Ex-HUD Employee Absolved : Pacoima: The man worked on a rent plan involving apartments that he later was hired to manage. Officials find no violation of ethics laws.

Following an eight-month investigation, the U. S. attorney’s office has decided not to prosecute a former federal housing employee suspected of violating ethics laws in his professional relationship with the owner of a San Fernando Valley housing project.

“We have determined that there is no merit to the allegations of misconduct,” Lourdes G. Baird, who was the U.S. attorney for the Los Angeles area when the decision was made, said in an Aug. 21 letter to Rep. Howard L. Berman (D-Panorama City).

Baird had asked the inspector general of the U.S. Department of Housing and Urban Development to look into the actions of Michael S. Damron, who left HUD in January, 1991, and became the manager of the low- and moderate-income Lakeview Terrace Apartments in Pacoima. Shortly before taking the new job, Damron, a mid-level HUD employee, worked on a HUD-approved package of rent increases and other benefits to the owner.

Baird, formerly the federal prosecutor for the central district of California who has been sworn in as a U.S. district judge since the decision, said that her determination was based on a review of the inspector general’s inquiry.

“We took it seriously,” said Assistant U.S. Atty. George B. Newhouse Jr., deputy chief of the Public Corruption and Government Fraud Unit who worked on the investigation. “It was not just a pro forma situation. . . . Interviews with persons who had knowledge of the facts were conducted.”

Berman requested the investigation after the publication of a story by The Times last December that raised questions about possible violation of the federal ethics law. Berman, whose 26th District includes Pacoima, provided a copy of Baird’s recent letter to The Times this week.

Damron said he was pleased with the U.S. attorney’s decision. “I agree with it,” he said Tuesday.

Richard Tod Spieker, a Palo Alto real estate developer who owns Lakeview Terrace Apartments and other properties, did not return phone calls.

Efforts to obtain reaction from HUD Tuesday were also unsuccessful.

They also denied charges by tenant leaders that the department had failed to protect tenants’ interests at the apartments. Many tenants experienced steep rent increases in 1991 despite longtime maintenance problems.

A former legal aid attorney who worked with tenants at Lakeview Terrace said they were disappointed with the finding. Tenant activists had been critical of Damron’s job switch, which they maintained violated “revolving-door” rules.

The law prohibits a federal employee who is negotiating for a job with a private business from participating in government matters involving that business. It also bars a former federal employee from representing a private employer in any government matter in which the employee had participated substantially while on the government payroll.

“It’s just reflective of the liberalization of revolving-door policies that we’ve seen over the last decade,” said Pamela Brown, who represented Lakeview Terrace Assn. tenants for the San Fernando Valley Neighborhood Legal Services for three years before leaving July 31.

“But even more important are the low-income tenants of Lakeview Terrace, who have lost any sense of oversight of their owner by HUD and any faith that their tax dollars are going to ensure decent, safe and sanitary housing.”