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2 Ex-Meese Advisers Indicted Over Wedtech : Lawyer, Investment Counselor Charged With Racketeering, Fraud in Work for Bankrupt Firm

December 23, 1987|RONALD J. OSTROW and ROBERT L. JACKSON | Times Staff Writers

NEW YORK — A former lawyer for Atty. Gen. Edwin Meese III and Meese's former investment adviser were indicted Tuesday by a federal grand jury here on charges of racketeering, mail and wire fraud and conspiring to defraud the United States in actions related to their work for Wedtech Corp.

The indictment--returned by a grand jury under the direction of U.S. Atty. Rudolph W. Giuliani--says that E. Robert Wallach, Meese's former attorney, had sought to influence Meese on behalf of now-defunct Wedtech. The small manufacturing firm sought no-bid defense contracts as a minority-operated company and in fact landed a $250,000 Army contract after Meese's intervention.

Meese Being Probed

Meese's ties to Wedtech are being investigated by a non-Justice Department prosecutor under the Ethics in Government Act. James C. McKay, the independent counsel in the case, said that "there is insufficient evidence as of this date" to indicate that Meese "knowingly participated in criminal activity in connection with his Wedtech actions."

Besides San Francisco attorney Wallach, a friend and confidant of Meese since their law school days at UC Berkeley, those indicted are investment manager W. Franklyn Chinn and Chinn's associate, Rusty Kent London. All three were consultants to Wedtech, and Wallach and Chinn were on the corporation's board of directors.

After noting that those indicted have asserted their Fifth Amendment privilege against self-incrimination rather than testify before the federal grand jury investigating Meese in Washington, McKay said that he might still seek their testimony about the attorney general after their trial is completed. Presumably, he would attempt to force their testimony by arguing that the defendants could not invoke the Fifth Amendment when asked about matters for which they had been convicted.

McKay disclosed also that he "is actively investigating other matters" involving the conduct of Meese, Wallach, Chinn and "others as it relates to matters not directly dealing with the Wedtech Corp."

Meese's lawyer, Nathan Lewin, interpreted McKay's announcement to mean that the outside prosecutor has concluded "the major focus" of his investigation favorably to Meese, adding that he is confident that "these other matters will be concluded promptly and favorably."

'Sword' Over Meese

But Sen. Carl Levin (D-Mich.), who has been probing Wedtech as chairman of the Senate Governmental Affairs oversight subcommittee and plans more hearings next year on the firm's dealings with public officials, said that McKay's statement "leaves the sword of criminal investigation hanging over the attorney general's head."

Investigations involving the now-bankrupt Wedtech have covered a number of politicians and businessmen. When asked Tuesday about the ethical questions raised by these and other inquiries, President Reagan said that he maintains full confidence in his attorney general.

"I'm more concerned about the way it's been presented--ignoring the fact that, in many of the cases, the charge appears on Page 1 and then, when it's determined that the charge is meaningless and has no foundation, that appears on Page 29," Reagan said at a photo session.

Justice Department officials said Tuesday that they do not expect Meese to step aside while the McKay investigation is being 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.

'Unresolved Questions'

However, "there are a number of unresolved questions concerning his involvement with the Wedtech Corp. and other matters," McKay told reporters after a pretrial hearing for Lyn Nofziger, Reagan's former political adviser, who has been indicted on conflict-of-interest charges involving his lobbying for Wedtech.

McKay and lawyers in his office would not describe the other matters involving Meese that are being investigated. But it is understood that chief among them is $55,000 that Meese and his wife, Ursula, invested at Wallach's suggestion in a trust handled by Chinn. The Meeses realized more than $35,000 in profits from speculative one-day stock trades that Chinn carried out with the money over a two-year period.

In an ethics filing last week, Meese disclosed that Chinn on several occasions had invested significantly more funds for him and his wife than was in their investment account, although they denied any knowledge of those transactions at the time they took place.

Iraqi Pipeline Project

McKay is also understood to be investigating Meese's possible involvement in an unsuccessful 1985 effort by Wallach to obtain U.S. support for a $1-billion Iraqi pipeline project.

According to the indictment in New York, Wallach, "in his capacity as adviser, consultant and lobbyist for Wedtech, sought to influence Edwin Meese and other government officials on behalf of Wedtech, primarily in connection with the firm's efforts to obtain government contracts" beginning in 1981, when the alleged conspiracy started.

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