Rep. Harold S. Sawyer (R-Mich.), furious about large consulting fees collected by President Reagan's appointees to the board of the Legal Services Corp., yesterday informed the president that he will ask federal prosecutors to recover the money on the grounds that it was paid illegally.
Referring to the $156,000 collected by the 11 appointees during the first 11 months of 1982, Sawyer said in a letter, "The conduct of your recess appointees . . . is an embarrassment to us and is becoming a political liability to you. We are alarmed by the growing public perception of the administration's and our party's lack of sensitivity for the poor and elderly . . . . "
Pointing to the $25,028 collected by board chairman William Harvey and the more than $19,000 paid to member William Olson, Sawyer said, "We cannot expect pro bono volunteerism from attorneys . . . when this administration allows the Legal Services board members to make a profit on the backs of a program designed to help out poor and elderly. It appears to be the application of a 'suck up' as opposed to a 'trickle down' theory."
Sawyer added that a congressional delegation would like to meet with Reagan "regarding the removal of the board, the repayment of the consulting fees, the removal of the corporate president, the nullification of his contract, and the selection and confirmation of qualified board members."
Reagan said Wednesday that he would ask the Office of Management and Budget to conduct an investigation after a House Judiciary oversight subcommittee on which Sawyer serves discovered that the board was collecting consulting fees at more than twice the rate of any previous board in history.
Meanwhile, the Senate also moved yesterday to control the board by adding a rider to the continuing resolution that would cut back not only on consulting fees but also on the fringe benefits approved by the board earlier this week for Indianapolis lawyer Donald Bogard, the new Legal Services president.
Board members say the contract was negotiated directly by Harvey, a former law professor of Bogard, without the participation of the other board members, even though the board had appointed a committee to handle the negotiations.
The Senate rider would nullify a provision in the contract providing paid membership in the private club of Bogard's choice and would severely limit another provision of the contract -- a special one-year severance agreement that would authorize Bogard to collect his full $57,500 salary along with benefits and expenses.
In addition, the rider would allow board members to collect their $29-an-hour consulting fee only for the time they are actually attending official board meetings.
Harvey, for example, does not like to fly, and has collected the consulting fee for his driving time to and from Indianapolis.
While the controversy over its expenses continued, the board met yesterday and approved funding for the Legal Services field offices for the coming year at the 1982 level.
In an often contentious meeting, Harvey attempted to move forward on votes while an angry legal services advocate -- shouting to be heard -- read Sawyer's letter into the record. Harvey offered no response.
Board members led by Howard Dana, a Portland, Maine, lawyer who ran Reagan's 1980 campaign in Maine, turned back attempts by Harvey and Olson to virtually eliminate class-action lawsuits by Legal Services lawyers and defeated proposed rules to make it easier to cut off funding for programs that may be ideologically out of tune with the administration.
Maryland Attorney General Stephen Sachs was met by cheers from the legal services advocates in the audience when he said, "Poverty ought not weigh at all--and certainly not heavily -- on the scales of justice . . . . Your proposals" -- to require that every member of a class grant permission before a class-action suit can be filed, and that class actions cannot lead to the expenditure of government funds -- "are . . . nothing other than an attempt to gut the class-action concept. Your requirements are impossible to meet."
Finally, Harold DeMoss, a Houston lawyer who is affiliated with the more moderate segment of the board, pushed through a resolution to ask Congress for a 6.7 percent increase in the budget for the 1984 fiscal year.
Legal Services has been operating since 1981 with a budget 25 percent below the 1980 level.
Nine of the 11 members of the board will cease to function as members as soon as Congress adjourns. Reagan withdrew his formal nominations of all nine last week when he received word that the Senate planned to reject Harvey and Olson. The board members are now serving in a recess capacity.
The other two were appointed in October and can serve until Congress adjourns next year.
Although conservatives have criticized previous boards as being overzealous, a number of Reagan board members have been criticized by both Republicans and Democrats.
"We've just exchanged our nuts for their nuts, and I think our nuts may be worse," said Rep. M. Caldwell Butler (R-Va.), a member of the House Judiciary oversight subcommittee that has been looking into the board's expense records.
Reagan has not indicated who any new board members might be. CAPTION: Picture, WILLIAM HARVEY . . . board chairman collected $25,028