In what a federal prosecutor described as "a dark picture of greed," E. Robert Wallach was accused Friday of defrauding Wedtech Corp. of more than $500,000 in a scheme to influence former Atty. Gen. Edwin Meese III and other government officials to help the now-bankrupt defense firm.
In opening arguments at the trial of Wallach and two co-defendants on fraud and racketeering charges in U.S. District Court in Manhattan, prosecutor Baruch Weiss told jurors that Wallach, a longtime friend and one-time lawyer for Meese, "agreed to be Wedtech's mole in the federal government."
At one time, Wallach urged Meese to appoint him solicitor general of the United States so he could begin burrowing in, Weiss said, and was paid $300,000 by Wedtech even though the appointment was never made.
Wallach's lawyer, Gary Naftalis, belittled the government's case as relying on testimony from former officers of Wedtech whom he described as "admitted liars, admitted thieves, admitted perjurers, admitted swindlers and admitted con men" who struck a deal with prosecutors in return for lenient treatment of their own crimes against the company.
Meese's former financial adviser, W. Franklyn Chinn, 47, and a Chinn-Wallach associate, Rusty Kent London, 46, also schemed to bilk Wedtech, Weiss said. They are charged with helping Wallach conceal some Wedtech payments and with receiving $1.3 million from the firm in bribes and fraudulent consulting fees.
The trial, expected to run two to three months, is the sixth corruption case growing out of the activities of Wedtech.
Once a small South Bronx machine shop, Wedtech grew into a $100-million government contractor through a special Small Business Administration program that set aside contracts without competitive bidding for minority-controlled companies.
In previous cases, prosecutors have maintained that Wedtech continued to receive the no-bid contracts even after it ceased being a minority-owned company, through a series of bribes to numerous officials.
Last summer, an independent counsel decided against prosecuting Meese for steps he took on behalf of Wedtech as well as other allegations growing out of his ties to Wallach. Meese has been subpoenaed by prosecutors in the Wallach case, but it is not known whether he will be called to testify.
Wallach, 55, a San Francisco personal injury lawyer, has been close to Meese since they met as students at UC Berkeley's Boalt Hall Law School.
Weiss, at times lowering his voice to a near-whisper as if to dramatize for the seven-woman, five-man jury the conspiratorial nature of Wallach's activities, contended that Wallach arranged to be paid by Wedtech primarily to influence Meese and other government officials.
In September, 1983, Weiss said, Wallach billed and received from Wedtech $125,000 "for services he supposedly performed in connection with the company's going public (with its stock)." This is a highly complex legal area, and "one that Wallach knew very little about," the prosecutor said, adding that Wallach "concealed the fact that he was really getting paid for exercising political influence."
In 1984, Wallach was confident that Meese would be confirmed as attorney general and was "very ambitious" about landing a federal post himself, Weiss said. But, realizing that as a federal official he would not be able to accept money from Wedtech for lobbying, Wallach entered into a secret agreement with the company to be prepaid $300,000 for 1985 and 1986 when he expected to be holding a high-level job under Meese, Weiss said.
He submitted "another false invoice" charging Wedtech $300,000 for work he "supposedly did" in connection with the company's 1984 purchase of a Michigan shipyard, when actually he "did nothing or virtually nothing," Weiss told the jurors.
Naftalis countered that Wallach had performed "honest, lawful work" for the fees and said the former Wedtech officers who will testify for the prosecution had made "the deal of the century" and have escaped punishment for "99% of the crimes" they committed.
The convicted Wedtech officials "falsely accused Bob Wallach because he was the big, visible public prize . . . that no aggressive prosecutor could resist," Naftalis said.
Former Rep. Mario Biaggi (D-N.Y.), his son and four others were convicted last summer of corruption charges that they turned Wedtech into a racketeering enterprise. Former White House aide Lyn Nofziger was convicted last year of illegal lobbying on behalf of Wedtech.