Investigation of HUD in Full Swing

THE independent-counsel investigation of corruption at the Reagan-era Department of Housing and Urban Development (HUD) is proceeding full-speed ahead.

Yesterday, another trial was set to begin: Developer Victor Cruise, a business partner of GOP political consultant Paul Manafort, faces four felony counts in United States District Court in Washington for allegedly lying to a grand jury about his role in seeking HUD funds for a low-income housing project in Savannah, Ga.

Mr. Cruise's trial comes just a week after three other men were convicted of giving illegal gratuities to a top HUD official. But the three, including Lance Wilson, a one-time chief assistant to former HUD Secretary Samuel Pierce, were cleared of more serious charges of wire fraud, conspiracy, and bribery. Grand jury meets tomorrow

Teresa Duggan, a spokeswoman for independent counsel Arlin Adams, says the investigation is proceeding and "will involve more indictments." A federal grand jury is scheduled to meet tomorrow to hear evidence in the case.

Informed sources do not believe the independent counsel has sufficient evidence yet to move against either Mr. Pierce or former Sen. Edward Brooke (R) of Massachusetts, a prominent lobbyist on behalf of firms that received HUD funds in the 1980s.

Instead, speculation about who will be the next target centers around Philip Winn, a former assistant secretary of housing who was US ambassador to Switzerland from 1988 to 1989. Business associates of Mr. Winn may also be targeted.

After leaving HUD, Winn ran a Denver-based development firm called the Winn Group, which received about $163 million in federal subsidies and tax credits, congressional investigators say.

The Winn Group partners included many former HUD officials, including J. Michael Queenan, a former director of the housing-development division at HUD's Denver regional office, and Mr. Wilson, convicted of influence-peddling last week.

Winn is "a natural" to be indicted, says Stuart Weisberg, staff director of the House Government Operations subcommittee that probed influence-peddling at HUD.

"The Winn Group received more [in HUD funds] than any other development group. The only group more successful during that period of time was the Harlem Globetrotters," he says.

A source close to the case confirms that the independent counsel has "been threatening an indictment of Winn for six months."

Winn and his lawyers could not be reached for comment. But an attorney for Mr. Queenan said he had not been notified that his client might be indicted.

Winn's role in alleged influence-peddling at HUD has come to light because several former associates have been convicted or indicted in the HUD scandal:

* Silvio DeBartolomeis, a former HUD official, admitted to receiving a $20,000 loan that was "facilitated" by Winn as compensation for Mr. DeBartolomeis's services in getting HUD funds for the Winn Group. DeBartolomeis is cooperating with prosecutors.

* Benton Mortgage Company, which ran low-income housing developments in Oklahoma and Texas, worked on at least one project with Winn. Benton pleaded guilty in June 1992 to concealing payments to former HUD officials who acted as project consultants. The company agreed to pay a $1 million fine and to cooperate with the independent-counsel investigation.

* Another Winn associate was Thomas Demery, a one-time top aide to Pierce.

According to a 19-count felony indictment of Mr. Demery, he accepted the free use for a week of a condominium and car partially owned by Winn in the ski-resort town of Vail, Colo. In return, the indictment charges, Demery helped Winn's company obtain millions of dollars in HUD funds for projects in Aurora, Colo., and Richland, Wash.

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