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More Trials on Tap in HUD Scandal

January 6, 1993

WASHINGTON (AP) _ Prosecutors are turning their attention to three upcoming trials and possibly more indictments of top political figures after winning their first courtroom convictions in the influence-peddling scandal at the Department of Housing and Urban Development.

Developer Victor R. Cruse, a business partner of Republican political consultant Paul Manafort, is scheduled to go on trial in U.S. District Court next Monday - less than a week after a one-time top aide to former HUD Secretary Samuel Pierce was convicted on a felony count.

Cruse is accused of lying to a federal grand jury when he denied trying to block HUD financing for a housing project in Savannah, Ga., after his and Manafort’s partnership tried unsuccessfully to buy it.

Manafort also testified before the grand jury and a House subcommittee, saying nothing he did was illegal. No charges have been returned against him.

Cruse, who was deputy commissioner of housing in Connecticut from 1981 to 1986, will be only the fourth person to go on trial in a special prosecutor’s investigation of political favoritism involving some $2 billion in HUD contracts during the Reagan administration.

But also awaiting trial on charges of bribery, conspiracy and perjury are two other top aides to Pierce. They are Thomas Demery, who was assistant HUD secretary for housing from 1986 to 1989 and Deborah Gore Dean, Pierce’s executive assistant in the mid-1980s.

And a federal grand jury was meeting here again Wednesday in connection with the ongoing investigation by Independent Counsel Arlin Adams.

Asked if more indictments might be coming, Teresa Duggan, a spokeswoman for Adams, would say only, ″We’re in the investigation business, and that’s possible.″

The grand jury and Adams are known to be investigating allegations that Pierce showed favoritism in administering HUD programs and that he lied to Congress. However, no charges have been brought against Pierce, who was HUD secretary for eight years.

The House Government Operations Committee, which exposed many of the abuses at HUD, claims Pierce lied to one of its subcommittee under oath in May 1989 when he denied ordering subordinates to approve government financing for specific projects.

The panel claims he also lied when he said he couldn’t recall a January 1987 meeting at which he supposedly sought data on all developers seeking money under HUD’s Moderate Rehabilitation Program for low-income housing. Pierce told the subcommittee he was not a ″hands-on″ manager while at HUD.

Also still under investigation is former Sen. Edward W. Brooke, R-Mass., in connection with some $14.5 million in subsidies he obtained from senior HUD officials in 1985 for 150 rehab low-income units in Lowell, Mass.

Elaine Richardson, an executive assistant to Brooke, pleaded guilty in November to assisting the former senator in making false statements to a deputy assistant inspector general at HUD and an FBI agent in 1988.

Since his appointment in March 1990, Adams’ office of 19 full- and part- time attorneys has spent more than $8 million investigating and prosecuting the alleged wrongdoing at HUD.

So far, the highest-ranking official convicted is Lance Wilson, a friend of Pierce who preceded Dean in the early 1980s as the housing secretary’s executive assistant.

After a 12-week trial and eight days of deliberations, a jury on Tuesday found Wilson guilty of paying for the trip of a HUD official and his wife to New York in September 1986, two years after Wilson had left the agency.

At the time, Wilson was a vice president of PaineWebber Inc., involved in arranging private financing for HUD-assisted projects. But the jury acquitted him of 23 other charges, including bribery, conspiracy and mail fraud.

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