NEW YORK, DEC. 22 -- E. Bob Wallach, a close friend of Attorney General Edwin Meese III, and two colleagues were indicted here today on racketeering, fraud and conspiracy charges for extracting payments from the Wedtech Corp. in order to influence Meese and other federal officials.

Independent counsel James C. McKay announced in Washington that there was "insufficient evidence as of this date" to charge Meese with criminal activities.

"This is an interim and not a final, decision," McKay added.

{Meese associates said McKay's announcement will weaken the attorney general's ability to run the Justice Department and may signal more legal trouble for him. Details, Page A4.}

Wallach, a San Francisco lawyer who has known Meese for 30 years, was accused of taking $525,000 in money from Wedtech in return for using his influence with Meese and other government officals while covering up the real purpose of the payments.

The indictment said Wallach took one of those payments, a Nov. 5, 1984, check for $300,000, as a secret advance for services to be rendered to Wedtech in an anticipated post at the Justice Department under Meese.

Wallach's codefendants, San Francisco money manager W. Franklyn Chinn, and Honolulu financial consultant R. Kent London, were accused of helping Wallach conceal some of his Wedtech payments and of receiving $1,380,000 from Wedtech in illegal kickbacks, commercial bribes and fraudulent consulting fees.

The 18-count indictment includes ancillary charges such as mail fraud, securities fraud, conspiracy to defraud the United States and interstate travel in aid of racketeering. Each of the main counts of racketeering and racketeering conspiracy carries a maximum penalty of 20 years in prison and a possible fine of $3,810,000.

Chinn and London were hired by Wedtech on Wallach's advice in April 1985 as consultants who could bring in new business.

Less than a month later, in May 1985, Wallach persuaded Meese to invest $55,000 in an investment partnership with Chinn. Last week it was disclosed, in amended reports from Meese, that on at least three occasions, Chinn had invested significantly more money for Meese and Meese's wife, Ursula, than they had given to Chinn.

The details of Meese's partnership with Chinn as well as Meese's intervention on Wedtech's behalf in 1982 while serving as counselor to President Reagan have been under investigation by McKay for months. He said today that he was unable to proceed any further at the moment because Wallach, Chinn and London all refused to testify, invoking their Fifth Amendment privilege against self-incrimination.

McKay said he could have forced them to testify only by granting them immunity from prosecution. Rather than do that, he authorized U.S. Attorney Rudolph W. Giuliani of Manhattan to proceed with the indictment returned today.

For more than a year Giuliani and the Bronx district attorney's office have been investigating the growth of Wedtech, which was based in the Bronx but is now defunct, during the early part of the Reagan administration. Four of its former executives, named in today's indictment as "coracketeers" but not defendants, have pleaded guilty to charges of conspiracy to bribe.

McKay said that after disposition of today's indictment against Wallach, Chinn and London he "may once again seek the testimony of these individuals."

The three defendants are scheduled to be arraigned Jan. 14 in U.S. District Court here. Wallach said in a statement that "I deny any wrongdoing whatsoever and I am confident . . . that I will be fully vindicated after a fair trial."

But he maintained that he could not get fair treatment from Justice Department prosecutors "when my conduct in this case directly involves their boss." He said he wanted to be tried by an independent prosecutor, but had been rebuffed by McKay.

London's lawyer, Albert Krieger of Miami, said that "when we have our day in court, the indictment will be shown to have been a misconception and misconstruction" of London's dealings with Wedtech. "His activities were not pursuant to or in furtherance of any conspiracy of any sort," Krieger said.

Chinn's lawyer could not be reached for comment.

At a news conference here, meanwhile, Giuliani declined today to say how successful Wallach had been in influencing Meese on Wedtech's behalf. Giuliani also declined to say whether Wallach's lobbying for Wedtech was itself legal or illegal.

"I don't think I can answer hypothetical questions," he said. "There are laws against influencing people. It depends on how you do it."

According to the 48-page grand jury indictment, Wallach "began serving as an adviser, consultant to, and lobbyist for Wedtech" in 1981 and in that capacity, "Wallach sought to influence Edwin Meese and other government officials on behalf of Wedtech primarily in connection with Wedtech's efforts to obtain government contracts."

No specific mention was made of Wallach's success in 1982 in getting Meese to order a White House review that resulted in Wedtech's obtaining a $32 million, no-bid Army contract.

In exchange for Wallach's services, the grand jury said, Wedtech paid Wallach in 1983 and 1984 alone, between $1.3 million and $1.6 million in money and securities.

The allegedly fraudulent payments began with a $125,000 check to "Robert Wallack" dated Sept. 7, 1983. "Wallach and his coracketeers," the indictment said, falsely attributed the payment to consulting work he purportedly had done when the company went public with a stock offering in August 1983.

But "in fact," the indictment charged, "the $125,000 was . . . instead for other services, including his efforts to influence Edwin Meese and other federal officials."

Similarly, the $300,000 payment in November 1984 that Wallach was accused of taking on the promise of a Justice Department appointment was represented as a payment for Wallach's purported role in Wedtech's acquisition of a Michigan shipyard.

The indictment did not spell out the Justice Department position Wallach expected to get. The grand jury said only that in 1985, when Meese became attorney general, "it was decided that Wallach should not take the anticipated position."

Wallach also was accused of taking $99,999.98 from Wedtech in 1985 and 1986 to influence federal officials while using one of London's corporations as a cover for the payments. London and Chinn each picked up at least one of the six checks in question for deposit, "knowing that the checks were obtained by fraud," the indictment said.

In another Wedtech development, U.S. District Court Judge Thomas A. Flannery agreed in Washington today to a motion by McKay to dismiss two counts of the six-count indictment against former White House political director Lyn Nofziger.

Nofziger, whose trial is scheduled to begin Jan. 11, was indicted last July for violating federal ethics laws in lobbying the administration on behalf of Wedtech, Fairchild Industries, and a maritime union.

W. Franklyn Chinn: San Francisco businessman and private financial consultant introduced to Wedtech by Wallach. Chinn became a consultant to the company in April 1985 and was named to the Wedtech board of directors the following August. In May 1985, at Wallach's urging, Meese hired Chinn to invest $55,000 of his family's funds.

R. Kent London: San Francisco medical doctor, financial consultant and gambling whiz who has written several books (under a pseudonym), about beating the system in Las Vegas. A close friend of Chinn, he was also introduced to Wedtech by Wallach and became a consultant to the company in April 1985. In a civil lawsuit, the new lawyers for Wedtech have charged London with conspiring to defraud the company of $1.14 million through consulting fees he received.

E. Bob Wallach: San Francisco attorney and friend for 30 years of Attorney General Edwin Meese III. Wallach became a consultant to Wedtech early in the Reagan administration and wrote a series of memos to Meese persuading him to help Wedtech obtain a $32 million Army contract in 1982. Wallach later received more than $1.2 million in cash and stock from the company.