WASHINGTON — Two associates of Atty. Gen. Edwin Meese III were indicted today in the Wedtech scandal, it was revealed here by independent counsel James McKay, who said his criminal investigation of Meese will continue.
Meese's longtime friend and his former attorney, E. Robert Wallach, and the attorney general's former financial manager, W. Franklyn Chinn, were indicted in New York on federal charges related to the defense contractor's work for the federal government, McKay disclosed.
A third man who is an associate of Wallach, R. Kent London, also was indicted, McKay said.
In court documents filed in Washington, McKay disclosed that "there is insufficient evidence as of this date" that Meese "knowingly participated in criminal activity" in connection with his involvement with Wedtech, a South Bronx, N.Y., company which was awarded $250 million in no-bid contracts for the government.
McKay, who has been investigating Meese since last May 11, said, however, that questions that do not lend themselves to immediate resolution "still remain open."
Still 'Actively Investigating'
The independent counsel also disclosed that he is still "actively investigating other matters" unrelated to Wedtech "concerning the conduct of Mr. Meese vis-a-vis E. Robert Wallach, W. Franklyn Chinn and others."
He noted that those indicted--Wallach, Chinn and London--all have refused to testify in the Meese inquiry on grounds of possible self-incrimination.
Justice Department officials said they do not expect Meese to step aside while the investigation is pursued because, as one put it, there "would have to be a direct hit" on the attorney general--not just those around him--to persuade him to resign.
An announcement concerning the indictments was expected later in the day from U.S. Atty. Rudolph Giuliani in New York.
The New York Daily News quoted sources as saying that Giuliani and McKay both uncovered evidence that Wallach and Chinn committed crimes, and decided that Giuliani should prosecute the charges.
$60,000 in Blind Trust
Wallach introduced Meese to Chinn, and persuaded Meese to invest $60,000 in a blind trust to be handled by Chinn's financial consulting company. The investment, in which Chinn made a $40,000 profit through highly speculative stock purchases, brought Meese under scrutiny by congressional committees and McKay.
Meese has repeatedly denied wrongdoing in the Wedtech affair.
Wedtech's new management has charged in lawsuits that Wallach, Chinn and London conspired to collect large consulting fees from Wedtech, and split the money after secret meetings in Switzerland and Washington.
A former Wedtech official, Mario Moreno, testified that Wallach was hired because of his access to Meese. Moreno said the company gave large cash payments to Wallach when he told Wedtech that he was about to get a high-ranking job under Meese.