Former Police Chief Carrol Lynn wanted $350,000 stolen from the police property room and used to finance the killings of "people he thought shouldn't be living," according to testimony from a man who says he saw the hit list.

"He wasn't himself at the time," J.L. Patterson said Thursday in state district court. "To my understanding, the money was to be used to hire hit men."

Lynn, who served 15 months as police chief of Houston but was assistant chief at the time of the alleged offenses, is on trial on charges of obstruction of justice, perjury and extortion.

He is accused of asking John Vincent Holden for $45,000 to stop a federal investigation of Holden. The former Houston oilman has been indicted on charges of mail fraud and violation of federal securities regulations.

Patterson, an electronics specialist who served time in federal prison for defrauding a telephone company, said the list Lynn gave him contained the names of "people that he thought shouldn't be living. He was concerned and upset that the town couldn't be cleaned up lawfully. The money was to be used to clean up the town."

The names on the alleged hit list were not revealed.

Under cross-examination, Patterson said he offered to perform the killings."But I wasn't serious," he added. "I wanted to see if he was."

Holden testified Thursday that he met with Lynn at Lynn's office April 7. He said he brought the $45,000. Holden said he showed Lynn the money and gave him $1,000.

Lynn allegedly told Holden and Patterson that the $45,000 was needed to pay people in Washington to cancel a hit contract on Holden and his lawyer, Gerald Birnberg, who was shot in the hand outside his house April 3.

The $1,000 Holden said he gave Lynn was to pay expenses for a weekend trip to Washington so Lynn could "clear it up," Holden said.

Lynn was arrested April 10 outside Holden's house, where he allegedly had just taken $25,000 in extortion money.

Holden also testified that the former chief told Birnberg and himself that he had interceded in the securities case on Holden's behalf with Leonel Castillo, head of the Immigration and Naturalization Service, and U.S. Attorney J.A. (Tony) Canales. Both men have testified that they knew of no such deal.