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Investigation of HUD in Full Swing

Prominent Denver developer is expected to be the next target of independent counsel's probe

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* Wilson was a former partner in Winn's development firm. In 1989 hearings, Rep. Tom Lantos (D) of California, chairman of a House Government Operations subcommittee, charged that Wilson got a large equity interest in some of Winn's projects in return for using his political connections at HUD to secure federal funds.

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Most of the allegations against Winn and many other figures in the scandal revolve around HUD's "model rehabilitation program," which has since been abolished. Under that program, Pierce's department awarded hundreds of millions of dollars to local housing authorities around the country. The authorities were then supposed to use a competitive-bid process to dole out the subsidies to owners of low-income rental properties who fixed up and improved their buildings.

Instead of awarding funds on the basis of merit, investigators charge, the money was often given out to companies that hired consultants politically well-connected to Pierce's department.

Mr. Adams has looked into corruption allegations at HUD since 1990. He has 19 attorneys on his staff who have spent $8 million on the investigation. Four defendants, including DeBartolomeis and Benton Mortgage Company, have pleaded guilty.

But the only HUD-related investigation to go to trial ended last week with a jury acquitting the defendants of most of the charges. Although Adams praised his prosecutors' work in the case, defense attorneys claimed the trial was a defeat for the independent counsel. Case called `overtried'

"They overcharged and overtried the case and they got only one felony conviction," said Martha Rogers, an attorney for Wilson. Ms. Rogers said she would appeal the verdict.

Besides the trial set to start yesterday, two other prominent figures in the HUD case have already been indicted. Demery will go on trial in April. Still awaiting trial is Deborah Gore Dean, a former executive assistant to Pierce who is charged with 13 felony counts.

Sources close to the case say that the independent counsel has been pressuring those involved in the HUD scandal to plea-bargain by accepting dismissal of most of the charges against them in return for testimony implicating Pierce in the corruption.

Rogers said the independent counsel had offered a deal to Wilson, but he had refused because "he said I can't dishonestly give up someone." Deal offered to HUD aide

A similar deal was offered to Ms. Dean, sources say. Her attorneys turned down the offer for two reasons. First, the independent prosecutor wanted her to plead guilty to at least one felony count, which would have left her facing time in jail. Second, her attorneys felt that Dean could not implicate Pierce without "massaging" her testimony, in the words of one source.

However, observers believe the independent counsel may be hoping that if Demery or Dean is convicted - and receives a heavy sentence - one aide may decide to cooperate with prosecutors.

Another possible target of the independent-counsel probe is former Senator Brooke. In November, Elaine Richardson, a former executive assistant to Brooke, admitted that she lied to conceal his behind-the-scenes involvement in securing HUD rehabilitation funds for a large development project in Worcester, Mass.

Since Ms. Richardson's plea bargain implicated Brooke in possible illegal activity, observers believe that the former senator may be a prominent target for the independent prosecutor. Brooke's attorney, Frank Knight, refused to comment on the case.