A federal judge in Chicago vacated last month's conspiracy conviction against slain insurance executive Allen M. Dorfman yesterday, while FBI agents and local police continued to hunt for his killers.

U.S. District Court Judge Prentice H. Marshall set the stage at the same time for a potentially explosive set of presentence hearings involving Dorfman's co-defendants: Teamsters union President Roy Lee Williams, Chicago mobster Joseph (Joey the Clown) Lombardo and two officials of the Teamsters Central States Pension Fund, Amos Massa and Thomas O'Malley.

All five had been convicted of conspiracy and 10 related offenses for plotting to bribe a U.S. senator in return for favors to the union.

Two men accosted Dorfman in a hotel parking lot in Lincolnwood, Ill., last week and shot him eight times in the head and neck in a mob-style execution.

Investigators say they are convinced that he was murdered in a pre-emptive move to "keep him quiet" and head off any deal with the government.

At a hearing before Marshall yesterday, the victim's chief defense lawyer, Harvey Silets, moved to dismiss the indictment against Dorfman, because he had died before any final judgment was rendered. The request was granted.

The judge denied a stack of other defense motions aimed at setting aside the remaining guilty verdicts, but reserved ruling on one concerning "alleged juror contacts," which remains under seal.