A federal judge here yesterday threw out all criminal charges against two employes of the giant Velsicol Chemical Corp. for contamination of animal feed in Michigan, citing mis-conduct and "prosecutorial vindictiveness" on the part of U.S. attorneys.

The attorneys were so determined to pin blame for the 1973 event on Vesicol and to put the company through a highly public trial that they brought criminal felony charges only when Velsicol pleaded no contest to lesser counts, U.S. District Court Judge Barrington D. Parker wrote:

"The evidence strongly indicates a retaliatory motive," he said in dismissing the case. Velsicol executives had been charged with lying to Food and Drug Administration investigators and with covering up evidence.

Millions of farm animals had to be destroyed after fire retardant PBBs (polybrominated biphenyls) were mixed inadvertently with a feed additive chemical in a Belsicol subisdiary plant in 1973. Many of the affected animals were slaughtered and sold as food, however, and studies have estimated that 90 percent of all Michiganders now have traces of PBBs in their bodies.

In trying to prosecute Velsicol for the event, U.S. attorneys in Michigan's western district first charged the Chicago-based company with four misdemeanor counts of negligent adulteration of the feed additive products. When Velsicol indicated that it would plead nolo contendere, or no contest, thus avoiding a trial and admitting no guilt, Parker wrote, U.S. Attorney James Brady threatened to file additional charges.

"Fearful that the citizens of the state of Michigan would not understand acceptance of such a plea and that it might possibily 'breed contempt for federal law enforcement,' [Brady] sought out individuals upon which to attach criminal liability," the judge said. "This proceeding involves an explicit threat . . . an intent to retaliate for the exercise of a right."

The judge found that the felony charges of lying and coverup, which were subsequently filed against Velsicol employes Charles Touzeau and William Thorne in Michigan's eastern district, were based on information that had been available to the government for several months. However, it had not been used until after Velsicol entered its no contest plea.

"Apparent vindictiveness is clearly established," the judge wrote. "It presents troubling questions concerning the broad discretion generally granted to prosecutors in bringing indictments."

The case was moved to Washington's U.S. District Court after defense attorney's of the Williams & Connolly firm complained of adverse pretrial publicity in Michigan.

Velsicol corporate Vice President Rich Blewitt said yesterday that the company was "glad to see that justice was served" by Parker's ruling.

He noted that Velsicol had paid a $4,000 fine in the misdemeanor case and had also paid out $40 million, mostly through its insurance company, in out-of-court settlements of damage claims brought by Michigan farmers and others. "We're not saying that PBB was not a disaster," he said.

U.S. Attorney F. William Soisson said the ruling would make further damage suits less likely to be resolved against Velsicol. "We objected to a nolo pleading because it is the policy of the Justice Department to oppose them in general," he said. The government is considering whether to appeal the ruling, he added.

The government continues to hold that the decision to bring felony charges was based on discovery of new evidence that the company had misrepresented facts to FDA investigators, Soisson said. The evidence was not available when the original misdemeanor charges were brought, he said.