Federal prosecutors have convened a special grand jury to hear allegations that controversial landlord Shao Ti Hsu and former U.S. senator Vance Hartke (D-Ind.) attempted to bribe a Prince George's County housing official last fall.
The grand jury, which has been meeting in Baltimore once a week since early this month, is listening to tape recordings secretly made by the housing official, Charles C. Deegan, during dozens of meetings and phone conversations with Hsu and Hartke over a period of several months, according to sources.
The tapes, which Deegan made at the request of FBI investigators, contain evidence that Hsu allegedly planned to buy several dilapidated apartment projects in Prince George's from the Department of Housing and Urban Development with Hartke as a partner, and that Deegan was offered a one-third share in the ventures -- or an estimated $7,000 a month -- in exchange for his help in getting county approval of the sales, sources said.
Both Hsu, a millionaire engineering professor at the University of Maryland whose apartment buildings in Maryland and the District have frequently been cited for code violations, and Hartke havea acknowledged meeting with Deegan. They have repeatedly denied offering him interests in their planned investments.
No one has yet been called to testify before the grand jury, and a vote on possible indictments is no expected for several months. Prosecutors are considering subpoenas for both Hsu and Hartke to testify, sources said.
The prosecutor handling the case, Assistant U.S. Attorney John McCall, refused to comment yesterday on reports of the grand jury's work.
Hsu, 63, was convicted twice recently on misdemeanor charges involving his management of the Emerson Gardens apartment project in Hyattsville. Hsu has appealed both cases.
Hartke, 60, who served served in the Senate from 1958 until 1976 and was chairman of the Veteran Affairs Committee, now works as a lawyer in the Watergate office complex.
The FBI investigation of Hartke and Hsu began in July 1979 after Hsu allegedly approached Deegan with his plan to buy baber Village, a condemned federal housing project in Seat Pleasant, and other projects, sourcss said.
After learning of the contact, the FBI enlisted Deegan's aid and he pretended to go along with the alleged scheme while tape-recording meetings with a microphone hidden on his body.
Deegan was an investigator for the county Landlord-Tenant Commission who had been detailed to the county's Department of Licenses and Permits. He reportedly worked to convince Hsu and Hartke that he could control the necessary county approvals needed before the the projects could be bought from HUD.
In one instance, county housing officials had revoked the rental license of Hsu's Emerson Gardens complex in Hyattsville for code violations, but then restored it. Although both actions were done in accordance with normal procedures, Deegan implied to Hsu that he had been responsible for having the license restored.
Among other tasks, Deegan was supposed to ensure that the county dropped its suit seeking demolition of Baber Village. In fact, several months after the investigation was disclosed, county and HUD officials agreed to tear the project down.
Deegan met with Hsu and sometimes with both Hsu and Hartke several times a week during the investigation, in several instances at Hartke's Watergate office, sources said. It was made clear during those discussions, sources said, that Hartke would own an interest in the properties, although he would not put up any cash for their purchase.
Hartke's principal role in the scheme, sources said, was allegedly to negotiate with HUD officials on the projects' sale. It was for that work that he allegedly was to receive a partnership interest from Hsu, FBI investigators said.