A Howard County lawyer has been indicted on charges of receiving a $7,500 legal fee from funds he allegedly knew were embezzled by a client from the Columbia Association, the organization of residents that helps govern the new town of Columbia.

The accused man, Timothy Welsh, vice president of the Howard County Bar Association, had been attorney for Walter J. Davis, who admittedly last spring embezzling $195,416 over a period of more than three years from the Columbia Association.

Davis pleaded guilty in June to one count of larceny after trust and was sentenced in November to five years in prison.

The Davis case and its aftermath have generated considerable controversy inside the closely knit Howard County Bar Association, which has fewer than 100 members. Welsh reportedly has been nominated to be the association's next president.

According to Deputy Howard County State's Attorney Ron Spahn, Davis and Welsh sought to have State's Attorney Charles Wehland held in contempt "because of some publicity they alleged he caused."

Wehland asked the Circuit Court to appoint an outside prosecutor to determine whether a member of the county bar was implicated in the Columbia Association scandal, Spahn said.

Appointed special prosecutor last summer was Joseph Keil, a Baltimore County Lawyer who formerly headed the U.S. attorney's organized crime "strike force" in Baltimore."

Keil later resigned. He said yesterday he did so partly because of an outcry from the bar association that he had been handpicked by the state's attorney. He said he wanted to "maintain the appearance and the substance of fair play."

Charles O. Fisher Jr., a lawyer from Westminster in Carroll County, was then named by Chief County Circuit Judge James MacGill to replace Keil as special prosecutor.

Fisher dealt with the county grand jury that Monday indicted Welsh on two counts of receiving stolen goods, one of conspiracy to violate the law and one of being accessory after the fact to larceny after trust.

Welsh is free on his own recognizance pending trial. Davis also is free while appealing his five-year prison sentence. Neither Welsh nor Davis could be reached for comment yesterday; Welsh's secretary said he would have no comment.

Davis has maintained he acted alone in the embezzlement. He told the Columbia Association president in a letter a year ago he would make a full restitution, which he estimated would take him 15 years.