Using the ransom callers' phone number, police were able to trace the location of Cunningham and Sanchez to a Best Western hotel in Webster, Texas, where authorities moved in and arrested the pair.
The agent who shot Valladares has been placed on paid administrative leave pending the outcome of the investigation.
Health, 35, is being charged with aggravated kidnapping. The boy later managed to get free and run to a neighbor's house where police were called.
During his meeting with police, he received a call from someone who claimed to be from a Mexican drug cartel, who demanded $20K for Villadares, KHOU reports. The 12-year-old son of the man who was shot is now in Child Protective Services custody.
"The system failed", Philip Dupuis, the police chief in Conroe, said at a news conference Thursday about the victim's shooting.
The FBI says they are investigating the incident, but can not comment on any details.
It's still not clear why the victim was shot when Federal Bureau of Investigation agents forced their way into the home near Ebert Street and South Finch Circle after learning he was being held there. The kidnapping victim, whose name wasn't immediately released, died later at a hospital.
Police told the Chronicle that a woman in the home was arrested and charged with aggravated kidnapping.
"In the interest of protecting the investigation's integrity, we can not comment regarding investigative details", she said in an emailed statement.
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"There are oftentimes claims of a cartel connection just to place a fear factor", Smith told the Chronicle.
"They were demanding money they were owed that nobody knew anything about", Smith said.
The FBI said the shooting was being investigated by an internal incident review team and results will be shared with the Department of Justice and local police. "It appears somebody connected to the family was involved".
A neighbor, Monique McKnight, told reporters that two adults and two children lived at the home and that she was questioned by agents seeking information about the children.
"This is not what happens on Elbert Street", said Flora Henry-Smith, who grew up there.
"It sounded like an explosion", she said.
Neighbors were shocked to hear about the raid and shooting.
"Your neighborhood will be safer now", one agent told her.