BALTIMORE -- A Wedtech Corp. employee met with state Sen. Michael B. Mitchell and former state senator Clarence M. Mitchell (D-Baltimore) to discuss halting an investigation by the House Committee on Small Business into the military contractor's affairs, according to court testimony.

Richard Strum and the Mitchells met with two top Wedtech officials and a marketing consultant, at which time "it was agreed that for $50,000, Michael and Clarence Mitchell would see that the investigation was stopped," Assistant U.S. Attorney Gary P. Jordan told U.S. District Judge Norman Ramsey in court Friday.

The Mitchells' uncle, former U.S. representative Parren J. Mitchell (D-Md.), headed the committee handling the small business investigation but has been cleared of wrongdoing in the Wedtech case, prosecutors have maintained.

The money was to be paid "under the guise" of a legal retainer to Michael Mitchell's law firm, Jordan said. He told the judge at Strum's court appearance that the Mitchell law firm also received $50,000 in February 1985 to instigate an investigation of a Wedtech competitor and another $10,000 in March 1985 to "quiet the committee's renewed interest" in the Bronx, N.Y.-based defense contractor.

Jordan made his accusations in presenting the government's case against Strum, who pleaded guilty Friday to a charge of conspiring to block the congressional probe.

The brothers, who face charges of conspiracy to obstruct the investigation and wire fraud, are scheduled to go to trial Wednesday in federal court here.

Strum, a former vice president of marketing of marketing at Wedtech, is expected to testify at the trial as part of a plea bargain.

The Mitchells claim the money they received was for lobbying or legitimate services.

Wedtech has been under investigation for alleged illegal practices such as violating minority contracting regulations and bribery. Earlier this year, four top Wedtech officials pleaded guilty and several public officials in New York were indicted.