Federal prosecutors yesterday dropped charges against a Fairfax County man in connection with the manufacture of $346,980 in counterfeit $2 bills in return for his guilty pleas to two drug charges.

Virgil H. Jewell, 49, an escapee from the U.S. prison at McNeil Island, Wash., pleaded guilty in U.S. District Court in Alexandria to inducing two women to travel from Colombia to Virginia with the intent to violate narcotics laws. He faces a maximum penalty of five years in prison and a $10,000 fine.

Jewell also pleaded guilty to using a telephone to facilitate a conspiracy to distribute cocaine. The maximum penalty on that charge is four years in prison and a $30,000 fine.

As part of his plea bargaining with prosecutors, Jewell is supposed to plead guilty Aug. 29 to the charge of escaping from a federal prison. The maximum penalty for a prison escape is an additional five-year term and a $5,000 fine. Jewell did not plead guilty to the escape charge yesterday because papers from Washington had not arrived, according to Assistant U.S. Attorney Thomas K. Berger.

In the same case, Robert S. Horning, 32, of 9015 Andromeda Dr. in Burke, pleaded guilty Thursday to two counts of using a telephone to further a narcotics conspiracy to distribute cocaine. Together the charges carry a maximum sentence of eight years in jail and a $60,000 fine.

Other drug and counterfeiting charges were dropped against Horning and Jewell in return for their guilty pleas.

Jen Martinez, 22, who is married to Jewell under a marriage certificate where both used aliases, will have charges of conspiracy, harboring a federal fugitive (Jewell) and two counts of manufacturing heroin dropped Aug. 29, if Jewell pleads guilty to the escape charge, Berger said.

"This young lady is certainly getting all the blessings in the world," U.S. District Court Judge Oren R. Lewis said. "She ought to be thankful nothing happens between now and the 29th. I don't think anything will."

Jewell and the others were arrested June 2 at the Andromeda Drive address by federal narcotics agents and Fairfax County police. Police said they unexpectedly found. In addition to cocaine, marijuana and heroin, the bogus money - in a garage attached to the house. They also found a printing press, green and black inks and other printing equipment designed to add serial numbers and seals to the counterfeit bills.

Prosecutors have said the counterfeit was to be used to buy drugs in Columbia.

Sentencing for Jewell and Horning is scheduled Sept. 9.