Rep. Daniel J. Flood (D-Pa.), sitting in his Wilkes-Barre "command post" amidst the destruction of Hurricane Agnes in 1972, took a $5,000 cash bribe from a businessman selling disaster relief housing to the federal government, the businessman testified yesterday.
William Fred Peters was the fourth witness to accuse Flood of personally accepting bribes in exchange for using his influence to procure government favors.
To obtain Flood's help on a separate business matter, Peters also testified at Flood's trial here that he paid thousands of dollars to the congressman's administrative aide, Stephen B. Elko, part of which was to be funneled to Flood.
Peters said in U.S. District Court that though Flood's office did try to help him in both instances, he never got what he paid for. Instead, he lost both businesses and wound up serving a two-year prison term.
"I was conned," he said with reference to the housing deal in 1972. "At no time did he [Elko] even come close to delivering what he promised."
Peters, Elko, and Washington lobbyist Deryl Eleming conceived the housing deal immediately after the devastating storm -- Agnes -- left thousands homeless along the East Coast. According to previous testimony from Elko, Flood himself was also in on the scheme.
Elko, Peters and Fleming convinced the Sterling-Homex Corp., which had an inventory of 20,000 easily transportable mass-produced modular homes, that Flood would control all federal disaster relief purchases in his district around Wilkes-Barre. Because of their relationship with Flood, they said they could guarantee a bonanza for Sterling-Homex, Peters said.
According to his testimony, Elko, Peters, Fleming and Flood would then split a 2 percent commission. Elko dispatched Peters to make a cash "prepayment" to Flood a few days after the storm, Peters said.
Carrying $5,000 in a white envelope, Peters said, he visited the congressman in the "command post" from which Flood helped direct relief operations in Wilkes-Barre.
"I talked to Mr. Flood about the availability of Sterling-Homex modular houses," Peters recalled. "He told me that he thought something could be done but that there were also some other government officials -- heavy-weights -- interested in selling housing.
"I then either laid the money on the table or gave it to him and he put it in his pocket," Peters said.
Peters was so convinced the deal would come off that he phoned his stockbroker and bought $40,000 worth of Sterling-Homex stock. The Los Angeles stockbroker, John McGrain, Testified that he was equally excited and bought $4,000 worth of the same stock.
McGrain said Peters told him to expect an announcement of the purchase on July 10. Instead, he said, Sterling-Homex announced that it had filed a bankruptcy petition. The stock became worthless and the company never got the contract.
Peters' other business interest, the West Coast Trade Schools, was also dissolved after Flood's intervention with the Office of Education failed to produce the accreditation necessary to continue receiving federal aid.
The bribes Peters allegedly paid Flood in connection with that accreditation constitute a major portion of the bribery, conspiracy and perjury charges against the 75-year-old, 16-term congressman.