'They Enslaved the Deaf Mutes' screamed the headlines in the Mexican press as the bizarre story unfolded of how deaf immigrants from Mexico were forced to live in squalor and peddle trinkets for a pittance on the streets of New York.

But even stranger was the fact that their captors were themselves deaf and also Mexicans. Today they sit in a shabby motel overlooking a cemetery in the Queens suburb of New York. They are under house arrest and face deportation when the embarrassed New York authorities have collected their testimony about the human smuggling racket.

Seven members of the Italian Mexican Paoletti family who ran the smuggling ring have been charged with transporting illegal immigrants, coercion and assault. The father, Jose Paoletti, who masterminded the racket from Mexico city has disappeared.

There was shame and revulsion in New York when details of the plight of the deaf Mexicans emerged this week. The pictures of the two apartments into which 57 people had been crammed including three pregnant women and 12 children caused shock. This turned to anger when it was learned the housing and fire departments had "inspected" the apartments and found no violations of the city code.

Mayor Rudy Giuliani who went to inspect the scene said that "it's almost impossible to come to that conclusion". He said the occupants were living in "virtually slavery".

The saga began when four of the deaf Mexicans went to Jackson Heights police station in Queens at midnight with a three page letter in Spanish.

The police went to the two apartments and found them crammed with people in bunkbeds and sleeping bags.

Gradually the details of their wretched lives emerged. They used to rise before dawn, be given a backpack filled with 100 key chains and sent on the streets and subways of Manhattan expected to return with $100.

They said that if they failed to meet the targets, they would sometimes be beaten or threatened with being turned over to the police as illegal immigrants. They said they were hungry most of the time. A number of the women said they were sexually abused.

This was a far cry from the lifestyle promised by the Paolettis to lure them to the cities of the United States.

First they were smuggled across the border and usually brought to Los Angeles. Then they were driven in vans or flown to New York by the smugglers, who took away their birth certificates and identity cards. The two apartments in Queens were run by Adriana Paoletti (29) and her brother Jose (28).

Adriana had been married to a deaf US postal worker from whom she is divorced. His brother, Brendan Coenan, claims she earned $200,000 a year. Police found $35,000 in one of the apartments.

The peddlers were paid $400 a month from which $200 was taken for rent.

Another brother now on the run, Renato Paoletti, is said to be the chief smuggler. The mother, Delia (59) also used travel to Mexico to recruit deaf victims.

All of the Paolettis are deaf, including the father, Jose, who stayed back in Mexico city.

After retirement, Jose Paoletti began to travel in the US, where he started a business selling keyrings. Deaf friends of the Paoletti children were told they would have a much better life in the US working for Jose.

For the victims of the Paolettis the extent of the coercion is not clear. An interpreter in Jackson Heights used to organise prayer meetings for them and sometimes they would go and eat in nearby Mexican cafes if they had money.

The interpreter, George Friebolin, said that he never heard them talk of leaving their "employers" or going to the police. They feared the police because of their illegal immigrant status.

The dilemma for the deaf peddlers was that home could be worse than their joyless existence in New York. Dr Frank Estralda, who has been examining them in their motel, says they are healthy but disillusioned. "If there's anything they have to talk about, it's that the American dream isn't what they expected when they left Mexico," the doctor said.