Imelda Marcos Launches Her Defense--Alongside the Specter of a Dead Dictator : Conspiracy case: Jury selection starts next week. Late husband of the former Philippine First Lady is expected to have a key influence on the trial.

Imelda Marcos, dressed in mourning black and clutching Rosary beads, launched her defense against fraud and racketeering charges Friday alongside international financier Adnan Khashoggi and the ghost of her late husband, exiled Philippine President Ferdinand E. Marcos.

The courtroom of U.S. District Judge John F. Keenan was packed with press and spectators trying to see the woman known in her homeland as “the Iron Butterfly” and the Saudi Arabian businessman and arms dealer once regarded as “the world’s richest man.”

But it was the specter of a dead dictator that promised to have the greatest influence on the trial that opens with jury selection next week. Central to the case of chief federal prosecutor Charles LaBella is an alleged criminal conspiracy in which the deposed President, in life, played the key role.

“He’ll be on trial. He’s the heart of the government’s case,” said a lawyer, and former federal prosecutor, familiar with the case.

And defense attorneys, reluctant to discuss trial strategies, nonetheless acknowledge that the ghost of Ferdinand Marcos poses a significant legal problem to his accused widow.

Gerry Spence, Mrs. Marcos’ flamboyant Wyoming attorney, said that in addition to defending the former First Lady, he will fight to clear the name of the dead President--apparently setting aside any plan to assert what some call “the ignorant, innocent wife” defense.

“She wants her husband defended in life or in death,” Spence said in a telephone interview.

Mrs. Marcos, 60, is charged with conspiring with her late husband to loot the Philippine national treasury of more than $100 million and using it to secretly purchase New York real estate. Among the choice properties were the Crown Building on 5th Avenue and a Wall Street skyscraper.

They also were accused of fraudulently borrowing $165 million from American banks, including Security Pacific National Bank, to refinance the buildings and make additional purchases.

The 90-page federal indictment outlines a plot involving embezzlement, bribes, kickbacks and forged documents starting about September, 1972, when Marcos seized dictatorial control of the Philippine government and continuing beyond February, 1986, when the couple were forced into exile by a popular revolt.

According to the government, Khashoggi acted as a front for the Marcoses, helping to conceal the Marcoses’ true ownership of New York properties with allegedly forged and back-dated legal documents and false claims that he owned the buildings.

Khashoggi also is accused of trying to sell art for the Marcoses that allegedly belonged to the Philippine national museum. Millions of dollars in fine art in Khashoggi’s possession was seized by French authorities and turned over to U.S. prosecutors nearly two years ago.

Late Friday, the defense teams suffered a setback when an attorney for Los Angeles-based California Overseas Bank, the sole corporate defendant in the case, entered a guilty plea to wire fraud charges.

Donald Smaltz, the lawyer for the bank, told the court that fictitious accounts were set up in the bank from 1977 to 1986 to funnel money from the Philippines, an admission that could undermine the Marcos defense.

Judge Keenan indicated that the bank could face a possible fine of $500,000 at sentencing on April 23.

The bank, which prosecutors charge was secretly owned by Marcos, was established by Roberto Benedicto, one of Marcos’ closest friends and business cronies. He was chairman of the bank when federal grand jury indictments were issued in 1988, but he fled U.S. jurisdiction before he could be arrested.

Benedicto remains a fugitive, along with several other Marcos and Khashoggi associates. Earlier this month, Rodolfo T. Arambulo, former president of the bank, pleaded guilty and agreed to cooperate with prosecutors. Attorney Smaltz said the bank’s current management was not involved in the illegal transactions.

Friday’s pretrial hearing dealt with jury selection procedures and exchanges of evidence. During the hearing, Spence complained that the Marcoses have received so much unfavorable publicity that his client already “has been tried and convicted in the press.”

In the phone interview, Spence questioned the U.S. government’s right to prosecute former heads of state and condemned what he called “a sort of underlying hunger--a sort of drool--to do in another big and powerful person.”

Mrs. Marcos, appearing nervous and upset as Spence argued that she may not be able to get a fair and impartial jury, frequently dabbed her face with a tissue. Her son, Ferdinand (Bongbong) Jr., sat nearby.

It was Mrs. Marcos’ first court appearance with Khashoggi, who wore a blue suit and the electronic surveillance bracelet that was required as a condition of his $10-million bail. She has been free on $5-million bail.