On May 5 the U.S. Department of Labor filed a civil suit alleging that a union's pension fund had been fleeced in a deal involving Terence R. McAuliffe. Department officials are not eager to talk about the case, which seems certain to remain dormant this year. No wonder. Federal bureaucrats well might flinch at pursuing a complaint that involves President Clinton's benefactor.

This is the same Terry McAuliffe who is the foremost fund-raiser of the Democratic Party and who forked over $1.3 million of his own money to guarantee a mortgage with a German-owned bank for the Clintons' new home in Westchester County, N.Y. But oddly, the Labor Department suit is not McAuliffe's biggest potential embarrassment. He could be a witness in an impending federal trial of Democratic-Teamsters corruption in which he would be questioned about the illegal, mutually beneficial swap of the party's and the union's cash.

McAuliffe, at age 42, is a political baronet of a type unimaginable in the Washington of a generation ago, before the Capital was awash with campaign money. He became Bill Clinton's intimate by raising millions for him and is playing a similar role for Vice President Al Gore's presidential campaign and Hillary Rodham Clinton's Senate effort. An imprudent Clinton considered McAuliffe as secretary of commerce and pleaded with him to become Democratic national chairman.

It was imprudent because of McAuliffe's mixing of government, politics, union affairs and personal business -- as shown in the Labor Department complaint. He was close to Jack Moore, who in 1997 retired as general secretary and principal money manager for the International Brotherhood of Electrical Workers (IBEW). McAuliffe and Moore collaborated in politics (both as frequent White House guests) and in business. Now Moore is a defendant -- and McAuliffe is prominently mentioned -- in the Labor Department suit.

Labor alleges that the National Electrical Benefit Fund (NEBF), a joint IBEW-management pension fund, in 1992 lent more than $6 million of its assets to the Columbia Land & Development Corp. of Orlando, Fla., knowing it could not be repaid. Moore was then a trustee of NEBF while McAuliffe and his wife, Dorothy, owned Columbia.

The lawsuit further alleges that NEBF improperly purchased nearly $2.5 million of American Capitol Group I Assets, also owned by McAuliffe's American Capitol Management. Furthermore, American Capitol Management was the collateral for the pension fund's loan. According to the court filing, NEBF then sold its share of American Capitol Group I Assets at a loss.

This is embarrassing enough for McAuliffe, but the Teamsters corruption trial, scheduled for Oct. 12 in New York City, is potentially more menacing. Former Teamsters political director William Hamilton is charged with orchestrating a money-laundering conspiracy. The union is accused of promising inflated contributions to the Democratic Party in return for rerouting Democratic funds to ensure the 1996 election of Teamsters President Ron Carey.

McAuliffe never has been designated as a prosecutorial target, and his big-time Washington lawyer, Richard Ben-Veniste, told me his client never talked to Hamilton. But Hamilton's indictment frequently mentions "the former national finance chairperson of the Clinton/Gore committee" -- that is, McAuliffe -- as a party to conversations with other alleged conspirators about elements of the illegal swap.

Can McAuliffe, as a possible witness in open court, maintain his position that he was only an innocent bystander in these machinations and ignorant of their criminal implications? In truth, there may not ever be a trial. Considering the Clinton Justice Department's track record, it would not be surprising to see Hamilton agree to a plea bargain that would make him the scapegoat but protect major figures in the Democratic political apparatus, including Terry McAuliffe.

As for that pension fund scam, it took me three days of telephone calls even to learn from the Labor Department that the case was active -- barely so. A hearing was scheduled for December (seven months after the original complaint was filed), but a motion to extend the date now puts off that hearing indefinitely. Following his leader's example, McAuliffe appears oblivious to accusations while he finances the president's new mansion.

(C)1999, Creators Syndicate Inc.