North Beach Mayor Mark R. Frazer has begun a vigorous response to allegations under investigation by the state prosecutor that he accepted free or low-cost housing from a developer and misused town resources for personal gain.

In an interview Thursday, Frazer denied any wrongdoing and accused political opponents of trying to tarnish his image before next year's mayoral race.

"What I told the special prosecutor . . . will exonerate me and will indicate that I am not at fault," Frazer said.

The investigation by state prosecutor Robert A. Rohrbaugh began in the summer after a few residents complained that Frazer had received free housing from a prominent local developer and had directed town employees to help him move.

"The level of his corruption has just accelerated to the point where it's outrageous," said Rich Romer, a former Town Council member and a contributing writer for the Voice of Southern Maryland, the weekly newspaper that first reported the state inquiry.

Romer said he saw the town's public works crew, using town-owned trucks emblazoned with North Beach signs, move furniture and personal belongings last winter from Frazer's residence on Atlantic Avenue to his new home on Sixth Street. Romer said he then saw town employees use town trucks to help Frazer move into a condominium in the Southwinds development this summer.

Although he acknowledged that town employees helped him move, Frazer said he did nothing wrong.

"The instances where town employees assisted me, I paid them personally," he said. "These guys only make $10 or $11 an hour. They can use some tip money."

Frazer said he told Brian McNeil, the director of public works, that town employees should only help him when they were "not on the town clock."

But the workers were being paid by the town while they helped Frazer move, according to a source with direct knowledge of the inquiry. Frazer told state investigators that he thought the workers were on a break, said the source, who spoke on condition of anonymity because of the sensitivity of the case.

The source said Frazer wants to take legal action against McNeil -- and is considering firing him -- in part because he believes it was "not responsible" for McNeil to allow the workers to help him while they were being paid by the town. Frazer declined to comment about McNeil.

"I'm a bit taken aback by all this," said McNeil, who declined to comment about the inquiry. "The climate here is difficult to even come to work every day."

State investigators also have looked into whether Frazer paid below-market-rate prices for two homes owned by local developer John Scott Sr. and whether the mayor is a silent partner in Scott's Southwinds development, Frazer said.

Frazer, who denied having any financial stake in Southwinds, said he gave the prosecutor's office a copy of his lease and other documents that proved he paid market rates for his homes.

"His indication was that if I could provide him with those documents, then the investigation would go away. Those were his words," Frazer said. "I provided him with what he asked. . . . I feel that my responses will be satisfactory."

He said the state prosecutor was also investigating whether the town's public works crew spread gravel on the driveway of his home and whether he ordered town employees to do special cleanup work at his home after Hurricane Isabel two years ago.

"They did no more or less for me than they did for every resident that was struck by Isabel," Frazer said he told investigators. As for the gravel, Frazer said it was put on the shoulder of the road, not his private driveway, just as it would be on any street that floods.

Rohrbaugh, whose office is responsible for investigating bribery law violations and general misconduct by public officials, declined to comment on the inquiry.

This is not the first time complaints about Frazer have prompted the state prosecutor's office to investigate him. Shortly after Frazer was elected mayor in 1998, the state office looked into his involvement in contracts approved without public notice or normal bidding procedures. Frazer said the town did not follow the normal contract process because "there were mitigating circumstances." The state prosecutor did not file criminal charges.

Critics of the mayor are convinced that the outcome will be different this time. Romer said he has spoken with people who discussed wide-ranging accusations with investigators. Frazer said that none of the allegations is true and that Romer is leading a campaign to destroy him politically.

"He's been on a crusade to bring me down ever since I've been elected," Frazer said. "He resorts to his publication to do his political dirty work."