Most of the 21 people named in the case were picked up Thursday as federal agents executed five search warrants in the Little Village neighborhood.
Officials said their investigation was part of a continuing crackdown on fake ID operations. They also said they were not trying to send a message to illegal immigrants.
At locations raided Thursday by Immigration and Customs Enforcement (ICE) agents, angry crowds gathered and watched as evidence and 15 of the suspects were taken into custody.
While all but two of those arrested were Mexican nationals, ICE officials say citizenship is not an issue in the investigation.
"No one was picked up randomly. These [people] were targeted in operations that were criminal in nature," ICE Special Agent in Charge Gary Hartwig.
Investigators allege that until Thursday, the corner of 26th Street at St. Louis Avenue was an open bazaar for the sale of fake driver's licenses, as well as for Social Security and Green cards. The sellers, called "miqueros," allegedly directed buyers to get their photos made at one of two nearby shops.
The criminal complaint charges the snapshots were taken to a house on South Christiana to be processed into fake IDs.
In magistrate court Friday morning, federal prosecutors identified the ring leaders as 31-year-old Manuel Estrada and 30-year-old Jaime Solis.
One of the alleged sellers is a U.S. citizen, 21-year-old Elias Munoz, who is the nephew of 22nd Ward Ald. Ricardo Munoz.
Seventeen months ago, the alderman's father, who owned a photo shop, was arrested during similar raids in the same neighborhood. The elder Munoz recently pled guilty in the 2007 case.
U.S. Attorney Patrick Fitzgerald said the raids should not be considered part of any federal crackdown on illegal immigration.
"To me, this case is outside that debate. We can't have people being able to walk up to street corners and walk way with a new ID. It poses too great a risk," he said.
The ICE agent in charge says, these days, fake ID operations potentially relate to an even bigger crime problem.
"These documents are also used in one of the fastest growing crimes in the United States, identity theft, which costs tens of billions of dollars annually and is not a victimless crime," Hartwig said.
Investigators say fake ID sellers at 26th and St. Louis saw their business increase after an April 2007 raid shut down a similar operation a few blocks away.
Fitzgerald says he does not expect the operation Thursday to end the fake ID business in Little Village because it's too big.