ATLANTA - A Kentucky federal grand jury has indicted the husband of former Gov. Martha Layne Collins on charges of extortion involving two bond firms.

Bill Collins was charged with extorting money from Donaldson, Lufkin & Jenrette Inc. and Cranston Securities in exchange for helping them state bond business.

Capping a four-and-a-half year investigation into the financial affairs of the couple, the jury also indicted Mr. Collins on obstruction of justice and tax fraud charges.

But the U.S. District Court for Kentucky's Eastern District did not level any charges against Ms. Collins or the two investment firms. Ms. Collins served as Kentucky's governor between December 1983 and December 1987.

According to an 18-page indictment, between 1983 and 1987 Mr. Collins and former state Finance Secretary Lester Thompson sought and received contributions to Ms. Collins's 1983 gubernatorial campaign and inauguration from officials at the two firms. The indictment also said that Mr. Collins set up thoroughbred horse partnerships as a vehicle for obtaining bribes from the firms.

In return, the indictment alleges, Mr. Collins directed Mr. Thompson to award state bond contracts to the firms, thereby violating the Hobbs Act, a federal law dealing with extortion.

Mr. Collins, who is a dentist, helped his wife raise money for her election campaigns. After Ms. Collins was elected, he became a fund raiser for the state Democratic Party.

Karen Caldwell, U.S. attorney for Kentucky's Eastern District, declined in an interview yesterday to say if more indictments were expected or if officials at Donaldson and Cranston Securities, which was bought by Cleveland-based Prescott, Ball & Turben in 1987, are targets of a continuing investigation. She also declined to comment on whether Mr. Thompson, who was named an unindicted coconspirator, had been granted immunity in return for his testimony to the grand jury.

"But we will continue to follow any leads that are presented to us," she said.

Mr. Collins's lawyer, Louisville attorney Frank Haddad, said yesterday that Mr. Collins would plead not guilty to the charges. "The government has absolutely no proof that Mr. Collins or Donaldson or Cranston did anything wrong," he said, contending that Mr. Thompson was offered immunity in exchange for his testimony. "They are resting their whole case on Mr. Thompson, who, in my opinion, is fabricating a lot of things to keep himself from going to the federal penitentiary."

Neither Mr. Collins, Ms. Collins, who is now president of St. Catharine College in Kentucky, nor Mr. Thompson, could be reached for comment. However, in a 1988 interview, Ms. Collins said that her husband did nothing wrong and that solicitations of campaign contributions and investment partnerships did not influence policy decisions during her administration.

Kathy Conroy, a spokeswoman for Donaldson, said that her firm has been cooperating fully with the grand jury and is aware of the indictments but denies any wrongdoing. "It would be absolutely incorrect to say that we were coerced into making any illegal payments to get bond contracts. That would go completely against the grain of the way we do business here," she said.

Officials who worked for now-defunct Cranston Securities could not be reached for comment.

The indictment alleges that Mr. Collins told officials at Donaldson Lufkin in October 1983 that they must contribute $25,000 in political contributions to be considered for state bond work.

Following contributions from Donaldson of $12,000 to the state Democratic Party and $13,000 to Martha Layne Collins's inaugural committee - and meetings between Mr. Collins and senior vice president William Johnston and managing director Joseph Harcum - Mr. Collins then "instructed" Mr. Thompson that Donaldson would be named senior manager on a $300 million Kentucky Turnpike Authority bond issue, the indictment said.

In August 1984, Mr. Collins told Mr. Thompson to appoint Donaldson senior manager of a $100 million Kentucky Housing Corp. bond issue and Cranston Securities as comanager of that bond issue, according to the indictment.

Between September and November 1984, the indictment said, Mr. Collins directed Robert Kanuth Jr., then chairman of Cranston Securities to buy a $100,000 thoroughbred horse partnership and officials at Donaldson to invest $700,000 in various horse partnerships.

In December 1984, according to the indictment, Mr. Collins obtained $35,215 from Donaldson to pay for a custom-built grand piano for then Gov. Collins, "in exchange for the awarding of contracts."

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