NEW YORK, JUNE 3 -- A federal grand jury accused Rep. Mario Biaggi (D-N.Y.) and six other men today of violating federal antiracketeering laws in milking bribes and extorting payments from the Wedtech Corp.
The company itself amounted to "a racketeering enterprise" that was used to make illegal payments to public officials so that Wedtech could obtain and maintain government contracts, the grand jury charged.
Wedtech's founder, John Mariotta, 57, once praised by President Reagan as a "hero for the '80s," also was indicted, accused of misrepresenting the company as a minority-owned business, from 1981 to 1983, when he owned less than half of it. Mariotta is Hispanic.
After the company went public in mid-1983, Biaggi, Mariotta and others "known and unknown to the grand jury" conspired to trick the Small Business Administration into believing that Mariotta owned more than 50 percent of the company's outstanding stock, the indictment said.
"Wedtech was presented to the public as the proverbial American success story," U.S. Attorney Rudolph W. Giuliani said in announcing the 58-count indictment at a news conference.
"This indictment now alleges that much of Wedtech's success was based on its being run as a racketeering enterprise," Giuliani added. "If Wedtech was the proverbial American success story, these charges raise serious questions about the way we practice politics and conduct business in this city, state and nation."
Biaggi, 69, a former police officer once known as "the most decorated cop" in New York, was charged with racketeering, conspiracy, extortion, fraud, obstruction of justice, perjury and and other violations. In all, he was named in 21 counts carrying a maximum aggregate penalty of 181 years in prison and $8.9 million in fines.
Indicted with him, besides Mariotta, were Biaggi's son, Richard, 38; their longtime law partner, Bernard G. Ehrlich, 58; former SBA regional administrator Peter Neglia, 39; Neglia's close friend and alleged bagman, Ronald Betso, 39, and former Bronx Borough president Stanley Simon, 57.
They will be arraigned Friday at 11 a.m. before U.S. District Court Judge John M. Cannella.
Biaggi, a member of Congress for the past 18 years, asserted his innocence at his lawyer's office today. He refused to take questions but complained in a prepared statement that the prosecution had accepted "at face value the statements of a pantheon of known liars and convicted felons, all desperate to save their skins."
Four former Wedtech executives, Fred Neuberger, Mario Moreno, Anthony Guariglia and Lawrence Shorten, all named today as unindicted "co-racketeers," pleaded guilty Jan. 30 to conspiring to bribe various public officials and are cooperating with authorities. Sources said Neuberger, not Mariotta, was Wedtech's principal owner before it went public.
Giuliani and his partner in the Wedtech investigation here, Bronx District Attorney Mario Merola, said their work was not complete. They added that they have been providing "facts" about Attorney General Edwin Meese III and former White House aide Lyn Nofziger to independent counsel James C. McKay, who is investigating Meese's and Nofziger's Wedtech-connected activities under the Ethics in Government Act.
Biaggi was accused of having demanded and obtained 5 percent, 225,000 shares, of Wedtech's outstanding stock in mid-1983 by threatening to withdraw his law firm, Biaggi & Ehrlich, from representing Wedtech and to put a stop to "the SBA's support of Wedtech."
Biaggi also was alleged to have demanded a $50,000 payment, disguised as legal fees, for contacting New York City officials on Wedtech's behalf.
Richard Biaggi was charged with concealing his father's acquisition of 112,500 shares of Wedtech stock (half of the 5 percent) and later selling 25,000 shares on his father's behalf in 1985 for more than $387,000.
The indictment charges that Neglia took part in the scheme to defraud the SBA in 1983 by approving a "sham" arrangement in which Mariotta was depicted as owning more than half of Wedtech's newly issued stock. The company's status as a minority business enabled it to win hundreds of millions of dollars in no-bid defense contracts under the SBA's set-aside program.
The Wedtech Corp., now under the protection of federal bankruptcy law, was not indicted, reportedly because of new management's "full cooperation" with investigators. Special correspondent John Kennedy contributed to this report.