BALTIMORE, NOV. 12 -- A federal judge today overturned the 10-year-old mail fraud and racketeering convictions of former Maryland governor Marvin Mandel and five associates in a reversal that stunned prosecutors and brought at least temporary vindication to the once-powerful Mandel.

U.S. District Judge Frederic N. Smalkin, basing his ruling on a June Supreme Court decision, said that Mandel and the others were convicted in an overly broad use of the federal mail fraud statute and all counts against them therefore must fall. That Supreme Court decision prompted Mandel to seek a new review of his case.

The ruling, if upheld on appeal, could lead eventually to Mandel's criminal record being expunged, restoration of his right to practice law and the return of thousands of dollars in fines levied against four of his associates.

Maryland U.S. Attorney Breckinridge L. Willcox said he would appeal.

"Vindication is all that I've ever been seeking, and the judge has provided that," a smiling Mandel, 67, said at a news conference just hours after the ruling. He said he will not seek financial compensation for his time in prison. "I never did anything to hurt the people of the State of Maryland or deprive them of anything," he said. "And the judge has just said the same thing."

Barnet D. Skolnik, the zealous federal prosecutor who spearheaded the Mandel prosecution, said yesterday that Smalkin's decision doesn't change anything.

"Nothing will ever change what Mr. Mandel did," Skolnik said. "He sold his office . . . . He sold out the people of Maryland and that's never going to change."

Speaking in the office of his Baltimore attorney, Arnold Weiner, Mandel said he has no plans to reenter politics, but left the possibility open by adding "at this time." He said his wife Jeanne, who sat by him at the news conference, does not want him to run for office again.

What kind of political position might be open to Mandel is unclear. Since his release from prison nearly six years ago, he has acquired growing influence behind the scenes in state politics and Maryland Gov. William Donald Schaefer has said he is one of Mandel's fans. Mandel has said that he has turned down offers to lobby for various groups.

Schaefer, who as mayor of Baltimore offered Mandel a work-release job at City Hall when Mandel had completed his prison time in 1981, said yesterday, "I am not surprised by the ruling. I have known Marvin Mandel and Irv Kovens {one of the codefendants} for years and never knew them to do anything illegal."

Today's decision was the latest in one of the longest-running and most dramatic political sagas in Maryland's history. As governor -- a post he first won by legislative appointment when Gov. Spiro T. Agnew became vice president -- Mandel was considered a master of politics and legislative strategy. In the early 1970s, he shocked Marylanders by leaving his wife Barbara for another woman.

By the mid-1970s, he was caught up in the scandals that swept Maryland, such as taking a $50,000 loan from a Catholic fund-raising order called the Pallottine Fathers to help finance his divorce from Barbara Mandel.

The case involving the Marlboro Race Track unfolded with indictments of Mandel and his codefendants in 1975 and a mistrial in 1976 because of publicity concerning jury-tampering allegations. After his conviction in a second trial the following year, Mandel appealed the case through the federal appellate courts and was ultimately turned down by the Supreme Court.

Prosecutor Willcox expressed disappointment at today's ruling but added, "I can't say I'm totally surprised" in light of the Supreme Court decision on which Smalkin based his ruling.

In that decision, made in June, the high court held that mail fraud prosecutions against state officials can be made only when the fraud involves economic loss rather than intangible losses, such as the loss of good governance by public officials, as charged in the Mandel case.

Mandel and five other defendants were convicted in 1977 of 15 counts each of mail fraud and one count of racketeering in an alleged scheme to increase the value of Prince George's County's Marlboro Race Track in 1972 and 1973. The horse racing track, now defunct, was secretly owned at the time by the five codefendants, W. Dale Hess, Harry W. Rodgers III, William A. Rodgers, Irvin Kovens and Ernest N. Cory.

As governor, Mandel helped the track obtain extra racing days, which are controlled by the state and worth millions of dollars in profits for track owners.

In exchange, according to prosecutors, the tracks' secret owners heaped money, jewelry and vacations on Mandel, as well as financial assistance in his divorce and remarriage.

Mandel served 19 months in prison and was disbarred. Hess, Kovens and the two Rodgers were fined $40,000 each and imprisoned for terms of one to three years. Cory received a suspended sentence.

Mandel, who was released from prison in late 1981 and has worked as a building contracting consultant and sometime radio talk show host, had sought repeatedly to get his conviction overturned, ironically on much the same grounds as Judge Smalkin provided for him today.

In various appeals, Mandel had contended that both the indictment against him and the trial judge's charge to the jury in 1977 referred primarily to defrauding the citizens of Maryland of their right to "conscientious, loyal {and} faithful . . . services" of the governor, all intangible values, rather than concrete economic worth, as required by the federal mail fraud statute.

Smalkin agreed. Under the McNally ruling of the Supreme Court in June, he said, the mail fraud statute "has been limited from its inception to the protection of money and property (rather than nonmonetary, i.e., "honest and faithful government") rights."

The legislative history and intent of the statute show that its reach "has logically been as narrow as McNally's interpretation since the day of its enactment," Smalkin said.

The jury, he said, was incorrectly instructed to allow a "conviction if the jurors simply became convinced that the defendants had subverted the process of honest government in Maryland. The evidence of concealment of ownership of Marlboro shares and of Mandel's secret financial arrangements certainly showed that something fishy, and perhaps dishonest, involving Maryland's governor and some of those personally and politically closest to him was going on."

"Mandel might well have been bribed," the judge said. "His codefendants might well have bribed him. But however strong the evidence of dishonesty or bribery, the jury was told it could convict for something that did not amount to a federal crime."

Smalkin, a former U.S. magistrate and a federal judge here for little over a year with a reputation for painstaking scholarly research, added in an unusual passage that his ruling today "has nothing to do with {Mandel and his codefendants'} guilt or innocence, in any moral sense."

He said: "The people of Maryland, as a matter of natural law, have and have always had an inalienable right to good government. A jury of 12 citizens found beyond a reasonable doubt that the {defendants} had deprived all the citizens of Maryland of that right. This conduct, however, for reasons amply set forth . . . cannot sustain a judgment that the defendants were guilty of federal crimes. A final answer to the question of {the defendants'} guilt or innocence, in any broader sense than that, must await the judgment of history."

Willcox argued in court papers this fall that bribery -- the taking of tangible goods for illegal purposes -- underlay the mail fraud and racketeering charges.

The case involved a "sordid tale of corruption, bribery and deceit at the innermost sanctum of state government," Willcox said.

But Smalkin ruled that while the word bribery appears in the Mandel indictment, its main thrust nevertheless was the loss of intangible "good government" rights, and both the racketeering charges and the underlying fraud counts thus must be set aside.

"We had hoped to persuade {Smalkin} that this was a bribery case, an economic deprivation case, unlike McNally," said Willcox today. "But we failed."

Staff writers Robert Barnes and Sue Schmidt contributed to this report.