Hector Beltran Leyva Mexico ABL Cartel
Hector Beltran Leyva, 49, was arrested by the Mexican army. Reuters

A dangerous cartel boss ran a violent drug and arms empire from a picturesque Mexican town popular with foreigners and artists, where he lived an ostensible quiet life posing as businessman selling art and real estate, police said after his arrest.

Hector Beltran Leyva was held by the army as he was dining at a seafood restaurant in the hilly town of San Miguel de Allende, central Mexico. No shots were fired in the operation.

Authorities believe Beltran Leyva, also known as "The H" and "The Engineer" was the head of the feared ABL cartel, named after its founder, Beltran Leyva's brother Arturo.

The 49-year-old allegedly took the reins of the crime syndicate in 2009, after Arturo was killed in a gun battle with security forces.

Federal criminal investigations chief Tomas Zeron said that during his reign, Beltran Leyva had adopted a "moderate profile" to avoid detection.

"He set aside luxury cars, choosing an identity that allowed him to pass for a wealthy businessman dedicated to trade in real estate and artworks to justify his standard of living," Zeron said.

During the 11-month investigation, authorities found out he lived in San Miguel de Allende, an historic city famous for its Baroque and neoclassical colonial buildings and churches.

A man he was dining with was also arrested on suspicion of being involved with the cartel's finances.

Mexican and US authorities believe the ABL cartel was responsible for trafficking large amounts of arms and drugs including cocaine, marijuana, heroin and methamphetamine to Europe and America, as well as kidnapping, murder and torture.

The gang formed as a splinter group of the larger Sinaloa cartel in 2008.

Its power reached its peak a few years ago, as it controlled and terrorised parts of central Mexico including the Morelos state south of Mexico City, but declined after Arturo was killed and another two Beltran Leyva brothers were arrested.

"Obviously this is not the Beltran Leyvas' organization in its strongest moment ... but it continues to be a criminal organization capable of generating localized violence in some states," Mexican security expert Jorge Chabat said.

The US government had put up a $5m (£3m) reward on his head, to which Mexico added 30m pesos (£1.4m).

"This action proves the effectiveness of the public policy of security and law enforcement to achieve the Mexico at peace that we desire," President Enrique Pena Nieto tweeted.

DNA testing has been ordered to confirm Beltran Leyva's identity.