Dusty HUD Probe Making Plodding Progress in Courts : Track record for convictions in the Reagan era scandal is unspectacular so far. But two biggest trials begin soon.

WASHINGTON —  In a remarkably quiet investigation over the last three years, an independent federal prosecutor sifting through the ashes of a Ronald Reagan-era domestic scandal has obtained the convictions of nine people and one corporation and secured almost $2 million in criminal fines.

Unlike the Iran-Contra affair, which was the Reagan Administration’s worst foreign affairs scandal, the inquiry into fraud and influence-peddling at the Department of Housing and Urban Development has attracted scant public attention as the independent counsel, former federal judge Arlin M. Adams, shuns the spotlight to go about his work.

Defense attorneys are scornful of Adams’ prosecutorial record so far, noting that most of his convictions have resulted from plea bargains. Such convictions are not uncommon, however, in long investigations.

So far, two trials have resulted in just three convictions, all for the payment of “illegal gratuities.” But the three defendants, tried together, were cleared of more serious charges of bribery, conspiracy and wire fraud.

The most prominent among them is Lance H. Wilson, a one-time chief assistant to former HUD Secretary Samuel R. Pierce Jr. and later a private consultant. Wilson was convicted of only one of 22 counts of influence-peddling brought against him.

In another proceeding, a Connecticut lawyer and real estate developer, Victor Cruse, was tried and acquitted on charges of perjury and obstruction of justice.

It is still an open question whether Pierce will be charged with any crimes.

Adams, who has refused to give interviews, has suggested in statements that his court-appointed investigation, which began March 2, 1990, is far from over. He says it “illuminates how, during the 1980s, HUD programs that were designed to aid the poor were instead used to enrich certain former HUD officials and developers.”

Congressional hearings in 1989-90 aired allegations that top HUD officials in the Reagan Administration awarded millions of dollars in grants to private developers with Republican connections, who, in some cases, made payoffs. As the hearings went on, then-Atty. Gen. Dick Thornburgh, under prodding from Congress, asked a federal appeals court to select an independent counsel to investigate wrongdoing, and the court selected Adams, a former Philadelphia judge.

Aided by FBI agents and a federal grand jury, Adams is examining evidence of influence-peddling, political favoritism, fraud and bribery involving former HUD executives and private businessmen.

The two biggest trials are to start this summer. The first involves Thomas T. Demery, once HUD’s No. 3 official. Demery is charged with 19 counts of obstruction and false statements for allegedly steering $15-million worth of HUD loan subsidies to a Michigan developer who, in turn, gave Demery a $100,000 second mortgage on very favorable terms.

The second trial will involve Deborah Gore Dean, Pierce’s executive assistant and alter ego, who is under indictment on 13 counts. She allegedly funneled millions of dollars in federal grants to favored contractors and then lied to Congress about her conduct.

Both Demery and Dean have pleaded innocent, and if previous court proceedings are any indication, federal prosecutors may have difficulty convicting them.

The scandal’s most recent major trial, featuring Wilson, did not go well for Adams. The prosecution’s star witness, DuBois Gilliam, who had leveled serious charges against Pierce and other former HUD officials at the congressional hearings three years ago, all but collapsed under cross-examination once he got into a federal courtroom.

Gilliam, himself a former HUD official who pleaded guilty to bribery and conspiracy, admitted so many other crimes and lies that prosecutors were shocked and disheartened.

The government’s heavy reliance on Gilliam practically guaranteed Wilson’s acquittal on 21 of 22 charges, legal experts said. Wilson’s only conviction as a private consultant was for providing Gilliam a free trip to New York, which was documented.

Whether Pierce ultimately will be charged by Adams remains a matter of conjecture. Gilliam was Pierce’s chief accuser before a House subcommittee, and if the testimony is not corroborated by others, it will have little value.

“The policy while I was at HUD dealt explicitly with political favoritism,” Gilliam told congressmen. Both Demery and Dean were in positions to know the truth of such allegations, but both have protested their innocence--as has Pierce.