To read Judge Gerhard Gesell's decision, you'd think he was writing a scenario for a movie like "The Sting."

A Washington businessman trying to sell some tugboats in Nigeria turns to a professional money broker in Virginia to help him raise badly needed cash.

The Virginia money broker calls another money broker in Louisiana and together they make a plan: to use funds belonging to a big government employes' credit union as collateral for a loan for the businessman, without telling the borrower, the credit union or the bank making the loan what's happening.

If no one's the wiser, no one gets hurt. The credit union earns interest on its money, the bank makes a fully secured loan, the businessman gets the money he needs and the brokers split a $25,000 commission.

It almost worked. Both times.

How the plan failed twice -- to the tune of $700,000 -- and all the participants wound up in court is spelled out in a 23-page opinion issued last week by Judge Gesell in U.S. District Court for the District of Columbia.

Gesell decided that using Peter's money to pay Paul was not a fraud according to the legal definition, but he ruled that two Washington businesses illegally converted to their own use funds of Langley Federal Credit Union of Hampton, Va.

He said the credit union is entitled to collect the $700,000 that the businesses got, and he approved an out-of-court settlement with the money brokers and the two banks involved. Terms of the settlement were not disclosed.

The businesses -- the principal defendants in the case -- are American Marine Supply, the firm trying to sell the tugboats, and Shenandoah Management Corp., which was in the business of recovering coal from mine wastes. Although both are identified in court documents as District of Columbia corporations, neither is listed in local telephone books.

The decision identifies American Marine's president as Claude Geoffrey Hyde and its vice president as Bromley Keables Smith. Hyde and Smith were also vice presidents of Shenandoah; president of that firm was Dennis P. Bixler.

Gesell's ruling said officers of the two firms made separate arrangements to get business loans through two self-employed money brokers, Mrs. Linnie Harp, who is from Louisiana and James W. Rice, at that time in business in Virginia.

In each case, the judge said, the plan was to induce the credit union to purchase a large certificate of deposit from a bank, then use the Credit Union's CD as collateral for loans to the businesses.

In his decision spelling out the case like a movie script, Gesell said the two brokers tried to arrange the deal so the banks, the borrower and the credit union didn't know the full details of the arrangement.

The first incident, involving American Marine Supply, began in the summer of 1976. The company came to Rice seeking money and help in selling the tugboats. Rice called Harp, and hatched the plan.

Harp, whose business specialty was steering credit union investments into banks -- for a fee -- solicited the part-time investment committee of Langley Federal Credit Union about buying a $300,000 CD from Riggs National Bank of Washington. No mention was made of American Marine Supply.

The decision says Rice told AMS that the credit union would lend it $300,000 if the money were invested in a $300,000 certificate of deposit at Riggs.

The CD then could be used as collateral for a loan, the brokers told AMS president Hyde.

"Significantly, the strange nature of this proposed transaction -- using supposed loan proceeds to buy a certificate of deposit and effectively reborrowing on the same money, paying additional interest -- should have caused Hyde, an experienced businessman, immediately to question Rice's description of the arrangement," Gesell noted.

Hyde also should have known something was afoot when he was not asked to provide the usual financial statements or sign a note for the credit union loan, the judge pointed out.

To set the deal in motion, Harp -- who had advised the credit union on previous investments -- arranged for the credit union to wire $300,000 to Riggs on July 15, 1976. At Harp's direction, the money was sent -- with no specific instructions on its use -- to James F. Keating Jr., an assistant branch manager at Riggs.

The credit union thought it was sending money to purchase a CD, but Rice told Keating the money was coming for AMS. When the funds arrived, Keating ordered them placed in the AMS checking account.

Later that day, Hyde came to the bank, and said he wanted to buy a $300,000 certificate of deposit with the money and use the certificate as collateral on a loan of $225,000.

Gesell's ruling describes Michael C. Finnegan, the Riggs official who handled the request, as "perplexed" by Hyde's plan.

Riggs already had turned down AMS requests for smaller loans because the firm "lacked repayment capacity," and the company's need for borrowing $225,000 when it had $300,000 in a checking account was "commercially inexplicable," the judge noted.

Riggs turned down the loan, and Hyde later withdrew most of the money from the account, paid Rice and Hyde a $25,000 commission and signed a $300,000 note payable to the credit union. The note was not sent to the credit union, however, but was kept by the brokers. It would have been illegal for the credit union to lend money to the business because credit unions are allowed to make loans only to their members.

A month later, officials of the credit union realized their certificate of deposit had not been received, but assumed that Riggs was holding it for safe keeping.

About the same time -- August, 1976 -- a virtually identical arrangement was made for a $400,000 loan to Shenandoah Management, supposedly to be secured by a $400,000 certificate of deposit in Union First National Bank of Washington.

Credit union officials were told to wire their money to a Union First official with the account number 3-148-785. That turned out to be Shenandoah's checking account number.

Like Riggs, Union First -- which previously had rejected Shenandoah's loan applications -- turned down the collateralized loan plan.

The money then was withdrawn, with $32,000 paid to Rice as a commission to be split with Harp, and $368,000 was transferred to Columbia Commercial Mortgage, a firm owned by two Shenandoah officers, Smith and Bixler. The $368,000 later was reinvested in another firm. Shenandoah officers also signed a note payable to the credit union, but it too was retained by the money brokers.

The whole scheme came to light in the fall of 1976 when auditors made a routine check of the investments of Langley Federal Credit Union, which serves 30,000 government employes and dependents in Tidewater and has assets of $70 million.

The auditors couldn't find the two certificates of deposit that supposedly had been purchased on Harp's advice. A call to the bank disclosed the certificates were not being held there for safekeeping, and this discovery set off an investigation that led to the lawsuit.

Gesell's decision faulted virtually all the parties in the transaction, noting "there were many stages along the line where the end result could have been prevented had LFCU (Langley Federal Credit Union) been more businesslike, had Harp been more astute, had the banks been less careless, etc." A representative of the credit union said the institution expects to be able to collect the money from the two firms and their officers, but will lose thousands of dollars in legal fees.