Federal police in Mexico have arrested the founder of one of the country’s most violent drug gangs.

Flavio Méndez Santiago, nicknamed El Amarillo (the yellow one), headed Los Zetas, a gang of Special Forces deserters who initially worked as mercenaries for the Gulf cartel before going independent in February last year.

The 35-year-old gang leader was on authorities' 37-most-wanted list, 20 of who have been captured or killed in the last year. Authorities had offered $1.2m for his capture. The primary leader of Los Zetas, Heriberto Lazcano Lazcano (sic), remains at large with a $7m bounty on offer, split between the US and Mexican governments.

The gang is blamed for some of Mexico's most brutal killings, with beheadings being their trademark. The massacre of 72 Central and South American migrants in Tamaulipas was attributed to the group by authorities in August last year.

A turf war between Los Zetas and the Gulf cartel broke out in November last year when Gulf Cartel leader Antonio Ezequiel Cardenas-Guillen, nicknamed Tony Temprano, was killed by Mexican Marines. The fighting forced the evacuation of300 families from the northern city of Ciudad Mier, Tamaulipas.

Mr Méndez was captured alongside a bodyguard outside Oaxaca City, in the southern state of Oaxaca that is popular with tourists. Another relatively wealthy city was also caught up in the drug wars as police found five mutilated bodies just south of Monterrey, the home of many Mexican and US businesses where income is double the country's average.

Five men were found in the town of Montemorelos with their arms and legs chopped off. A series of attacks saw 23 killed in the state of Nuevo Leon, with one woman dying of a heart attack after witnessing a shooting.