Mickey Nocera's gas well deals were the talk of the town among numerous Washington investors, some of whom were virtually standing in line to drill their cash into some of the best tax shelters that money could buy.

Between 1977 and 1979, four top officials of the National Bank of Washington invested their money through Nocera, a low-profile Rockville plumbing contractor, and his business partner Peter Carley.The remote natural gas wells were financed in part with more than $1 million in loans from the bank.

Nocera and Carley also borrowed millions of dollars from the bank for their other development and business enterprises, and their gas well deals created a continuing source of conflicts of interest for some NBW officials, the history of the transactions show.

The gas well deals provoked some of the most highly questionable conduct by bank officials in recent years, conduct that is now the subject of a federal grand jury investigation focused primarily on former NBW director Ronald G. Nathan, the bank's general counsel at the time and a protege of Sam Church Jr., president of the United Mine Workers of America. The labor union controls a majority of the bank's stock.

Moreover, the controversy over the gas wells and the bank loans that fed them is entwined with a seething corporate power struggle between Nathan, the mine workers' hand-picked representative on the bank board, and Dale L. Jernberg, bank president until his firing last month.

The struggle between the two men was for dominance in the decision-making process, which included the power to control nearly $50 million in loans made annually by the bank.

Nathan had a natural advantage. He had been best man at Church's wedding as well as his legal strategist during the last union election. His reward had been the bank job. He was young, only 35, but he carried an aura of power that flowed from the strong impression that he spoke for Church in the board room.

Jernberg, 56, a lawyer by training, was a generally cautious trust officer with more than 20 years experience who had worked quietly for most of his career in the shadows of more dynamic bankers.

Ironically, he got the bank president's job in 1978 with a boost from Nathan, who promoted him as the union's man at the bank over more senior officers who had resisted the influence of Church and Nathan.

For two years, Nathan and Jernberg had been jousting for control. Jernberg had the title of chief executive officer, but Nathan had the ear and confidence of Church. Nathan at times would deal directly with Jernberg's subordinates on loans and bank policy, ignoring the courtesy and protocol calling for Jernberg's involvement.

It was a corporate roll of the dice for Jernberg when on April 9, 1980, he privately informed federal prosecutors and bank examiners that Nathan held a secret interest in one of Nocera's 1979 gas well investment ventures that had received $1 million in loans from the bank.

The fact that he did not consult mine workers president Church before-hand was considered by some union associates to be Jernberg's fatal misstep and an unforgivable breach of loyalty to the union owners. The additional fact that Jernberg had turned on Nathan, some of the union men reasoned, meant that he might just as easily turn on them.

Nocera's gas wells were located nearly 300 miles from Washington, around Mingo County, W.Va. There the gengle Appalachian hill country harbors some of America's worst pockets of poverty and, in its subterranean depths, some of the richest seams of mineral wealth, which are also among the finest tax shelters known to the American investor.

Costs incurred drilling for natural gas and oil can often yield tax deductions worth several times the original investment, thus providing substantial tax savings for a high-bracket investor.

Nocera's gas well deals attracted many investors because the small drilling firm he financed, Ramco Oil & Gas Co., had an extremely good record. So, every year for the past several years, Nocera had organized a group of investors under the name Energy Resources Company to bankroll Ramco's drilling program on land leased from U.S. Steel Corp.

The chief business of Ronald M. Nocera was plumbing supply and contracting. He and Carley owned John A. Quinn Inc. They also developed real estate, like the Sheraton Potomac in Montgomery County, and formed partnerships with other developers, including Robert D. Holland and Bruce D. Lyons, whose Holland & Lyons Associates Inc. was one of the fastest growing condominium development firms in the Washington area.

Donald A. McCormack Jr., the NBW vice president who had handled Nocera's and Carley's loan accounts, was an early investor in Energy Resources. But McCormack, who had become close friends with Nocera, asked to be taken off the lending account because of the potential conflicts it presented him.

In both 1977 and 1978, Walton W. (Hank) Sanderson, who was then NBW's president, invested in the gas well ventures. During that time, he never abstained from voting on millions of dollars in loans to Carley and Nocera enterprises.

Sanderson had always maintained that his interest in the gas wells was disclosed to the bank's executive committee, but some directors did not remember the disclosure. The minutes of the committee for this period do not reflect Sanderson's disclosure.

In addition, during 1977, NBW made its largest commitment -- more than $3 million -- to The Papermill Associates, the partnership between Holland, Lyons, Nocera, Carley and multimillionaire Warren Avis. The loans would finance the construction of a gigantic condominium complex on the Georgetown waterfront.

Sanderson and Nathan supported this loan and others to the developers, the minutes show.

Outside of the board room, Sanderson told his colleagues that he did not consider anything improper about his gas well alliances. He felt he had disclosed his interests. Besides, they were too good an investment to pass up. To him, the gas wells had no bearing on the developers' other business with the bank.

Jernberg at one point told Sanderson that he should make no more investments with Nocera because of the conflicts the relationship presented, but Sanderson refused.

As it turned out, it did not matter because in 1979, Sanderson and the other usual investors in the gas wells were told by Nocera that there would be no gas well opportunities for them that year. Nocera, Carley, Holland, Lyons and their new partner, Douglas Miner, a former associate of Warren Avis, were to be the only investors.

By this time, for reasons unrelated to the gas wells, Sanderson had been shunted aside to the relatively powerless position of vice-chairman at the bank and the key decision makers at NBW were Jernberg and Nathan. Nathan urged the new bank president, Jernberg, early last year to invest in the gas wells. Jernberg shrugged off the idea.

On May 16, 1979, the bank's executive committee was presented with the first of two $500,000 loan proposals to finance that year's drilling. It was a large loan to be going outside the Washington area at a time when NBW could not fulfill the loan demands in its own back yard.

Loan officer William R. Johnson ticked off the terms: a first loan of $500,000 for drilling and completion costs for two wells in Raleigh and Mingo counties, secured by the income from a third well and guaranteed by Holland, Lyons, Nocera, Carley and Miner; interest rate to float at 3 percent over the bank's prime rate, bank records indicate.

Also pledged were the partnership profits of The Papermill, which were then estimated at $1.5 million over the next several years.

Some of the directors were concerned. Willie Runyon, a Baltimore ambulance company operator, said, according to the minutes, that he knew people in that part of West Virginia and they had told him of drillers who hit dry holes and went broke. William S. Harps, a real estate appraiser, questioned the pledge of proceeds from The Papermill, which already had been partially pledged on other loans.

The loan officer said that the drilling experience to date had been excellent and that the pledges of The Papermill proceeds would be double checked. He said that the second $500,000 loan had been postponed until the bank could get an independent petroleum engineer to check the value of the reserves in thhe well that was securing the loan.

When the executive committee voted to approve the loan, four directors, including Nathan, had excused themselves from the room.

On June 20, the second $500,000 loan was presented to the bank's executive committee under the same terms. This would complete NBW's $1 million commitment to the gas wells.

Again questions were raised. This time, bank records show, it was revealed that a petroleum engineer estimated the gas reserves at a well offered as collateral were $1.4 million over a 10- to 13-year period, less than half the $3 million estimate put on the reserves by the borrowers.

Still, the directors voted to approve the loan. The loan officer assured them that the Republic National Bank of Dallas, or some similar bank with drilling experience, would take over the loans after six months at most. Nathan asked to be recorded as abstaining on the vote.

The partners dickered into the summer over each one's share of the year's drilling investment and tax write-off. The close-out date for completing partnership arrangements was late in the year.

In the meantime, Nathan was busy. He struck a secret deal with Nocera to invest $100,000 in the 1979 wells. The deal included a promise that the bank director could sell his interest back to Nocera at any time for $125,000, giving the bank official a $25,000 profit regardless of whether the well paid off.

To finance his $100,000 investment in the well, Nathan set up a D.C. corporation on Aug. 30, 1979, called Park Chester Corp. Two of his law partners, Paul R. Walker and Patrick W. Walsh, signed with Nathan as owners of the corporation, whose purpose was "to invest in works of art . . . [and] to acquire . . . property," according to corporation records.

During the same week, Nathan had telephoned Jernberg and told him that he and Walker would like to borrow $75,000 each to buy into unspecified tax shelters. Since Nathan was in a hurry, the loans were approved after polling each director by telephone. (Loans to directors must be voted on by the full board.)

In the ensuing weeks, Nathan and Walker pooled their loans and used $100,000 of the proceeds to purchase a certificate of deposit at a California bank. Against that certificate, the two lawyers borrowed $100,000 and turned it over to Nocera to invest in Energy Resources Company.

In September, when the full NBW board met, the loans to Nathan and Walker were reaffirmed. The purpose of the loans was stated as funding "tax shelters." There were no questions. The loans were unsecured and were made at the prime rate, the interest rate usually reserved for the bank's best corporate customers.

Nathan was quite mute during the discussion of the loans. He did not disclose the circuitous route by which the money had traveled cross country and back to Energy Resources. He did not disclose his investment, records show.

The remaining $50,000 dispersed to Nathan and Walker was used to purchase artwork for speculative investment.

In early November, Jernberg received another telephone call from Nathan. This time, Nathan said that his partner, Walker, needed another $75,000 loan. Nathan said that he had Walker's power of attorney and could come right over to get the loan.

Jernberg referred him to a loan officer. Under the bank's rules, the loan should have been referred to the senior officers' loan committee because the total indebtedness of Walker would exceed $100,000 if the loan were approved.Jernberg would say later that the reason he did not refer the loan to the officers' committee was that he had forgotten about the first loans in August.

Nathan signed for Walker's loan, but Walker never saw the money. Nathan received the funds and invested them in artwork. His actions may have violated several federal laws relating to false statement on a loan application, failure to disclose his interests to the bank and misrepresentation, according to federal investigative sources.

As it turned out, none of the assurances about the originial $1 million in gas well loans were fulfilled. By December 1979, both loans had fallen into default. The proceeds from the well put up as collateral could not pick up the slack. There were no profits from The Papermill because it stood uncompleted and there were virtually no sales. And, no other bank was willing to take over the loans.

Nathan's interest in the gas wells was finally discovered by loan officers on April 9, 1980. When it was, Nathan demanded from Nocera repayment of his $125,000, saying that he had been promised a larger percentage of the wells. Jernberg, meanwhile, prepared his own report on the transaction and turned it over to federal bank examiners and prosecutors. At the April 16 directors' meeting, he asked for and was granted an internal investigation by the audit committee -- to the apparent anger of Church, who had not been consulted.

By the end of the summer, Nathan had resigned in the wake of the federal investigation. Jernberg was fired by Church, who now exercises day-to-day control over bank policy.