No Quick End Likely for U.S. Probe of Bradley : Mayor: Financial records subpoenaed by a federal grand jury cover all of his controversial dealings in recent years and the investigation could take months.

TIMES STAFF WRITERS

A federal investigation into Mayor Tom Bradley's financial dealings could continue for six months or longer before a decision is made on whether to charge him with any criminal misconduct, a government official familiar with the probe has told The Times.

Even if the pace of the investigation is accelerated because of pleas from Bradley and his lawyers to conclude it as quickly as possible, the federal official said it is doubtful that investigators can finish their work until early next year.

That rough timetable comes as investigators are just beginning what is expected to be a lengthy examination of financial records detailing Bradley's business ties to eight banks and savings and loan associations, and brokerage firms.

The financial records--subpoenaed last month by a federal grand jury as part of an investigation by the U.S. attorney's office and the Justice Department--cover all of Bradley's controversial dealings in recent years, from serving as an adviser to a bank doing business with the city, to his relationship with Drexel Burnham Lambert Inc., a brokerage firm that sold him junk bonds.

While the grand jury probe of Bradley has been surrounded by an unusual degree of secrecy from most government officials, sources said one major focus of the investigation is to determine whether Bradley's substantial stock and bond purchases may have violated federal insider trading laws.

The wide-ranging sweep of last month's subpoenas, however, has made it clear that federal officials are not limiting their investigation to possible insider trading violations, but also are exploring whether Bradley may have violated other federal laws specifically aimed at political corruption.

Under scrutiny in the continuing probe are Bradley's service as an $18,000-a-year adviser to Far East National Bank in 1988 and his appointment to the board of directors of Valley Federal Savings & Loan, as well as his relationships with Abraham Spiegel, chairman of Colombia Savings & Loan Assn., and investment broker Ira Distenfield.

The federal investigation of Bradley, which began last spring, showed little movement until the completion last month of an investigation by City Atty. James K. Hahn. The city probe concluded there was insufficient evidence to prosecute Bradley on any state conflict-of-interest charges.

Federal authorities have since emphasized moving forward with their own investigation. The Times was told last week by a federal source that FBI officials in Washington had urged their counterparts in Los Angeles to speed up the probe because of Bradley's position as mayor of one of the nation's largest cities.

Dismissing the issuance of grand jury subpoenaes as a "routine step" and proclaiming his innocence of any wrongdoing, Bradley called on federal officials earlier this month to conclude the investigation as "expeditiously as possible" to prevent any further damage to his reputation. His lawyers made a similar plea, citing the city's need to "put this behind the mayor."

Attorney Stephen D. Miller, representing Bradley in the federal probe, declined comment last week on the predictions that the grand jury investigation could last much longer than Bradley had hoped. Miller also has strongly urged a quick conclusion of the investigation, expressing confidence that Bradley eventually will be cleared of any criminal misconduct.

The grand jury used by the U.S. attorney's office in gathering records relating to Bradley is also investigating the financial dealings of former House Majority Whip Tony Coelho (D-Merced), The Times has learned. Both investigations are being supervised by the U.S. attorney's office and the Justice Department's Public Integrity Section.

While the use of grand juries to obtain indictments is constitutionally required in all federal felony cases, ex-prosecutors said grand juries themselves are little more than a tool for federal prosecutors in subpoenaing documents and compelling witnesses to testify. U.S. officials said it is rare for a grand jury to contradict a prosecutor on whether to indict.

In the Bradley investigation, according to several leading former prosecutors and defense lawyers interviewed by The Times, one of the biggest obstacles confronting the federal government in the investigation will be establishing whether Bradley had any criminal intent or knowledge of criminality to violate securities statutes or any other federal laws.

One area of investigation, for example, is Bradley's trading in high-yield bonds through Drexel Burnham Lambert. While the government is seeking to determine if there is any pattern of insider knowledge to Bradley's dealings, lawyers familiar with such investigations say proof may be difficult to obtain and that such investigations frequently do not lead to indictments.

Apart from possible securities trading violations, the government, sources said, is reviewing the gamut of Bradley's financial dealings to ascertain if any other federal laws have been violated.

"I get the feeling that they are going slow because they want to look at everything," one source familiar with the case told The Times. "That way, if they do close it out eventually without indicting, they won't be accused of having overlooked any possibility."

Legal experts say prosecutors in previous political corruption cases have relied on relatively few federal laws, among them the Hobbs Act, the mail fraud statutes and the Racketeer Influenced and Corrupt Organizations Act.

G. Robert Blakey, a University of Notre Dame law professor who helped write the RICO Act, said it has been used to prosecute corrupted officials when the government can establish a "pattern of racketeering" based on at least two criminal acts. But Blakey stressed that there has to be proof of criminal intent.

"The thing that protects an honest public official is that he has to act in bad faith to be indicted," Blakey said. "Using bad judgement is not enough."

Some prominent Los Angeles lawyers, who asked not to be identified, said that among Bradley's financial activities, those most likely to raise questions--particularly of personal judgement--involve the mayor's work as an adviser to Far East National Bank in 1988 and his possible links to a $2-million deposit of city funds with the bank early this year.

The same lawyers, however, said they are not sure if there are any applicable federal laws covering the Far East situation other than the Hobbs Act, which was enacted to combat flagrant extortion by corrupt unions. It was successfully used in 1969 to convict Newark Mayor Hugh Addonizio in an extortion plot involving kickbacks from a contracting firm.

The Hobbs Act states that the term "extortion" means the obtaining of property from someone by "actual or threatened force, violence, or fear, or under color of official right."

That definition would appear to limit the law's applicability in the Bradley case. But Blakey said a series of cases have established that a public official can be guilty of extortion if he takes money from someone even though no threats have been made.

In the case of Far East National Bank, City Treasurer Leonard Rittenberg deposited $2 million of city funds in the bank, without competitive bidding, after receiving a telephone call from Bradley. Although Bradley was a paid adviser to the bank at the time, both he and Rittenberg have denied that the mayor attempted to influence the investment decision.

The federal laws most commonly used to prosecute political corruption cases have been the mail fraud statutes. A 1987 Supreme Court decision, however, struck down the law's use in political corruption cases. A law passed last year by Congress to reinstate the mail fraud statutes cannot be used to prosecute acts that occurred before Nov. 18, 1988.

Bradley said he terminated his relationship with Far East on Dec. 31, 1988, but did not return the $18,000 he had been paid by the bank until March 23 of this year.

Former Chief U.S. Atty. Richard E. Drooyan, who successfully prosecuted Orange County businessman W. Patrick Moriarty and a dozen political and business figures in one of California's major political corruption scandals, relied heavily on mail fraud statutes at the time. But he expressed doubt that they or other statutes would be useful in the Bradley case.

Drooyan said that federal courts have interpreted the Hobbs Act to encompass the bribery of a public official as well as extortion. But he noted that a 1988 decision by the U.S. 9th Circuit Court of Appeals raised the standard of proof required to show the public figure offered some inducements to obtain a bribe.

In view of that decision, Drooyan, who is now in private practice, said:

"I would be less confident of using the Hobbs Act to prosecute public corruption in California now. . . . Using the federal statutes, I think it is extremely difficult to prosecute public corruption in California, which is not under-the-table cash bribery, which you have in Chicago or other Eastern cities."

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