Attorney General Edwin Meese III's friend E. Bob Wallach, Meese's former financial adviser and a third man pleaded not guilty yesterday in U.S. District Court in New York to racketeering charges related to scandal-torn Wedtech Corp.
Wallach, a San Francisco lawyer who has been a friend of Meese more than 30 years and has been accused of accepting more than $1.3 million in stock and cash to help Wedtech win federal contracts, said after his arraignment before U.S. Magistrate Thomas Francis that his activities on behalf of the South Bronx defense contractor were "dedicated and lawful."
Announcing that he is innocent and expects to be vindicated, Wallach called the charges "contrived and a contortion of the facts . . . . This trial will be the first opportunity to present an accurate portrayal of my role in this minority enterprise."
Wallach said the assistance he gave Wedtech was "consistent with 30 years of working with the disadvantaged and minorities."
Wallach, Meese's former investment adviser W. Franklyn Chinn and former Wedtech consultant R. Kent London are accused of accepting hundreds of thousands of dollars from the financially crippled contractor in return for promises to influence Meese and other federal officials.
Independent Counsel James C. McKay in Washington is investigating Meese's role in the Wedtech affair.
Wallach added that "the true motivation of the indictment will become evident during the trial." He refused to elaborate. The indictment followed an investigation of more than a year by the office of U.S. Attorney Rudolph W. Giuliani, who has said he is considering running for the U.S. Senate.
London, a San Francisco businessman who was brought into Wedtech as a consultant, called his indictment "outlandish" and added, "I'm convinced when the facts come out, I'll be totally vindicated."
Cristina Arguedas, Chinn's lawyer, called the charges "a fabrication of the crooks who ran Wedtech." She said that four former Wedtech executives who have pleaded guilty to conspiring to bribe city, state and federal officials, have been cooperating with prosecutors "to take years off their own sentences."
Chinn, a San Francisco businessman introduced by Wallach to Meese and to Wedtech, became the attorney general's financial adviser in May 1985 and was named to the Wedtech board of directors later that year.
Wallach, hired by Wedtech just after the Reagan administration took office in 1981, has acknowledged that he wrote more than a dozen memorandums about the company to Meese in 1981 and 1982 when Meese was serving as counselor to the president.
Meese has said that in response to Wallach's requests, he intervened on behalf of Wedtech in 1982 to make sure the company was fairly considered when it was seeking a $32 million Army contract under the Small Business Administration's no-bid minority set-aside program.
The company obtained that contract and others totaling about $250 million before it filed for reorganization under the federal bankruptcy laws in December 1986.
Special correspondent John Kennedy in New York contributed to this report.