District of Columbia Mayor Walter E. Washington has testified before a grand jury here in connection with a federal probe of bribery allegations involving mayoral aide Joseph P. Yeldell and millionarie businessman Dominic F. Antonelli Jr., The Washington Post has learned.
In extensive questioning of the mayor, prosecutors from the U.S. Attorney's Office were reported to have asked Washington about the financing of his 1974 election campaign as well as his knowledge of any relationship between Antonelli and Yeldell, a longtime aide and political ally of the mayor.
The mayor, who testified before the grand jury within the past month, appeared before the panel as a witness and is not a target in the investigation, sources have said.
The federal investigation was begun last December following disclosures in The Post that several decisions made by Yeldell while he was director of the D.C. department of Human Resources benefited Antonelli financially.
According to persons who have been questioned by presecutors, the investigation has focused primarily on a possible connection between these DHR actions and two loans totaling $54,000 that Yeldell obtained with Antonelli's help.
More recently, however, the federal investigators have broadened their probe to include examination of alle gations that a secret cash fund was used to pay some expenses in the mayor's 1974 campaign.
The Post reported last December that at least $1,400 in $100 bills was used by Walter Washington 's 1974 campaign coordinator, John Dean, to pay some campaign workers. The money, which was not reported publicly as required by law, was given to Dean by Washington's closest aide, city adminstrator Julian R. Dugas, according to sources in the campaign.
These sources said the money was part of a larger fund of unreported cash used to pay some campaign salaries, buy campaign literature and pay for other campaignrelated services, if this cash had been reported as required, according to these sources, it would have put the mayor's campaign expenditures above the $200,000 spending limit imposed by Congress.
According to one source, prosecutors told Dean they did not believe that his alleged payment of the unreported money to campaign workers violated local or federal election laws. The prosecutors were more concerned, the source said, with establishing the origin of the money allegedly given to Dean by Dugas.
One witness interviewed by prosecutors has said their new interest in the mayor's campaign has grown out of their ongoing investigation of financial ties between Yeldell and Antonelli.
Prosecutors, according to the witness, specifically asked whether there was a $33,000 secret cash fund that was used to pay certain campaign expenses.
The witness said investigators are also attempting to determine what role, if any Dugas had in the campaign.
Both Washington and Dugas have denied knowing anything about a secret cash fund for the campaign or any unreported payments to campaign workers.
A spokeswoman for the mayor said yesterday that Washington "is on leave" and unavailable to comment on his appearance before the grand jury.
In addition to Mayor Washington, federal prosecutors have interviewed Dugas, Dean and scores of other witnesses connected with either the campaign or DHR who may have knowledge of the campaign or of various dealings between Yeldell and Antonelli.
The callling of the mayor before the grand jury and the subpoenaing of numerous city documents and financial records of Yeldell and Antonelli indicates that federal investigators may be winding down their probe and nearing a decision on whether to seek any indictments.
The federal prosecutors also have been joined in their investigation of Antonelli and Yeldell by FBI angents who have begun what one knowledgeable source described as a separate probe of whether Yeldell violated conflict-of-interest, banking or other laws while he was DHR director.
In 1976, when he headed that agency, Yeldell was instrumental in setting the city to sign a controversial $5.6 million, 20-year lease for an old office building owned by Antonelli.
The building and other property, located at 60 Florida Ave. NE, had recently been purchased by Antonelli for $800,000.Both Yeldell and Dugas urged leasing of the facility even though other city officials had earlier opposed the action, arguing that the terms of the lease were too expensive.
The Florida Avenue lease was the first of several decisions made by Yeldell while he was DHR director that benefited Antonelli financially, The Post has reported.
Yeldell also approved extension of necessary development permits for Doctors Hospital to allow its directors to construct a replacement facility on property owned by Antonelli. And Yeldell tried to have the city purchase the Metropolitan Hotel, which is owned by a corporation in which Antonelli had a financial interest, as a relocation facility for physically disabled patients at Glenn Dale.
Prosecutors are said to be particularly interested in the timing of the Florida Avenue leasing agreement and how it might possibly relate to a $33,000 secondtrust loan made to Yeldell on what appear to be preferential terms.
Yeldell has said he twice sought Antonell's help in arranging two different loans the then DHR director needed.
In 1973 he borrowed more than $21,000 for himself and six partners in a financially troubled travel business that has since shut down. He obtained the loan from Madison National Bank, of which Antonelli is a major stockholder. Antonelli is also an owner of Parking Management Inc. (PMI), the city's largest parking operation.
Yeldell has said he turned to Antonelli again in 1976 when he needed help in arranging the $33,000 personal loan. That loan was made on May 25, 1976, shortly before Yeldell asked Mayor Washington to approve the leasing of the Florida Avenue building.
Federal prosecutors subsequently determined that most of the $33,000 personal loan to Yeldell was provided by Antonelli through a third party intermediary, which helped disguise the transaction.
Yeldell has repeatedly denied that his personal loan transactions with Antonelli over influenced any or his DHR decisions. Antonelli has consistently refused to comment publicly about the federal investigation or his dealings with Yeldell.
Yeldell, suspended as DHR director for four months following allegations of nepotism, cronyism and leasing abuses in his department, was transferred by the mayor last April to a post as a key aide. Washington said then that several city investigations had failed to turn up any hard evidence of impropriety on Yeldell's part.