Developer, lawyer face bribe charges over $100,000 'fee' in housing deal.

WASHINGTON -- Nebraska attorney David Steier and Florida developer Leonard Briscoe have been indicted in Florida on charges of conspiring to bribe a government official with $100,000 disguised as a consultant fee to Mr. Steier for bond and tax advice.

The indictment, which stems from the two-year-old investigation of the HUD scandal, charges that Mr. Steier and Mr. Briscoe comspired to bribe Dubois Gilliam, a Housing and Urban Development Department deputy assistant secretary, to obtain approval of Urban Development Action Grants worth $11.6 million for three of Mr. Briscoe's housing and development projects in Riviera Beach and Belle Glade, Fla.

Mr. Briscoe paid Mr. Steier $100,000 out of the grant proceeds for the Wedgewood Plaza apartments complex, purportedly for giving bond and tax advice on $15.8 million of tax-exempts issued for the project in April 1986, according to federal investigators and the indictment, which was handed up on June 12.

However, the $100,000 payment was intended to be diverted back to Mr. Gilliam as a bribe, the indictment says. Investigators contend that Mr. Steier never actually provided bond advice on the Wedgewood project, and in any case was not qualified to do so.

"Why would Briscoe, who was operating in Texas and Florida with loads of legal counsel, pluck some attorney out of Nebraska who's not even listed in the Red Book to give him bond advice?" asked Stuart Weisberg, staff director and general counsel of the House government operations subcommittee, which launched the HUD scandal investigation in 1989.

The subcommittee questioned in investigate hearings last year whether Mr. Briscoe's $100,000 payment to Mr. Steier as "special bond counsel" was legitimate, since he was not listed in The Bond Buyer's Directory of Municipal Bond Dealers of the United States, Mr. Weisberg said. Federal prosecutors now are apparently picking up on the theme, he said.

Mr. Steier acknowledged yesterday that "I'm not in the Red Book and I was not bond counsel, nor did I render any opinions with respect to the [Wedgewood Plaza] bond issuance."

According to Securities Data Co./Bond Buyer, the bond opinion on the deal was given by Bryant, Miller & Olive of Tallahassee, Fla., with assistance from Kutak Rock & Campbell, the counsel for the three co-managers, William R. Hough & Co.; Smith, Barney, Harris, Upsham & Co.; and the PaineWebber Inc.

David Brandt of Florida Municipal Advisors Inc., the financial adviser on the deal, said that Mr. Steier "didn't do any work" on the Wedgewood financing, to his knowledge. He said Mr. Steier clearly was not involved in the actual issuance of th bonds and was not paid out of the bond proceeds like the other bond firms.

Mr. Steier said he received the $100,000 payment not for assisting in giving the bond opinion but for advising on the status of tax-exempt bond legislation in Congress, as well other "tax, financial, and accounting areas."

"My services were critical to the project," he said. In particular, he continued, he provided guidance on dealing with the monumental Tax Reform Act of 1986 that was in the early stages of moving through Congress at the time.

The House version of the bill -- H.R. 3838 -- contained a provision that would have capped and targeted multifamily housing bonds like the ones issued for the Wedgewood project, with an effective date of Dec. 31, 1985. The bill included transition rules for some projects started before Sept. 26, 1985.

"The big thing here is that this project was done during the period with transitional rules," Mr. Steier said. "The question was how can you allocate the proceeds from the bonds to assure that there would be tax-exempt treatment. That was a critical aspect of the deal." The work he did on the transition rules accounted for "a big part" of the consulting fee, he said.

Mr. Steier said the government's charge that the $100,000 fee was actually a disguised bribe is particularly ridiculous since the fee was never passed on to Mr. Gilliam. "They don't allege that any money was paid to Dubois. If it was a bribery deal, you would think some payment would have been made," he said.

Federal investigators acknowledge that Mr. Steier never actually diverted the fee to the former HUD official. With regard to the fee, the indictment appears to charge Mr. Steier with conspiracy to bribe a public official and intent to defraud the government, while it alleges that other, smaller bribes by the co-conspirators were more successful at getting through to Mr. Gilliam.

Mr. Steier said that the indictment does not make clear exactly what the government's allegations are with regard to the $100,000 fee.

The contention that Mr. Steier and Mr. Briscoe intended to use the fee to bribe Mr. Gilliam appears to be based largely on testimony that Mr. Gilliam gave last year before the subcommittee under a grant of immunity from prosecution. Mr. Weisberg said Mr. Gilliam may have provided the same testimony to prosecutors on an immune basis in the grand jury proceedings.

Mr. Gilliam told the subcommittee last year that he asked Mr. Briscoe to hire Mr. Steier -- who was Mr. Gilliam's personal tax attorney at the time -- purportedly as a tax adviser. Mr. Gilliam said he had expected, in requesting the favor, to "participate" in sharing the fee after he left the department.

Mr. Gilliam said that the fee was never passed on to him because Mr. Steier later "refused to do it," claiming he might "run into some problems on ethical issues."

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