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Grand Jury Indicts Developer in HUD Influence-Peddling Case

March 24, 1992

WASHINGTON (AP) _ A federal grand jury today indicted a real estate developer on charges of perjury and obstruction of justice in connection with the influence-peddling scandal at the Department of Housing and Urban Development.

Victor R. Cruse, a developer and business partner of Republican political consultant Paul Manafort Jr., was charged with two counts of perjury and two counts of obstruction of justice.

The charges were related to Cruse’s testimony before the grand jury that has been investigating the Reagan-era scandal at HUD since 1990.

He was accused of lying to a grand jury by denying he would block HUD financing for a Savannah, Ga., housing project after his partnership’s effort to buy the project fell through.

Cruse also was charged with lying to the grand jury when he denied telling a co-owner of the housing project that HUD funds would not be given to the project.

His attorney did not immediately return a telephone call seeking comment.

Cruse, a deputy commissioner of housing in Connecticut from 1981 to 1986, co-owned CFM Development Corp. with Manafort and James Fox.

The company had sought to buy the Park Villa housing project in 1988 if it could get financing from HUD. But the bank that held the mortgage on the Park Villa project refused to approve a loan for the purchase.

According to the indictment, an officer of the bank was then told by Cruse that he would instruct an associate in the Alexandria, Va., consulting firm of Black, Manafort, Stone & Kelly to block HUD funds to the Park Villa project.

Richard Collins, executive director of the Savannah Housing Authority, said in a 1991 interview that his office had provided federal investigators with documents on meetings and correspondence on the Park Villa project, including dealings with Black, Manafort.

Collins said that a Black, Manafort associate had told him that federal housing subsidies would be steered to Savannah if Collins could guarantee Manafort’s development group would get the funds. Collins said he declined to make such a promise and the project fell through.

Manafort testified before congressional hearings on the HUD scandal and acknowledged that his efforts to steer federal housing renovation funds to a Seabrook, N.J., project he co-owned amounted to influence-peddling.

But Manafort also told lawmakers he ″played by the rules″ in obtaining multimillion-dollar federal housing subsidies. Manafort also testified last year before the grand jury investigating HUD.

Cruse testified with Manafort before a House subcommittee on Oct. 1, 1989. His testimony centered on the Seabrook project, which he co-owned with Manafort and which received more than $31 million in HUD subsidies and tax credits.

If convicted on all counts, Cruse would face a maximum of 20 years in prison and $30,000 in fines.

The grand jury and the office of independent counsel Arlin Adams also are investigating whether former Housing Secretary Samuel Pierce showed illegal political favoritism in administering HUD programs and whether he lied under oath to Congress about his eight-year tenure at HUD. No charges have been filed against Pierce.

Samuel P. Singletary, a longtime Pierce friend, pleaded guilty last month to a tax evasion charge related to the HUD scandal. Two other people have been indicted on HUD charges - real estate investor Leonard E. Briscoe of Fort Worth, Texas, and Lance H. Wilson, Pierce’s former executive assistant.

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