Are there Iraqi terrorists armed with "toxic substances" looking to attack the U.S. after crossing the border with Mexico?

The Mexican government is denying the reports, but several news agencies say the hunt is on, and two Iraqi nationals and an American of Iraqi descent have reportedly been detained.

Both Fox News and NBC News reported that CIA sources revealed that a half-dozen Iraqis – possibly carrying chemical and biological weapons – are being sought in the border region.

According to Fox, the Iraqi suspects may have "toxic materials" requiring temperature controls. A Homeland Security official involved with border security said that toxic chemicals requiring temperature control could mean either biological or even radiological materials.

The network cited sources claiming the Iraqis sought to pay human smugglers to escort them across the border, and authorities were reacting to tips from the public and ongoing undercover investigations.

Sources in the northern Mexican state of Tamaulipas told NBC News that agents of the national security agency were seeking six Iraqi nationals with German passports.

The sources, who spoke on condition of anonymity, said police in the municipality of Valle Hermoso, some 60 miles southwest of Brownsville, Texas, were informed on the search on Monday.

The Voice of America reports Mexico is rejecting the reports, with government spokesman Hector Villarreal saying there's no evidence of Iraqi terrorists in Mexico.

Earlier in the week, Mexico announced "the Sentry Plan," a huge security effort at Mexico's borders and other strategic locations to coincide with the war in Iraq.

Meanwhile, Mexico's Notimex news agency reports two Iraqi brothers and an American of Iraqi descent were detained by Mexican immigration authorities in a Tijuana bus station as the three prepared to enter California.

The agency quoted immigration sources as saying Dahsh and Janges Slio Mattis were carrying forged Austrian papers when taken into custody.

With them was Saad Murad, an American citizen, whom they had allegedly paid $8,000 each to arrange for political asylum in the U.S.

The three were spotted getting off a bus from Puerto Vallarta and held for investigation by immigration authorities, Notimex said.

The report said Mexico intercepted five Iraqis with German papers who tried to illegally enter the U.S. a month ago. They were ultimately deported back to Germany.

U.S. authorities are now conducting voluntary interviews of up to 11,000 Iraqi-Americans, over a fifth of the 50,000 Iraqi nationals believed to be in America.

"I came to the United States for freedom, and they treated me like a criminal," Kadhim Rahim Fatthollah, among the first Iraqis interviewed, told the Arizona Republic.

But Ali Al-Hachami, who runs the Baghdad Restuarant in Phoenix, told the paper he had no problem with the questions, citing the chance that some of Saddam's agents had moved to the U.S.

"I'm sure there are some of them (Iraqis) who worked for Saddam Hussein," he said.

The Santa Fe New Mexican reports security has been tightened at the state Capitol and airports.

Police check bags at New Mexico Capitol (photo: Jerome Nakagawa, The New Mexican)

The bureau set up a command post to solicit calls from the public regarding "terrorist or potential terrorist activities or anything regarding the war effort," supervisory agent Doug Beldon said.

These are voluntary interviews in hopes of finding out "whether they have any information pertinent to terrorism or the now-ongoing war effort – or whether they would have information as to someone who does," Beldon told the paper.

Gov. Bill Richardson says federal officials told him they didn't plan on raising the security code to red, the highest level.

"I want to pass that on to calm the nerves of New Mexicans who are understandably concerned during these uncertain times," Richardson said.

Next week, California Gov. Gray Davis and his counterpart from the Mexican state of Baja are slated to meet to discuss security measures along the border.

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