Guzmán and his operation likely grossed 20% of that–enough for him to have pocketed $1 billion over his career and earn a spot on the billionaires list for the first time.

While others with ten-figure fortunes have criminal records, Guzmán is probably the only one for whom the U.S. government is offering a $5 million reward for his capture. “He clearly is a sociopath and willing to engage in high levels of violence, but he is skillful in managing these turbulent waters,” says Bruce Bagley, chairman of international studies at the University of Miami. While traditional drug cartels are built around a family hierarchy, Guzmán’s operates more as a confederation of different groups. He hires gangs that have peeled off from competitors, offering attractive profit sharing. “The Sinaloa cartel is kind of a new animal in a way. He offers them a better deal,” adds Bagley.

Guzmán grew up in the Pacific coast state of Sinaloa in a rural region that has produced big drug traffickers. The farm boy was likely exposed to the trade at a young age. Officials say he honed his drug-running skills working for different gangs, most notably as an airplane logistics expert for Miguel Angel Félix Gallardo, “El Padrino,” or the Godfather, the country’s leading trafficker at the time. Gallardo was arrested in 1989.

By the early 1990s Guzmán had started his own international firm. Business didn’t always run smoothly. In 1993, at the northern border, Mexican authorities seized a 7-ton shipment of cocaine, believed to be his, that was hidden in chili pepper cans. The same year rival gang members, apparently trying to kill Guzmán at the Guadalajara airport, bumped off a Catholic cardinal instead. Also that year he was captured and convicted for homicide and drug trafficking.

A 1995 U.S. indictment alleges he directed a vast network of employees and assets, including warehouses in California, New Jersey and Chicago; a tunnel, running 65 feet deep and 1,416 feet long, between Mexico and Otay Mesa, Calif.; an executive jet rental business; and railcars carrying cooking oil. At least one of his employees was in charge of paying off Mexican prosecutors and police, allegedly dropping $1 million in cash in 1991 for the release of Guzmán’s brother, “El Pollo,” from a Mexico City prison. (El Pollo was murdered in 2004.)

How long can Guzmán, who may be in Guatemala, continue to elude authorities? The Mexican government is trying to crack down on the murderous drug trade that has killed 6,000 people in the past year, including Guzmán’s son, who was gunned down in May. It has dispatched thousands of soldiers to hot zones. In November it arrested the nation’s top antidrug authority for allegedly agreeing to a $450,000-per-month deal to tip off drug traffickers about raids and arrests. That pressure, along with more pressure from rival drug gangs, appears to be making business harder for Guzmán but hasn’t persuaded him to get out of the industry.

“It is striking that even though his organization has suffered setbacks, he seems to have maintained the ability to traffic cocaine,” says Stephen Meiners, Latin America analyst at Stratfor, a global intelligence firm in Austin, Tex.; Stratfor pegs El Chapo’s net worth at $12 billion.

More Stories By Luisa Kroll:

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Billionaire Family Feuds

Boots' Stefano Pessina and Walgreens' Greg Wasson (photo: Business Wire)

A former nuclear engineer, Stefano Pessina has made a career, and a fortune, out of orchestrating buyouts, mergers, and acquisitions. The executive chairman of pharmaceutical distributor and healthcare retailer Alliance Boots, Pessina told Forbes this spring that he had probably executed about 1500 transactions including Europe’s biggest leveraged buyout, completed in partnership with KKR in 2007.

But still the billionaire was waiting for that one transformative deal that would help him create the industry’s only global player. On Tuesday, he finally got it his wish.

Walgreen Co. (NYSE:WAG), the largest drug store chain in the U.S., and his Alliance Boots announced that they would form a strategic partnership that would likely lead to a merger. Walgreens will initially invest $6.7 billion in cash and stock for a 45% stake in the European group; that first step is expected to be completed on September 1. It then has the option to acquire the remaining 55% in approximately three years. The second step of the transaction would be valued at $9.5 billion in cash and stock plus the assumption of Alliance Boots then-outstanding debt. The combined group would have 11,000 stores in 12 countries plus 370 distribution centers delivering to more than 170,000 pharmacies.

Forbes spoke to both Pessina and Greg Wasson, Walgreens’ CEO, hours after the announcement, when both were still a bit giddy.

“A deal like this makes me younger,” says Pessina, who turned 71 earlier this month.  “I have tried to do this deal for 10 years. The industry needed a global player and you can’t be a player without the U.S., which has 40% of the market. I had talked to everyone in the U.S. many times.”

It was not until he met Wasson, who became chief executive of Walgreens in 2009, that he found someone with the “same creative in his mind…the same vision.” At first they discussed doing more joint ventures but eventually they agreed on a more structured alignment. “Where we ended up is a beautiful spot,” says Wasson, “Now we really can focus on creating real value.”

Walgreens’ stock fell nearly 6% on Tuesday, the t dayhe deal was announced, but Pessina is not concerned, calling it a long term play: “I don’t know how the shares will perform in the next two weeks but in the long run we’ve created something unique that brings real change to our industry and that no one will be able to repeat.”

Pessina, who owns nearly one third of Alliance Boots, is not taking out any cash in the transaction and instead will eventually become the single largest shareholder in Walgreens when the deal is complete. “I believe in this deal. I didn’t have to provide an exit to KKR. We were just looking for something that made sense,” he says. Pessina’s stake in his company is now valued at $4.8 billion, giving him a net worth of close to $5 billion, much higher than our $2.6 billion estimate earlier this year.

A relatively tiny donation from the Bill & Melinda Gates Foundation has created quite a stir over the past several days. News broke that Clemson U. had late last year obtained a nearly half million dollar grant from the foundation to conduct a pilot study with Galvanic Skin Response (GSR) bracelets, wireless sensors that track physiological reactions, in schools. The idea supposedly was that children would wear these biometric bracelets in classrooms to measure their engagement. What made this grant even more polarizing was the notion that the bracelets were in fact tools that would evaluate teachers’ effectiveness.

Then came the discovery of another grant, this one for $621,265, awarded to the National Center on Time & Learning Inc. to “measure engagement physiologically with Functional Magnetic Resonance Imaging and Galvanic Skin Response,” also to be used to gauge degrees or levels   of engagement.”

All of this was just too much for Diane Ravitch, a leading education expert who is now Research Professor of Education at New York University, who has been writing about the controversy on her blog. “I’m sorry. I think this is madness. Is there a mad scientist or psychologist advising the Gates Foundation? Does Dr. Moreau work in a Gates laboratory in Seattle?”

Turns out that one of the biggest concerns about the study was actually wrong, due to an error on the Gates’ foundation website. The biometric bracelets were not supposed to measure teachers’ effectiveness, insisted Deborah Veney Robinson, the foundation’s senior communications officer. The grants are not related to the Measures of Effective Teaching research project, and “will not in any way be used to evaluate teacher performance.”

So what are these bracelets for? According to the foundation, they are intended to “help students and teachers gain a better understanding of how and when students are most engaged in the classroom.” The bracelets, which are made by a company called Affectiva, a spinoff of the MIT Media Lab, have been tested in the past on autistic children who have worn the bracelets to help evaluate which students, who are seemingly unresponsive to external stimuli, are in fact engaged and learning. (Disclosure: Forbes apparently used Affectiva last year to analyze readers reactions to videos).

The Clemson pilot, which will start in the fall, will not involve students with special needs. Clemson would not confirm where the study will take place but did say that the 100 or so students who wear them will be 11 to 13 years of age.

“Optimally, our goal is to support empathy and understanding in the classroom. With so many empathetic teachers out there, we want to continue to find ways to help support these types of practices. We hope that there would be a tool to measure engagement and provide teachers and students something they can look to for real-time (reflective feedback), kind of like a pedometer,” explained Shaundra Daily, an assistant professor in Clemson’s Human-Centered Computing division.

Ravitch, for one, is not sold. “Why do they want bracelets with wireless sensors for children and teachers that can gauge physiological reactions? What’s the purpose of this research?,” said Ravitch, “I don’t understand what those bracelets are for. Still don’t.”

It all sounds a bit futuristic and creepy and I would not be happy if either of my daughters were part of the study. But I, for one, will give Gates the benefit of the doubt.  For starters, it’s truly a small sum in the scheme of things. The Gates Foundation spent $311 million on education in the U.S. in 2010, the last year for which figures are available; $237 million of that amount was spent on “College ready” K-12. “The lion’s share in college ready goes to teacher’s support,” says Daily.

Furthermore, Gates, who has given more money away than anyone else on the planet, is struggling to find effective solutions, something that has initially eluded him.

From 2000 to 2008, the Bill & Melinda Gates Foundation made over $2 billion in grants to help high schools around the U.S. reorganize curriculum, teaching methods, and even their total student body size.  However, Gates admitted in 2009 that despite donating all that money, the foundation “fell short” of its ultimate goal of raising college-ready graduation rates. He refocused on a more specific subset of schools — mostly charter schools — and has donated hundreds of millions in the last several years to programs aimed at measuring and evaluating teachers.

Research (and the results from his first wave of grants) showed Gates that great teachers, not great schools, make the biggest difference in education. So now he’s investing in teacher assessment programs that are data-oriented, testing systems that extend the time before a teacher earns tenure and link both tenure and pay raises to student achievement.

There are no easy answers when it comes to fixing education in this country. Let’s be glad that Bill Gates is at least trying, even if he makes some controversial decisions along the way.

Carlos Slim. (Image credit: Getty Images North America via @daylife)

Wall Street ended the day up more than 1% but the biggest winner among our real time billionaires was once again the richest person on the planet, Carlos Slim Helu. His stake in America Movil jumped $1.27 billion, after a successful auction for 4G wireless airwaves in Brazil earlier today. The telecom paid $408 million for 20 megahertz of national spectrum, a 34% premium. Investors apparently thought it had not overpaid and got a good deal, spending significantly less than what Telefonica Brasil bid for a similar block and paying a much lower premium than what was shelled out for the 3G licenses back in 2007.

Slim is now well-positioned in the important Brazil market. “He is Mr. Capacity R Us. He continues to build up capacity and pulls himself away from the pack,” said Valder Nogueira, head of equity research at Santander Global Banking & Markets in Brazil. Slim reportedly spent $2.7 billion last year to boost his stake in Brazil’s biggest cable-TV carrier, and America Movil, which is combining its various divisions in Brazil, posted a big jump in profits in the first quarter, apparently due to more Brazilian customers signing up for TV.

In other big news, Slim continued to battle for dutch telecom KPN. America Movil upped its stake in KPN for the second day in a row and now holds 7.9% in the company, which rejected an earlier offer from the Mexican telecom giant, saying it was not offering a sufficient premium.

After hours, two of America Movil’s rivals, Iusacell and Spain’s Telefonica, announced a deal, which could give them more leverage when competing against formidable Slim.

The second biggest gainer of the day was Warren Buffett, whose Berkshire Hathaway announced a $9.6 billion dollar order that will add as many as 425 Cessna and Bombardier planes to Berkshire-owned NetJets’ fleet. According to my colleague Chris Barth, it is the largest business jet order in history and has some investors scratching their heads. That may be true but at least for today, investors pushed up the stock, and helped boost Buffett’s fortune by nearly $400 million.