Former Washington lobbyist Deryl Fleming testified yesterday that he made a $1,000 cash payoff directly to Rep. Daniel Flood (D-Pa.) as part of a plan to "spread some money around" on behalf of his client.
In addition, a second witness against Flood confirmed yesterday that the congressman had received $4,000 worth of bank stock which prosecutors contend constituted yet another bribe.
The testimony of Fleming and Pennsylvania banker Joel Harpel is crucial to the prosecution of Flood on 11 counts of bribery, perjury and conspiracy in U.S. District Court here. It contradicts Flood's claim that he never accepted any money and corroborates damaging statements from Flood's former administrative aide, Stephen B. Elko.
The $1,000 and the bank stock are part of $69,000 worth of bribes prosecutors allege Flood took in exchange for using his influence to procure contracts and grants.
Fleming, known as "Corn Flakes Fleming" because he represented the Kellogg Co. for many years, was seeking Flood's intervention with the U.S. Office of Education on behalf of West Coast Trade Schools. That company stood to lose millions of federal student aid dollars because it lacked accreditation.
In April 1972, Fleming said he advised his friend and client, Trade Schools president William Fred Peters, to bribe Flood and Elko because of Flood's position as chairman of the Appropriations subcommittee for the Department of Health, Education and Welfare, which includes the Office of Education.
"I asked him [Peters] if he was ready to buy an insurance policy yet. I told him it was time to start spreading that money around," Fleming testified.
Peters, through Elko, made a series of payments to Flood, Elko testified previously, and Flood authorized Elko to send letters in the congressman's name to the Office of Education on Peters' behalf.
One of those letters outraged Flood, Fleming testified, because it used intemperate language in addressing the then commissioner of education, Sidney Marland, Jr. To soothe the congressman, Elko advised Fleming to make another payoff and brought Flood and Fleming together in Elko's apartment.
Flood, who lived in the same building, came clad in pajamas and a bathrobe. 'Steve [Elko] talked with him for a half minute, told him I had something for him and left," Fleming said. "I pulled the envelope [containing $1,000 cash] out of my pocket and said I'd like for him to have it," Fleming testified.
Flood "put it in his right-hand robe pocket" and left, Fleming said.
Fleming, who said he had "25 years' experience in Washington watching people hand each other money," testified under a grant of immunity. He also testified in the West Coast trial of Elko, who is serving a prison term for accepting bribes from Peters.
Elko, by his own admission, was the intermediary for all of the bribes Flood allegedly accepted and also the one who brought pressure on federal agencies. "I'm sitting here in the chairman's [Flood's] office," he would say as he telephone agency officials on behalf of those who paid the bribes, according to testimony.
Elko was the go-between for officials of the First Valley Bank in Bethelehem, Pa., who allegedly agreed to bribe Flood with bank stock in exchange for his help in getting Treasury Department approval of a bank merger. Flood already owned stock in the bank and the alleged bribe was to be worth $4,000 to him.
Harpel, an assistant vice president of First Valley, who played no role in the alleged scheme, described documents yesterday showing the transfer of 100 shares of bank stock, worth $40 each, to Flood's account about eight months after the merger was approved.
Flood's lawyer, Alex Kleiboemer, has argued that %elko was the recipient of all the bribe money and that to protect himself, he devised a scheme to implicate Flood should it become necessary.
Flood sat immobile and expressionless during yesterday's damaging testimony, as he has throughout the five days of his trial.
The 75-year-old congressman, whose hometown is Wilkes-Barre, Pa., was sworn in for his 16th term in the House on the first day of the trial.