San Diego — Tourism from Southern California is huge in Rosarito Beach; it's the town's principal revenue-generating industry and bigger now than ever. But a problem has emerged in the past few years that threatens those revenues and the town's reputation as a safe place to enjoy Mexico.

Those who run the tourist industry in this popular beach town should be rubbing their hands in anticipation of the upcoming Labor Day weekend. Instead they're worried about a repeat of what happened on Memorial Day weekend, when large numbers of cholos, Hispanic gang members, most from the Los Angeles area, took over the town and turned it into their playground. Some say the cholos are driving out more traditional tourists. The town is even debating the formation and financing of a permanent police swat team.

Rosarito residents and businesspeople call them pelones, literally "bald-headed ones," or more accurately, Hispanic skinheads, some sporting tattoos on their naked pates. According to a story in the local weekly Ecos de Rosarito, the pelones left a mark on the town during the weekend of May 24 to 26,1997.

"Widespread fighting, drunks in the streets, property damage, glass breakers, knife wielders, and all kinds of destruction and vandalism...the pelones again attacked Rosarito...[and] turned Benito Juarez Boulevard into a gigantic bordello." Noting that "disorder was the order of the day," the paper also wrote of girls going topless and of "drunks urinating on every corner of the city and women showing off their tanned behinds while everyone whistled encouragement."

American-educated Mario Teran, 24, whose father owns several tourist resorts along Baja's Gold Coast, handles publicity for some nightclubs in the "party zone," an area in the north end of town that's Rosarito's big draw for border-crossing fun-lovers.

"We're so sick of the gangbangers...the skinheads. Maybe a few small hotels like them, they do almost all of their business on big holidays, but most of us, we're just sick of the cholos...."

Teran says that before 1993, during American holidays, all you saw in Rosarito were the gueros (blondes, gringos). "But now, all we get are the cholos."

Teran tells of his involvement in the party zone's Memorial Day incident. He was outside the Rock & Roll Taco club talking to a doorman observing a group of pelones in front of the Festival Plaza, half a block away. Two attractive Mexican women walked by, and one of the pelones grabbed one woman's rear end.

"She turned around and slapped him. The cholo made a fist and started hitting her in the face. Me and the doorman ran up to help, and before long they had us both on the ground, punching us." According to Teran, a patrol car had to fire a gas grenade to break it up. Teran wound up in the hospital for stitches.

American college kids and families have learned not to come to Rosarito during three-day holidays. "They come the week before and the week after," explains Teran. "And the people who live here in Rosarito are afraid to leave their houses on the long weekends. When the town council meets, they just moan and say, 'Oh, oh, what are we going to do?' It's like downtown Rwanda."

Teran says that the town wants the gueros back on the big weekends. "Some of the Mexican Americans are okay, well-dressed and well-behaved, but for the others, we want to start redlining. When people call to make reservations, we'll get their area codes, and if someone says, 'This is Bob Smith from Beverly Hills,' we'll say, 'Yeah, sure, do you need a suite?' but if we hear, 'This is Hector Gonzalez from East L.A.,' well, we're booked up."

The Mexican elections were held on the July fourth weekend, and all the bars were closed, but Teran worries about the next big holiday. "On Labor Day weekend, if we don't do something about it, somebody's going to end up dead down there."

Ricardo Martinez de Castro, who has absorbed the culture on both sides of the border, handles the entertainment at the Rock & Roll Taco restaurant and nightclub, which caters to the mid-20s crowd - 85 percent American. He also coordinates promotion for the adjacent Festival Plaza, a complex painted bright magenta, teal, sea blue, and mustard, which includes Mexican-themed shops, restaurants, bars, and a 120-room hotel. The Festival Plaza is owned by the same company that owns Rock & Roll Taco.

Martinez's brother, Guillermo de Castro - better known as "Mannix" - is a U.S.-educated architect who conceived the idea of a Mexican-themed complex. Mannix opened a Rock & Roll Taco in Ensenada in 1988. Three years later, he opened another bar by the same name in Rosarito and invested $20 million to add the Festival Plaza (the Ensenada Rock & Roll Taco has since closed).

Festival Plaza has been a big hit with gringo tourists. One of the theme bars, El Museo Cantina, boasts the largest collection of tequila in the world, including a bottle from China, one mixed with rattlesnake, and a premium Cuervo that goes for $35 a shot.

Martinez says his bar offers a "musical salad," but mostly 1980s rock to appeal to the 25- to 35-year-old market. Eight years ago, he says, he and Mannix "saw two markets then existing for Rosarito: the seniors who like the Rosarito Beach Hotel, and the teenagers who go to Papas & Beer [built in 1987]. We go after the dinks [double income, no kids]. We created a new market here in Rosarito, upscale folks in their 20s and 30s. These people can come here to experience Mexico in a controlled, secure, and safe environment. We do some American stuff, but we really want them to experience Mexico."

Martinez acknowledges the cholo invasions are the main threat to that safe environment. He says he tries to control it by not marketing Rock & Roll Taco in gang areas of Los Angeles. On long weekends, he does a select selling of vip party passes.

Last Memorial Day, he says, a group of 20 lowriders, one or two claiming to be from Low Rider magazine, tried to get into his bar without paying. He refused them admittance. "All of them pelones. So I told them, 'No, I can't let 20 people in without paying a cover.' One said that he'd report the unfriendly attitude in the magazine. I told him to do what he had to do, and I'd do what I had to do."

Martinez thinks the publication wrote something about his bar being a "club for white boys" and admits that may be an accurate assessment. "We have to give preference to our regular year-round market, including on big holiday weekends." Paige Penland, an editorial assistant for Low Rider magazine, said last Friday by phone from Los Angeles that Low Rider did not publish anything negative about Rock & Roll Taco. The photojournalist likely responsible for the incident, she said, worked for their now-defunct spinoff magazine Street Beat; he was no longer with the publication. "We never badmouth a business," she said, "and 30 percent of our readers are white, so that bar may have gotten some business."

The worst area on long weekends, says Martinez, is the two-block stretch leading from the main street down to the big clubs on the beach. "We call it Vietnam during the big holidays." He recounts the Memorial Day riot of 1997 at Peanuts "N" Beer (next door to the better-known Papas & Beer). The place, he says, has a capacity of about 800, but through a promotion with Power 106, a Los Angeles radio station with a significant Hispanic youth market, they sold 1200 tickets and another 800 in Rosarito. Those left outside began to pitch rocks into the roofless Peanuts "N" Beer; those inside responded with beer bottles (business was so good they'd run out of plastic cups). Then one of the inside walls gave way and the cholos broke out into Oceana Condominiums, which Martinez says is owned by Hugo Torres, Rosarito's first and current mayor (Rosarito broke away as a municipality from Tijuana in 1995). Torres also owns the famed Rosarito Beach Hotel.

Martinez chuckles at the recollection. "So there were all these pelones running through the nice lawns of the condominiums and swimming in the pools."

Carlos Campos, 41, is part owner of Peanuts "N" Beer; he says he took over two weeks ago. He described the bar's main investor as "one of the wealthiest men in Mexico" but declined to name him. The ownership group, he says, has already committed to sinking $300,000 more into the place as an initial investment.

Campos lives in Chula Vista and says he's been a restaurateur in Mexico, the U.S., and Canada. While he was not involved in the club on Memorial Day, he claims the reports were exaggerated and that no overselling of tickets occurred.

"We have a capacity of 3500, but there were 5000 people outside on the beach trying to get in. And when you have that many people drinking, Mexican or American, you'll have problems." Campos promises increased security for the Labor Day party.

He admits that L.A. cholos make up about half his clientele, but he believes it's a valid market. He's currently distributing 300,000 invitations to his club's Labor Day weekend bash, which will feature some of L.A.'s top deejays. The invitations read, "We brought you two weekends of buckwild, out-of-control fun. We kicked everybody's ASS!" On the reverse side is a warning: "Absolutely No Gang Attire Whatsoever!!!"

Campos's problem is not with the cholos but with Hugo Torres, who Campos claims calls his customers "garbage tourists." According to Campos, Torres runs Rosarito for his own selfish interest, buying popular bars if he can and using his municipal power to drive out those who will not sell.

Campos says the Mexico City investor laughed when Torres tried to buy Peanuts "N" Beer. "Hugo Torres owns half the town, and he wants to own the other half. But this is a good business," Campos says, looking at his club and commenting on the planned renovations. "We're not going to sell."

Torres, reached by phone last week, says he doesn't own Oceana Condominiums - though some family members used to - and dismissed as nonsense the idea that he tried to buy Peanuts "N" Beer. "No, never in my life. It's not my type of business."

According to Torres, it's only a few bars - mostly Peanuts "N" Beer and Club Tequilas - that are causing the town's holiday turmoil. "We have so many people coming to Rosarito, it would be absurd for any good business to advertise on those [holiday] dates. The problem is that [the renegade bars] advertise in the gang areas. Sometimes there are gangs out on the beach wearing different colors or tattoos, and they get into fights. We can't solve the gang problems of L.A."

Adding to Torres's worries is Baja Fest, a joint Mexican and American venture being staged on the Labor Day weekend about 25 miles south of Rosarito. The event, featuring eight bands, is being advertised on the popular Power 106 station. Torres fears many of the Baja Fest crowd, projected at 30,000, will end up in Rosarito. He plans to close off the toll road exit into Rosarito whenever traffic chokes the main boulevard, and U-turns will be prohibited to discourage gang cruising. Compared to Memorial Day, security will be increased: 30 Mexican marines beach patrolling and all 100 Rosarito cops on duty, augmented by police academy trainees.

As for Carlos Campos, Torres says, "He doesn't care what happens to this town, to the people of Rosarito." Torres says a request has been made to the state of Baja to revoke the gang bars' liquor licenses. "People are angered at the city council and me because we are insisting they obey the law," says Mayor Torres. "But that comes with the job."