A federal judge in Alexandria has dismissed an indictment against an Internal Revenue Service agent accused of accepting an $11,000 loan supposedly arranged in secret by Dr. Murdock Head, director of the controversial Airlie Foundation.

Judge Oren R. Lewis Jr. dismissed the indictment against IRS agent Jesse R. Hare on the grounds that the statute of limitations under which the charge was brought had expired.

Hare, 55, of Woodbridge, could not be reached yesterday for comment.

Hare was indicted by a federal grand jury March 22 on a charge of accepting a gratuity -- the $11,000 loan -- shortly after he completed a 14-month audit of the Warrenton-based foundation.

The loan allegedly was made in 1970, which put it outside the scope of a five-year statute of limitations on such matters, according to Lewis' ruling on Friday.

Head, who established the foundaing to the 4th U.S. Circuit Court of court and congressional testimony about a congressional influence-buying scheme. Federal prosecutors have alleged that Head gave cash to Rep. Daniel Flood (D-Pa.) and former Rep. Otto Passman (D-La.) to win their support for federal contracts for his foundation, which is affiliated with George Washington University.

Head is under investigation by a federal grand jury in Alexandria. U.S. Attorney William B. Cummings said in March that Hare "conducted an audit which should have seen that which was obvious." Cummings would not elaborate on his statement, and could not be reached yesterday for comment.

Head has repeatedly denied all allegations of wrongdoing. Hare is a career IRS agent who is close to retirement. Lewis on Friday dismissed the indictment "without prejudice," which means prosecutors can appeal the rulng to the 4th U.S. Circuit Court of Appeals, or possibly refile the indictment under a different statute.

Prosecutors could not be reached for comment.