Federal prosecutors today outlined at a bail hearing for arrested State Sen. Tommie Broadwater Jr. (D-Prince George's) what they said was a novel scheme by Broadwater and three other men that employed a defunct Washington funeral home and a taxi that carried no passengers to redeem $70,000 in improperly obtained food stamps.

Broadwater, who has spent no time in jail since his arrest Sunday on charges of trafficking illegally in food stamps, sat silently with the other defendants at the hearing before U.S. Magistrate Paul M. Rosenberg as Assistant U.S. Attorney James P. Ulwick described the government's case. Ulwick charged that the four conspired to obtain thousands of food stamps in exchange for cash and drugs from an undercover Secret Service agent posing as a food stamp thief. Ulwick added that Broadwater was not observed handling any drugs.

Ulwick said the funeral home, which "apparently has not been used for a funeral in a very long time," was the drop point for persons wanting to sell stolen food stamps at a discount, or less than their face value. After the transactions, he said, the stamps were driven by a taxi driver, "who apparently has not been picking up any fares," to Chapel Oaks Farmers Market, the Fairmount Heights store owned by Broadwater.

There, according to a Secret Service affidavit filed in the case, the food stamps were endorsed and then forwarded to an account at the Prince George's State Bank--where Broadwater is on the board of trustees--for cash redemption by the U.S. government.

Rosenberg released Broadwater on personal bond and ordered him to appear for a preliminary hearing March 25.

Broadwater left the federal courthouse here without comment, but his attorney, longtime Democratic ally Bruce Bereano, said the 41-year-old Broadwater "will continue his business as usual as a Maryland state senator."

(Broadwater returned to Annapolis later today, where State Senate President Melvin A. Steinberg said Broadwater would continue to serve "as long as he can handle it emotionally and time-wise.")

The other three defendants were also released on terms ranging from personal bond to $25,000 bail.

They are: William Dudley, 48, of 3620 Edwards St., Landover; Jack Quigley Jr., of 7920 Denton Dr., Clinton, and his father Jack Quigley Sr., 68, of 5731 Colchester Rd., Fairfax, Va.

According to an affidavit filed by the Secret Service in support of a search warrant, federal agents became aware, apparently through a tip, that stolen food stamps were being sold for "cash and narcotics" at 424 R St. NW in Washington, which is the location of the Malvan & Schey funeral home.

(William Jones, who said he has worked at the mortuary 12 years, said federal prosecutors are "mistaken" about the lack of funerals there.

("We're ready for business," said Jones, who added that the most recent funeral was held there "about three weeks ago.")

The Secret Service, working with Agriculture Department agents, sent undercover agent Norman James to the funeral home, "assuming the role of an individual who had stolen food stamps to sell," according to the affidavit.

On eight occasions last fall, the affidavit said, James sold stamps to the two Quigleys and others "for either cash or narcotics."

The affidavit identified the elder Quigley as the manager of the funeral home. It said that in January, Quigley introduced the undercover agent to Dudley, a Maryland taxicab operator.

The affidavit said Dudley offered to "transact a food-stamp-for-cash deal" with James in the future.

It said the Secret Service then obtained thousands of "marked" food stamps and on three occasions--Jan. 20, Feb. 1, and Feb. 20--the undercover agent brought varying amounts of the stamps to the funeral home and sold them to the Quigleys at an approximate rate of "40 cents cash for each $1 of food stamps."

The Quigleys paid the agent $9,000 in cash with a promise of more to come on the various occasions, the affidavit said.

Altogether, the affidavit said, the agent sold $46,050 in marked stamps.

On each occasion, the affidavit said, Dudley, the cab driver, was observed by surveillance agents carrying a bag from the funeral home and driving to Broadwater's home in Glenarden or to his Farmers Market.

Thereafter, it said, large portions of the stamps were endorsed by Broadwater's supermarket and deposited in a bank account in the name of the Ebony Inn Bar and Restaurant in Fairmount Heights. Broadwater is a part-owner of the restaurant.

From the bank the marked food stamps were forwarded to the Federal Reserve Bank in Baltimore, where agents intercepted them, the affidavit said.

Prosecutor Ulwick said authorities originally charged the four defendants with conspiring to obtain $50,000 in food stamps during the last six months but that an "additional transaction" occurred just last weekend when the four men were being arrested, bringing the total to $70,000.