Adviser Linked to Wedtech; Meese Quits Probe
Atty. Gen. Edwin Meese III has removed himself from any role in the Justice Department investigation of Wedtech Corp. after learning that a financial consultant with whom he invested about $60,000 is a possible target in the investigation of the defense contracting firm, a source close to the case said Friday.
Meese’s financial disclosure statement shows that he made the investment in May, 1985, with a firm run by W. Franklyn Chinn, a San Francisco consultant. About three weeks earlier, Chinn had become a financial adviser to Wedtech, the Bronx company that is now being investigated for allegedly seeking to obtain government contracts by giving illegal fees to local and federal officials.
The Chinn link raises to four Meese’s direct and indirect links with Wedtech, which is at the center of local and federal corruption investigations involving the fee allegations.
May Cancel Investment
Terry Eastland, a spokesman for Meese, confirmed that the attorney general had removed himself from any role in the Wedtech investigations being directed by New York federal and local prosecutors. He said Meese is also considering withdrawing his investment with Chinn to avoid any appearance of conflict of interest.
Eastland cited the “irony” that Meese and his wife, Ursula, had sold stocks in several well-known companies and invested the funds with Chinn to satisfy a pledge to the Senate Judiciary Committee that he would enter into a limited blind trust to avoid any possible conflict of interest.
Under terms of the “limited blind partnership,” Meese does not know whether Chinn invested any of his funds in Wedtech, Eastland said. He added that the attorney general had not known of Chinn’s ties to Wedtech. On Thursday, Newsday reported Meese’s latest known ties to Wedtech, disclosing his investment in Financial Management International Inc., the financial consulting firm that Chinn heads.
Nofziger Inquiry
Late last year, the attorney general took himself out of an investigation of possible conflict of interest by Lyn Nofziger, President Reagan’s former political adviser, for steps Nofziger took on Wedtech’s behalf after leaving the White House. An independent counsel now is investigating actions by Nofziger, who worked alongside Meese at the White House during Reagan’s first term.
Meese removed himself from the question of whether to seek appointment of an independent counsel because of his friendship with Nofziger.
The attorney general has acknowledged that, while serving as Reagan’s counselor, he received about six memos from his longtime friend and attorney, E. Robert Wallach, about Wedtech’s 1982 efforts to obtain a no-bid Pentagon contract. Wallach worked as a Wedtech attorney, receiving close to $500,000 from the firm in 1983 and an undisclosed cash retainer.
In addition, Meese’s White House office was instrumental in obtaining a review by the Army of difficulties that Wedtech contended it was having in seeking the no-bid contract. Meese said that he was interested only in seeing that the company received fair treatment and that he had taken similar actions for other firms “dozens of times.”
Aide Joined Wedtech
In a related action, Meese’s former deputy at the White House, James E. Jenkins, held a May, 1982, meeting to resolve a contract dispute involving Wedtech, the Small Business Administration and the Army. Jenkins later went to work for Wedtech as its Washington marketing director.
Wallach did not return a reporter’s calls Friday, and Chinn’s attorney, Chris Arguedas of Berkeley, said she had been told by federal prosecutors in New York that her client is a subject, not a target, of an extensive investigation into Wedtech, which filed for bankruptcy last December.
According to the U.S. attorney’s manual, a “subject” is an individual whose conduct is within the scope of the grand jury’s investigation, and a “target” is a person against whom there is substantial evidence linking him to a crime.
Received Stock Option
Chinn signed an agreement with Wedtech on April 30, 1985, under which he was given an option to buy 75,000 shares of Wedtech common stock at $9.25 a share when it was selling at $14, according to Wedtech documents at the Securities and Exchange Commission. After becoming a Wedtech director four months later, he received additional options for more than 37,500 shares of the company’s common stock.
It could not be learned whether he exercised the options or whether he invested any of Meese’s funds in the firm.
Arguedas, in a telephone interview, said that Meese learned of Chinn through Wallach and that Wallach had brought Chinn into contact with Wedtech.
Two prominent Maryland politicians, former state Sen. Clarence M. Mitchell III and his brother, state Sen. Michael B. Mitchell, have been indicted for taking Wedtech fees to allegedly head off a congressional investigation of the firm.
In addition, former Bronx Borough President Stanley Simon has been indicted on federal charges of extorting cash and other benefits from Wedtech. And Reps. Mario Biaggi and Robert Garcia, both New York Democrats, are being investigated for allegedly receiving improper Wedtech payments.
