‘Scandal’ Threatens Chicago Drug Convictions : Law: A federal judge accuses U.S. prosecutor of misconduct, throws out guilty verdicts against three alleged members of the El Rukns empire.

In an action that undermines the convictions of dozens of members of a once-formidable Chicago narcotics empire, a federal judge Friday threw out guilty verdicts against three alleged drug dealers because of what he described as “a scandal” of misconduct and suppression of evidence by a government prosecutor.

Federal District Court Judge James F. Holderman angrily accused the chief prosecutor in the government’s offensive against the El Rukns drug organization of failing to investigate reports that key witnesses in cases against 65 El Rukns regularly used narcotics inside government facilities and engaged in sexual relations with friends and relatives inside prosecutors’ offices.

In a scathing 136-page ruling, Holderman chastised Assistant U.S. Atty. William Hogan Jr. for allowing several federal witnesses in the El Rukns case to “continue their illegal drug use after he became personally aware of it” and to “use offices under his control for (sexual) contact and conjugal visits.”

Holderman said he found credence in reports that federal witnesses regularly smuggled cocaine and heroin into a detention area, had sex in prosecutors’ offices and were given access to beer, money and other amenities by prosecutors.

Holderman also said he believed tapes that indicated a federal paralegal smuggled contraband into jail for one witness and had sexually explicit telephone conversations with witnesses.

The decision was a stinging rebuke to Hogan, a rising prosecutor whose apparent success in torpedoing the El Rukns organization led former U.S. Atty. Gen. William P. Barr to send him to Los Angeles last year to aid prosecutors in their war on the Crips and Bloods street gangs.

Hogan is now being investigated by the Justice Department and could also face an ethics investigation.

The El Rukns, who grew from a South Side street gang into a major drug distribution network, dominated Chicago’s criminal activities for more than 20 years until federal efforts began splintering their organization in the mid-1980s.

As a result of Holderman’s ruling, many of the 37 convictions and 16 guilty pleas already won by the government against El Rukns defendants are in danger of being declared mistrials, said defense lawyers involved in the case.

One defense attorney, Richard S. Kling, said “umpteen” other state and federal criminal cases may also be endangered because of the role Hogan and El Rukns witnesses played in their outcomes.

He added that prosecutors may be unable to retry any El Rukns defendants who win mistrials because of laws barring the government from launching new trials if the initial cases are aborted because of prosecutorial misconduct.

Only the fact that many of the 65 defendants charged in the El Rukns cases are already imprisoned on other charges will prevent them from being released if the government’s cases evaporate.

“There’s no reason for the public to panic and lock their doors,” Kling said.

Justice Department officials were cautious in their public reaction to Holderman’s ruling. Michael J. Shepard, the acting U.S. attorney in Chicago until a permanent replacement is named for former U.S. Atty. Fred Foreman, said he was “saddened” by Holderman’s decision to grant defense motions for the three mistrials.

John Smietanka, a U.S. attorney from Grand Rapids, Mich., who has been appointed to oversee the El Rukns cases, said he has not decided whether to appeal Holderman’s ruling.

Hogan, a veteran prosecutor who worked in Seattle before joining the Chicago office, could face an Illinois Bar Assn. disciplinary hearing for his actions.

James J. Grogan, chief counsel for the state’s Attorney Registration and Disciplinary Commission, said Friday that staff members had been sitting in on Holderman’s hearings, although he declined to say if Hogan was a specific target of inquiry.

Several sources close to the case said a probe by the FBI and the Justice Department’s Office of Professional Responsibility into the El Rukns affair could result in criminal charges if investigators conclude, as Holderman did, that “Hogan suppressed (evidence) in bad faith to improve . . . the government’s chances of victory.”

Two other federal district judges in Chicago, Marvin E. Aspen and Suzanne B. Conlon, also conducted hearings into the El Rukns cases. Aspen grew so concerned that he took the rare step of appointing former U.S. Atty. Thomas P. Sullivan as a “friend of the court” to interrogate Hogan and other witnesses to learn how deeply the El Rukns cases may be tainted by prosecutorial misconduct.

Several defense attorneys involved in the El Rukns case said Friday that the ruling comes as a major blow to the government’s anti-drug efforts, highlighting longstanding concerns that some law enforcement officials have been willing to go to almost any length to dismantle narcotics rings.

“They were so eager to get these guys they lost sight of the rules,” said Peter J. Schmiedel, who represents another El Rukns defendant before Conlon.

Times staff writer Ronald J. Ostrow in Washington and researcher Tracy Shryer in Chicago contributed to this story.