The case of a Baltimore drug lord who ordered executions from federal prison is a prime example of how inmates have run deadly criminal enterprises with unfettered access to telephones, a government inquiry has concluded.

The Inspector General's Office, an investigative arm of the U.S. Justice Department, accused the Bureau of Prisons of "taking insufficient steps to address this abuse" despite being aware of widespread problems for years.

"A significant number of federal inmates use prison telephones to commit serious crimes while incarcerated, including murder, drug trafficking and fraud," Inspector General Michael R. Bromwich concluded.

The report uses the local case of Anthony Ayeni Jones, who is serving a life sentence for running one of the most murderous drug gangs in Baltimore history, linked to more than a dozen killings.

Federal prison officials called the report unfair.

Spokesman Todd Craig noted that the investigation uncovered just 77 problem cases, representing a fraction of the 400,000 inmates who passed through the system during the three-year review.

Craig said a computerized monitoring system should be in place at each of the nation's 94 federal prisons by 2002, and other security recommendations are being considered.

"Our agency's leadership is committed to protecting the public by eliminating inmate telephone misuse," he said.

But Bromwich concluded that his findings "paint a troubling picture of the scope and seriousness of inmate use of prison telephones."

The report depicts several cases, including an inmate who arranged drug shipments from South America to North Carolina and a man who tricked people out of $1.6 million.

But it calls the Jones case the most egregious.

The report says that Jones began his telephone scheme in the mid-1990s, when he was incarcerated at a federal prison in Allenwood, Pa., and became aware of a federal grand jury investigation into his drug activities.

"He used the prison telephone to order his associates outside prison to murder two witnesses he suspected had testified against him," the report says.

"One of the witnesses was killed and the other was shot several times."

The report says that even after Jones was convicted in May 1998 and sent to prison for life, he "retained full telephone privileges" which were not restricted until after the inspector general's investigation had begun.

He is incarcerated in the nation's most secure prison, in Florence, Colo., where former Mafia boss John Gotti, Unabomber Theodore J. Kaczynski and Timothy J. McVeigh, the Oklahoma City bomber, are held.

Jones is allowed out of his cell only one hour each day and is barred from sending or receiving mail and telephone calls.

He can communicate only with his lawyers.

2 dead, 1 disabled

Federal prosecutors first detailed the prison hits two years ago when they told a judge that Jones had ordered his stepbrother to kill several witnesses and their mothers.

Jones' adopted brother, John Jones, who had testified about the gang to a federal grand jury, was shot and killed in February 1997 in his East Preston Street home. Another witness was shot and disabled in a North Gay Street carryout.

A year earlier, a police informant named Octavian Henry was slain -- shot repeatedly in the head in an alley off East Oliver Street.

"He was one of the most evil defendants that we have ever seen," said U.S. Attorney Lynne A. Battaglia, whose Baltimore office has won convictions against Jones and 20 of his co-conspirators since the gang was broken up in 1996.

Prosecutors said Jones developed a coded language to order killings by his henchman and to thwart prison officials monitoring his phone calls.

One of Jones' lawyers, Harry J. Trainor Jr., said he would not comment on specifics yesterday because the conviction is being appealed. But he noted that the call in question was made from Allenwood, one of the least secure federal prisons.

During his trial, Jones said prosecutors misread his code, which he called street slang.

Failure to monitor calls

The inspector general repeatedly criticized prison officials for failing to monitor phone calls made by Jones and other inmates. The report says only 3.5 percent of prisoner calls are listened to live -- though every one is recorded.

"Consequently, prison officials have little control over any criminal activities discussed during the overwhelming majority of inmate calls," the report says.

Investigators noted that one FBI director "told us that when large-scale drug dealers serve time in the United States Penitentiary in Lewisburg [Pa.], 'all you do is change his address and his phone number.' "

Up until the early 1970s, federal inmates were allowed to make only one phone call every three months. Those rules have since changed.

"Now, most inmates are allowed to make as many telephone calls as they are able to pay for or as many collect calls as people outside prison will accept," the report says.

Investigators interviewed Rayful Edmond, a Washington, D.C., drug dealer who ran his organization while incarcerated in Lewisburg, Pa.:

"He talked on the telephone all day long and made arrangements for drug deals on the telephone almost every day, including participating in conference calls to Colombia."

The report cited another drug dealer housed in Lewisburg who was convicted of using the telephone to deal drugs, then was moved to Leavenworth, Kansas, where he "again used telephones to conspire to purchase cocaine."

Problem called overstated

Craig, the prison spokesman, said the report overstates the problem.

He said there is typically one phone for 150 inmates, limiting their ability to make more than one call a day.

He said his agency ordered the computerized monitoring system nearly a decade ago, but it was stalled because of a lawsuit filed by an inmate who alleged it violated his rights.

Prison officials have won the case, but implementation throughout the federal prison system has been delayed until 2002.

Other security recommendations are being studied, Craig said, including increased phone monitoring and stricter sanctions against telephone abusers. The spokesman said it is "only a minority who try to circumvent the system" for criminal use.

He called Jones a unique case. Even if officials monitored his calls live, he said, he doubted anything could have been done.

"A reasonable person listening to coded language has difficulty decoding one of these messages," he said. "That does not diminish our responsibility. But this report needs to be put in context."

And as for Jones' future, Craig noted that the Baltimore man is locked in the "highest-security prison in America. He has been effectively dealt with."