A Social Security Administration employee was arrested at the agency's M Street NW office yesterday and charged with bribery for allegedly heading what prosecutors described as a major crime ring that sold hundreds of fraudulently obtained Social Security cards to illegal aliens during the last seven years.

Assistant U.S. Attorney John A. Finnegan said at a court hearing that Theodore Lloyd Cash, 41, of 3214 Johnson Ct., Glenarden, had received at least $60,000 in cash each year since 1981 for selling the cards, for which he received at least $150 each.

Sources said Cash, whose job at the Social Security Administration was to process applications for new numbers, had several middlemen who worked for him soliciting applications from illegal aliens for a charge of up to $300 each.

The arrest of Cash, a lifelong D.C. area resident, came after a yearlong investigation by the Immigration and Naturalization Service and the inspector general's office of the Social Security Administration that was begun after an alien-smuggling operation was uncovered last year, sources said.

Three alleged middlemen, two illegal aliens from El Salvador and a Haitian, also have been arrested in connection with selling fraudulent cards, according to affidavits filed in U.S. District Court here.

They are Jose Balmore-Martinez, 28, of 1110 Fiddler La., Silver Spring; Tito Elvido Chavez, 44, of 3126 16th St. NW, and Jean Dufort, 64, of 3620 16th St. NW.

Balmore-Martinez was sentenced in October to eight months to two years in prison after pleading guilty to two theft charges. He is to be deported after serving eight months, officials said. Chavez and Dufort were arrested this week, and each was charged with conspiracy.

According to the affidavits filed when the men were arrested, Balmore-Martinez and Chavez were partners in the solicitation of illegal aliens for the Social Security cards. Dufort, who works as a cabdriver for Barwood Cabs, was known among Salvadorans as "the lawyer" for his ability to help them fill out the Social Security applications and then obtain the cards.

Social Security laws require that aliens applying for numbers supply their green cards or work visas for inspection by agency personnel and submit to a personal interview. Sources said that the applications were usually completed with the correct personal information about the illegal alien, but that the spaces for the required immigration numbers were left blank.

They said Cash would fill in the spaces with fictitious numbers or numbers that belonged to other persons, indicate that he had interviewed the person and then submit the applications for regular processing. The aliens then would receive real Social Security cards in about two weeks.

More than 125 fraudulent applications have been identified by investigators and the U.S. attorney's office for use in his prosecution. Cash was also videotaped on Nov. 5 accepting $300 for processing two applications.

It is unclear whether the Social Security Administration will try to find all of the persons who obtained cards fraudulently. Those found will be subject to deportation, INS officials said.

U.S. Magistrate Patrick J. Attridge released Cash yesterday on a $50,000 unsecured bond pending a preliminary hearing on Feb. 1. Conviction of bribery carries a maximum prison sentence of 15 years and a fine of up to $250,000.Staff writer Zita Arocha contributed to this report.