Tapes of Cisneros, Ex-Girlfriend Probed : Investigation: Justice Dept. studying allegations that HUD secretary may have misled FBI before his appointment. Inquiry may lead to special counsel.

The Justice Department is reviewing tape recordings made secretly by HUD Secretary Henry G. Cisneros’ former lover to determine whether to open a formal inquiry that could lead to appointment of a special counsel to look into allegations she has raised against him, officials said Thursday.

Sources said the investigation centers on accusations made by Linda Medlar that Cisneros may have misled the FBI before his appointment as secretary of Housing and Urban Development. The statements at issue dealt with the extent and nature of financial payments he made to her after their affair ended in a public scandal in 1988.

If the inquiry leads to the appointment of a special counsel, it would become the third such special investigation now aimed at the Administration. Special prosecutors are currently conducting one probe directed at President Clinton’s personal investment in the Whitewater resort development in Arkansas and another focusing on allegations that Agriculture Secretary Mike Espy took prohibited gratuities from businesses regulated by his department.

Cisneros’ attorney, Seagal Wheatly of San Antonio, said in an interview that the secretary welcomes the Justice Department inquiry and expects it will lay to rest the specter of wrongdoing that Medlar has generated by filing suit against Cisneros and by her sale of the taped conversations to the television show “Inside Edition.” The Justice Department is reviewing copies of those tapes, which were made available to news organizations by “Inside Edition.”

“We intend to fully cooperate as expeditiously as possible,” Wheatly said.

Although Cisneros has not yet been contacted by Justice or the FBI, Wheatly said, he and his client were questioned in detail last week about Medlar’s allegations by White House counsel Lloyd N. Cutler. He said Cutler was primarily interested in Medlar’s lawsuit alleging that Cisneros owes her money.

Cisneros could not be reached by The Times for comment Thursday, but he was quoted by the Associated Press as saying his payments to Medlar were not improper. “I don’t believe providing a person assistance can be called unethical, or that trying to help someone who said they needed work is unethical,” Cisneros said.

At a news briefing on Thursday, Atty. Gen. Janet Reno declined to comment when asked if the taped conversations conflict with what Cisneros told the FBI about the payments to Medlar. But Carl Stern, Reno’s chief spokesman, later issued a guarded, two-sentence statement acknowledging that Reno had directed her staff to look into the matter.

“The Ethics in Government law directs the attorney general to determine whether information received about a covered person alleging a violation of federal criminal law is specific enough and from a sufficiently credible source to warrant a preliminary investigation,” Stern said.

“The Justice Department has received information relating to material that was broadcast on the television show “Inside Edition” about Secretary Cisneros and is proceeding as the law provides.”

If Justice officials decide that the allegations against Cisneros meet the criteria spelled out in the law, officials said, the department’s public integrity section will conduct a full, 90-day preliminary investigation. Only after that investigation will Reno be required to decide whether to ask for the appointment of a special counsel.

Justice is known to be focusing primarily on the credibility of statements that Cisneros made to the FBI during an investigation into his background before his appointment by Clinton in early 1993. But Wheatly acknowledged it is possible that investigators might also look into other allegations--such as Medlar’s claim that she also received money from prominent Texas Democrat Morris Jaffe, as a favor to Cisneros.

This is not the first time Cisneros’ romance with Medlar has caused him trouble. In 1988, during his fourth term as mayor of San Antonio, the affair became a matter of public knowledge and Cisneros held a press conference to acknowledge it.

After later reconciling with his wife, Mary Alice, Cisneros has said, he agreed to assist Medlar financially because the publicity generated by the affair had apparently destroyed her ability to earn a living. Cisneros also has acknowledged that he enlisted the help of Jaffe to find Medlar a job, but he insists he had no role in persuading Jaffe to loan Medlar $5,000--an action that could be construed as soliciting an indirect bribe.

In the taped conversations, Cisneros calls Jaffe a “savior” for helping her.

In her suit, Medlar contends that Cisneros reneged on a contractual agreement with her that he would provide her payments of $4,000 a month through 1999. In his response to the suit, Cisneros has said there was no such agreement, even though he did provide her with some money.

Medlar claims that Cisneros paid her a total of about $200,000 between 1990 and 1993, including about $50,000 after he became HUD secretary. Wheatly said Cisneros has no record of exactly how much he paid, but he does not quarrel with Medlar’s accounting.

Earlier this year, Cisneros said that none of the payments were made to Medlar after he assumed his position in the Cabinet. But Wheatly said Thursday that Cisneros misspoke on that occasion.

In the taped conversations, Cisneros said he told the FBI he did not know how much money he had paid her over the years.