Former Washington lobbyist Fred B. Black Jr. was convicted here yesterday on three counts of income tax evasion that prosecutors said involved funds from a scheme to launder money from cocaine sales.
But after six days of deliberation, a U.S. District Court jury acquitted the 70-year-old Black of eight other charges and deadlocked on 23 others.
William G. Hessler, 47, a former vice president of Riggs National Bank and codefendant in the case, was acquitted on six counts of misusing bank funds, mail fraud and failure to report taxable income.
The jury said it was deadlocked on 17 other charges against Hessler, who formerly managed the Riggs branch at the Watergate, where Black still lives.
U.S. District Judge Thomas Hogan declared a mistrial on all the charges on which the jury said it was deadlocked.
After the verdicts, Timothy J. Reardon III, principal assistant U.S. attorney for Washington, said Hessler would be retried "at the earliest possible time." He said prosecutors were uncertain whether to retry Black, who was convicted in March in a related case of conspiracy to import and distribute cocaine.
Black faces a maximum penalty of 20 years in prison and a $35,000 fine in the previous case, and up to 15 years in jail and $30,000 in fines for yesterday's conviction.
During the 1960s, Black was a business associate of former Senate aide Robert G. (Bobby) Baker and a well-known Washington figure. He was convicted of income tax evasion in 1964 but was acquitted in a retrial after the Justice Department disclosed it had illegally placed a microphone in his apartment.
Yesterday, Black, wearing a blue windbreaker, stood impassively as he heard the jury's verdict. He told Hessler in the hallway later, "I'm delighted for you."
"I did it," Hessler said exultantly. "It's been a long time."
The two men were indicted in December 1983 along with 13 others in what prosecutors called a "complex, sophisticated and lucrative" cocaine trafficking and money laundering ring that smuggled the drug from Colombia and sold it in many parts of the United States.
So far, prosecutors said, five persons have been tried and convicted in the case and seven have pleaded guilty. Another trial, involving four other members of the alleged ring, is scheduled to start in Texas next month. The Colombian wholesaler of the drugs, Marcos Cadavid, was convicted here in March of conspiracy to import and distribute cocaine.
During the two-month trial that ended yesterday, Assistant U.S. Attorney Roger M. Adelman said Hessler was part of a conspiracy to launder more than $1 million from cocaine sales. Hessler was not accused of knowing the source of the funds.
A key prosecution witness, Lawrence G. Strickland Jr., testified that he took cash to Black in his Watergate apartment for deposit in Riggs accounts controlled by Black.
Strickland, 34, who grew up in Northwest Washington, is a brother-in-law of Hessler and was described by prosecutors as the leader of the cocaine ring. He has pleaded guilty to several drug and tax charges and is awaiting sentencing.
In more than a week of testimony, Hessler strongly denied deliberately violating currency reporting regulations, as the indictment charged. He said he had followed bank policies in making loans to Black, on which prosecutors said Riggs had lost $130,000.
The indictment said Hessler had taken about $40,000 in bribes from Black, but both men testified that the money was lent.
The tax evasion counts on which Black was convicted involve $473,000 in unreported income in 1978, 1979 and 1981.
Black, who testified that he believed all the funds he received from Strickland came from legitimate sources, said the money had been used in a venture to construct a gambling casino and hotel in Atlantic City, which eventually foundered.
Prosecutors, using extensive bank records, said the funds went for Black's personal use.
In arguments to the jury, Thomas Dyson, Black's attorney, said the complex charges against his client were "silly putty." Attorney John Shorter described Hessler as a "trusting" banker who sometimes may have been "conned" but who had no intention of violating the law.