Uneven Results Mark HUD Corruption Cases

INDEPENDENT INVESTIGATION

INDEPENDENT Counsel Arlin Adams's investigation of corruption at the Reagan-era Department of Housing and Urban Development (HUD) seems to take one step backward for every step forward.

The latest setback for the investigation was the acquittal on Jan. 28 of Victor Cruse, a Connecticut lawyer charged with lying about his role in securing $1 million in HUD subsidies for a low-income housing project in Savannah, Ga.

Mr. Adams, however, won a major victory on Feb. 9 when Philip Winn, a prominent Colorado developer and former assistant secretary at HUD, pleaded guilty to one felony count for providing bribes to HUD officials who approved federal subsidies for his projects. Mr. Winn agreed to pay a fine of $981,975 and to cooperate fully with prosecutors.

Adams described Winn's plea bargain as a "significant development" that vindicates "the public's right to a government that operates for the benefit of all its citizens, rather than for a favored few."

Theresa Duggan, a spokeswoman for Adams, said that a grand jury continues to meet and more indictments are possible.

There are several possible targets for the probe:

* J. Michael Queenan and Phil Abrams, partners in the Winn Group, a development firm that received $163 million in HUD subsidies and tax credits during the 1980s. Mr. Abrams's attorney, Richard Beckler, refused to comment on Winn's plea bargain. Mr. Queenan's attorney, Larry Barsala, said his reaction was unprintable.

Although Mr. Barsala said his client has nothing to fear from the independent counsel, one source close to the case said that, after the Winn plea bargain, "I can't believe they would let Abrams or Queenan drop."

* Edward Brooke, a former United States senator from Massachusetts who worked in the 1980s as a lobbyist on behalf of firms seeking HUD funds. A former aide to Mr. Brooke, Elaine Richardson, received a sentence of 200 hours of community service on Feb. 3 as part of a plea bargain in which she is cooperating with prosecutors.

In court papers, Ms. Richardson said that in 1988 she sat by silently while Brooke told investigators that he had not sought HUD funds for a low-income housing project in Worcester, Mass.

Richardson says that Brooke knew his statements were "false, fictitious, and fraudulent," which, if proven, would mean that the former senator committed perjury and obstruction of justice.

Close observers of the case say they are mystified as to why Brooke has not been indicted yet; some say they believe it is because, like Winn, he is quietly negotiating a plea bargain with prosecutors.

On the other hand, the failure of the case against Mr. Cruse - who was acquitted of two counts of perjury and two of obstruction of justice - may have made the independent counsel wary of bringing similar charges against Brooke.

"If anybody wanted to bring a case like that he would be laughed out of court," says one person connected to the case. "Winn admitted paying gratuities. There is not one shred of evidence that Brooke ever paid any gratuities."

In addition, many lawyers on both sides of the independent-counsel case speak guardedly about the difficulties of prosecuting black defendants, like Brooke, on complicated white-collar charges before largely black juries in the District of Columbia.

Several lawyers closely observing the trial noted that in closing arguments Cruse's lawyer, R. Kenneth Mundy, seemed to suggest that prosecutors had singled out Cruse because of his race, while many alleged white white-collar criminals were not prosecuted.

This argument won the sympathy of minority jurors, they said.

But race should not figure in two pending HUD-related cases, since both defendants are white.

No trial date has been scheduled yet for Deborah Gore Dean, who faces 13 charges of influence-peddling while she was a top assistant to former HUD Secretary Samuel Pierce.

Thomas Demery, who served as assistant HUD secretary from 1986 to 1989, will go on trial June 29 on 19 felony counts of corruption.

"The Winn plea bargain beefs up the case against Demery," says Stuart Weisberg, staff director of a House subcommittee that looked into HUD corruption.

That's because in his plea bargain, Winn admits that in 1987 he let Mr. Demery have the free use of a condominium and car in Vail, Colo.

In return, the court papers say, Demery allocated federal funds to projects in which Winn had a financial interest. With Winn testifying as a prosecution witness, one observer says, "It'll be a hard case for Demery to beat."

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