At Kentucky trial, Bill Collins denies soliciting funds from Cranston.

FRANKFORT, Ky. - Continuing his testimony yesterday in his federal extortion trial here, the husband of former Kentucky Gov. Martha Layne Collins denied that he solicited horse partnership investments from Cranston Securities in exchange for state bond business.

Bill Collins' second day on the witness stand followed his rejection Tuesday of the federal government's contention that he had acted in a similar manner with Donaldson, Lufkin & Jenrette Securities Corp. He also said Tuesday that he had not sought campaign contributions from officials at Donaldson.

Bill Collins is accused of forcing executives at the two investment firms to ante up $1.65 million for his horse partnership business to nail down lead-manager positions on state bond issues.

During the administration of Martha Layne Collins, which lasted from December 1983 to December 1987, Cranston acted as bookrunner on a total of $1.2 billion of Kentucky state deals while Donaldson headed up syndicates for a total of $500 million. Neither firm had previously been involved in state bond issues.

Cranston Securities was bought by Cleveland-based Prescott, Ball & Turben in 1987.

No other person has been charged in the trial, now in its 33d day, before Judge Joseph Hood of the U.S. District Court for the Eastern District of Kentucky.

When asked by his lawyer whether he assured Robert Kanuth, Cranston's chairman, that the firm would receive state bond contracts if its employees invested in horse partnerships, Collins replied, "Definitely not."

After a shaky start yesterday, when he was visibly trembling as he took his oath on the witness stand, Collins seemed cooler today.

Bill Collins also specifically rejected an assertion made earlier in the trial by Lester Thompson, Kentucky's finance secretary during 1984, that Collins had directed Thompson to award a $310 million Kentucky Turnpike Authority bond contract to Cranston in June 1985.

Thompson, an unindicted co-conspirator, testified under immunity from prosecution in a number of tax-evasion cases.

Collins, who said he did not meet Kanuth until the early summer of 1984, also insisted that he only discussed the horse partnerships - and not state business - in a series of dinner meetings with Cranston officials in 1984 and 1985.

Earlier in the trial, the prosecution introduced as evidence a number of Cranston expense account vouchers, noting that Bill Collins had been treated to meals by the firm's executives.

Bill Collins also said yesterday that he did not have any contact with Donaldson officials with regard to the firm's purchase of a $35,000 grand piano given as a gift to Martha Layne Collins in December 1984.

He said that the first discussions he recalls about getting a piano occurred after the Collinses moved into the governor's mansion in December 1993 and discovered there was no piano in the ballroom.

According to Bill Collins, Thompson was then instructed by Martha Layne Collins to find a way to get a piano. After determining that purchase of the instrument could not be covered by state funds, Thompson then asked Donaldson to pay for it, Bill Collins said.

Collins acknowledged, however, that he did arrange a loan to the dealer overseeing construction of the piano to cover the dealer's expenses as the instrument was being readied for delivery. The loan was provided. Collins said, by a Versailles, Ky., bank at which he served as president.

Collins also acknowledged that he did not tell his wife that Donaldson had paid for the piano.

"I can't tell you why I didn't do it, but I can tell you I didn't do it," he said.

Collins also rejected Thompson's claim that Collins had asked the former finance secretary to calculate how much Donaldson would receive from acting as lead manager on a $300 million Turnpike Authority bond issue.

Further, Collins denied that he discussed Kentucky state bond business with Donaldson officials during the signing of horse partnership documents at the firm's New York City headquarters in October 1984. "We did not discuss any business in the state of Kentucky," he said. "The only reason for being there was signing partnerships."

Collins also said he did not know that Donaldson had partially reimbursed employees who made investments in his horse partnerships.

In testimony earlier in the trial, Donaldson president John Chalsty said that the firm forgave about $500,000 in loans to employees who had invested in Partnership #2, which was sold by Collins Investments in late 1984.

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