A federal grand jury yesterday charged Rep. Dan Rostenkowski (D-Ill.) with misappropriating more than $500,000, tampering with a witness and using taxpayers' money to enrich himself, his friends and his family.

"The allegations contained in today's indictment represent a betrayal of the public trust for personal gain," said U.S. Attorney Eric H. Holder Jr. "...Congressman Rostenkowski used his elective office to perpetrate extensive fraud on the American people."

The 17-count indictment charges that Rostenkowski, 66, chairman of the House Ways and Means Committee, engaged in a pattern of corrupt activity for more than 20 years.

He personally directed the House Finance Office to place at least 14 "ghost employees," who performed little or no official work, on the payroll, the grand jury said.

Instead, some mowed the lawn of his vacation house in Wisconsin, picked up his laundry, took pictures at his daughters' weddings and supervised the renovation of Rostenkowski's house, the indictment charges.

In one instance, Rostenkowski's future, now former, son-in-law was required to return most of his government salary to the congressman in cash kickbacks, the indictment said.

The government also alleges that Rostenkowski obtained seven cars valued at more than $100,000 from a Chicago dealership, while paying only $5,294 from the bank account of his daughters. The remainder of the debt was paid by the government and his campaign committee, prosecutors allege.

The charges were leveled one day after Rostenkowski rejected a proposed plea agreement with prosecutors and went on the offensive, denying all charges and vowing to fight in court.

"I have always fought for what I believe in," Rostenkowski said in a statement faxed around the country Monday evening. "I strongly believe that I am not guilty of these charges and will fight to regain my reputation in court... . This will be a difficult fight. The government has vast resources at its disposal."

A Rostenkowski spokesman said the 35-year veteran of Congress would have no comment yesterday and that his earlier statement would suffice. Holder called the alleged actions "offensive and reprehensible," stating that such official misconduct had a "corrosive effect" on the nation's "democratic system of government and on the trust our citizens have in their elected officials."

Rostenkowski is expected to be arraigned within the next 10 days, but a trial date is uncertain, prosecutors said, because of the time required to respond to expected defense motions. If the charges were taken separately, Rostenkowski would face a maximum penalty of more than 100 years in prison if convicted, but federal sentencing guidelines would prescribe much less confinement. Holder said Rostenkowski faced "several years."

The indictment alleges that Rostenkowski abused his congressional payroll account, his House Stationery Store privileges, his House Post Office prerogatives and his expense allotment for vehicle leasing.

Holder said that Rostenkowski "regularly put people on his congressional payroll who did little or no official work, but who instead performed a variety of personal services for him, his family, his family insurance business and his campaign organizations." Holder said that payments to them exceeded $500,000.

The government charges that between July 1971 and July 1992, Rostenkowski placed 14 people on his congressional payroll who performed personal services for him and his family.

One person allegedly received $20,000 in federal funds for taking photographs at the weddings of the congressman's daughters, and at political fund-raisers and parties held at Rostenkowski's family vacation house.

A second person allegedly received $48,400 during a four-year period while performing no government work. The father of that same "ghost employee" paid two of Rostenkowski's daughters a total of $48,000 through the payroll of the Illinois State Senate Office, the indictment charges. Another person, identified as Rostenkowski's 17-year-old godson, collected $1,500 in government salary in 1976 for "mowing the grass ... at defendant Rostenkowski's summer home."

During much of this period, Rostenkowski allegedly maintained "close" control over his payroll, personally determining each month who should be added to the accounts, how long they would remain and how much they should be paid, the indictment charges. Further, Rostenkowski instructed the House Finance Office not to disclose any payroll information to members of his staff.

The indictment charges that Rostenkowski kept the same "payroll counselor" to assist him in "payroll matters" for 10 years in violation of House policy that required such staff to be rotated every two years.

Rostenkowski's office created an "untraceable" supply of cash by instructing several employees to cash their checks and return them to the Chicago district office manager, prosecutors alleged. "Then, as these people performed services -- whether personal, official or campaign related -- they were paid in cash in substantially smaller amounts than the checks that initially had been issued to them."

The indictment also alleges that Rostenkowski obstructed justice by instructing a witness to withhold evidence from the grand jury. In 1991, Rostenkowski asked a House employee -- whom he had earlier placed on the congressional office payroll -- to engrave 50 brass plaques and to place them on the bases of 50 sculptures of the U.S. Capitol, prosecutors said. The plaques and the sculptures had been bought at the House Stationery Store and charged to his official account.

The employee was asked to engrave the names of recipients, followed by a phrase such as "friendship" or "our pal," and then followed by the first name of Rostenkowski and his wife. The employee did the work for no charge. In September 1993, the employee was asked to testify before a grand jury investigating Rostenkowski.

"The engraver {employee} went to see the congressman's administrative assistant in Washington, who had earlier told him that Rostenkowski's campaign committee was paying for lawyers for people called before the grand jury," Holder said. "After putting the engraver in contact with an attorney, the administrative assistant told the engraver that Rostenkowski wished to speak with him. Over the telephone, Rostenkowski instructed the engraver not to say anything about the crystal sculptures... . "

Rostenkowski obtained some $40,000 in merchandise from the House Stationery Store, the bulk of which he distributed as gifts to friends and associates, prosecutors said.

"He charged the items to his official expenses allowance, causing Congress to pay for them based on his false representation that the items were being purchased for official use," Holder said.

The list of items purchased included 60 wooden armchairs, handpainted and inscribed with his name for $379 each, 60 crystal sculptures of the U.S. Capitol at total cost of $12,000, 250 pieces of china at $5,000 and 26 pieces of luggage valued at $2,200.

Prosecutors charge that Rostenkowski obtained at least $50,000 in cash from the post office by "disguising the transactions as stamp purchases." Members of Congress have "franking privileges" that enable them to send official mail without postage. However, the frank cannot be used for certified, insured or express mail, and for these letters lawmakers can purchase stamps at the House Post Office. House members are required to submit vouchers that must be signed by the legislators, certifying that they have paid for or received the postage specified on the voucher.

From May 1985 through May 1987, Rostenkowski personally obtained $11,500 from the House Post Office through the postmaster, the indictment states. The postmaster got the cash from the post office supervisor of accounts, according to the charges. When that supervisor left in 1987, the postmaster allegedly told Rostenkowski that he was no longer able to obtain the cash.

"When the second supervisor of accounts left in 1989, Congressman Rostenkowski personally intervened and insisted that one of his patronage employees be promoted to the position," a Justice Department press statement said. Then, during a 21-month period in July 1989 and April 1991, Rostenkowski obtained $9,800 more in exchange for vouchers and stamps, prosecutors said, noting that the alleged scheme ended one month later when Capitol Police began investigating allegations of embezzlement.

Prosecutors charge that Rostenkowski was able to develop a "unique" relationship with a suburban Chicago Ford dealership, enabling him to obtain immediate possession of and title to vehicles without a down payment, without taking out a loan, without signing a promissory note, without paying interest on the debt and without making regular payments.

Rostenkowski submitted fraudulent lease agreements to the House Finance Office, which "falsely" represented that the payments would be for leasing the vehicles, prosecutors said. About $73,000 in government funds were used for the vehicles which were "for the personal use of himself and his family."

The indictment was issued after a two-week period of plea bargaining discussions with Rostenkowski's attorney, Robert S. Bennett. Last week the congressman declined to accept an agreement that he plead guilty to at least one felony count and serve a limited time in jail. Rostenkowski was said to have entered the negotiations in effort to reduce or eliminate any prison sentence while avoiding a lengthy court battle. He also wanted to retain his chairmanship. Such talks are considered normal and should not affect his trial.

Holder said Rostenkowski's attorneys initiated the talks, and that the government's only interest was in avoiding a costly trial. The talks in no way were reflective of concern on his part about the strength of the case, he said.

Sources said the talks ended without agreement because Rostenkowski maintained his innocence. There had been some tension between Rostenkowski and Bennett over the handling of his case that has fostered media speculation about whether Bennett would continue. Longtime friends had urged the lawmaker to fight, while defense attorneys urged him to weigh all options and even suggested that he get a second opinion about whether to accept a plea bargain.

Rep. Dan Rostenkowski (D-Ill.) was indicted yesterday on 17 felony counts:

MAIL AND WIRE FRAUD (counts 1 to 5)

On five occasions between December 1988 and January 1992, Rostenkowski allegedly used the mail and telephones to further frauds involving the hiring of congressional employees who did little or no work; the purchase of personal gifts paid from his congressional account; the use of his congressional stamp fund to obtain cash from the House Post Office; and the purchase with congressional funds of vehicles for personal and family use.

OBSTRUCTION OF JUSTICE (count 6)

Rostenkowski allegedly instructed a grand jury witness to withhold evidence. The witness had engraved brass plates for about 50 crystal sculptures purchased by Rostenkowski as gifts from the House Stationery Store.

CONCEALING A MATERIAL FACT (count 7)

This count alleges that 14 persons were put on Rostenkowski's congressional payroll over a period of 20 years who did little or no official work but performed a variety of personal services for Rostenkowski, his family, his family insurance business and his campaign organizations. It provides details on the dates, payment and tasks performed by each employee.

EMBEZZLEMENT (count 8)

This count deals with the alleged use of public funds to pay for work to benefit Rostenkowski and his family.

CONCEALING A MATERIAL FACT (count 9)

This count involves the purchase from the House Stationery Store of items for Rostenkowski's personal use and to distribute as gifts, including 60 wooden armchairs, about 50 crystal sculpt1970431347luggage.

EMBEZZLEMENT (count 10)

This count cites use of congressional funds for the purchase of armchairs, luggage, china and crystal for personal use.

CONCEALING A MATERIAL FACT (count 11)

Rostenkowski allegedly received cash from the House Post Office in exchange for postage stamps on 12 occasions between 1985 and 1991.

EMBEZZLEMENT (count 12) Receipt of cash for postage stamps purchased with congressional funds.

CONSPIRACY (Count 13)

This count also refers to allegations that Rostenkowski obtained cash for postage stamps.

CONCEALING A MATERIAL FACT FROM THE FEC (count 14)

Eleven times between July 1989 and December 1990, Rostenkowski allegedly gave the postmaster of the House signed checks drawn on the Rostenkowski for Congress Committee and the America's Leader Fund, and instructed him to cash the checks.

CONCEALING A MATERIAL FACT (count 15)

This count alleges that Rostenkowski had the U.S. Treasury pay $73,500 to Wil-Shore Motor Sales in Chicago for fraudulent vehicle lease agreements, and had the Treasury pay $1,800 to Bilbo Plating Inc. for storing a leased vehicle in a garage.

EMBEZZLEMENT (count 16)

This count also applies to the vehicle purchases.

CONCEALING A MATERIAL FACT FROM THE FEC (count 17) This count alleges that Rostenkowski directed the Rostenkowski for Congress Committee to pay $28,267 to Wil-Shore Motor Sales as partialp1635347813 was spent to rent automobiles for campaign purposes.

SOURCE: Grand jury indictment, U.S. District Court

The grand jury indictment against Rep. Dan Rostenkowski (D-Ill.) alleges that 14 people, from 1971 to 1991, were on the governmental payroll but did little or no official work. The amount of money involved appears in parentheses. The first abuse is reported to have occurred in 1971, 12 years after Rostenkowski entered the House.

* 1971 Employee performs bookkeeping services for Rostenkowski's private insurance company. $61,000. (1971 to 1992)

* 1973 Employee does no official work; receives gift for college. $3,200. (1973-1975)

* 1975 Employee supervises renovation of Rostenkowski's house. $53,600. (1975-76 and 1980-81)

* 1976 Employee cleans congressional office biweekly while employee's wife cleans Rostenkowski's house regularly without payment. $90,000 (1976-1987)

Employee mows grass at summer home. $1,500. (1976)

* 1977 Employee photographs personal events, including Rostenkowski's daughters' weddings. $20,000. (1977-1986)

* 1978 Employee, soon to become son-in-law, performs no official work. $10,400. Allegedly required to kick back most of money to Rostenkowski. (1978-1980)

Employee receives "salary" checks that were primarily rental payments for campaign office. $55,700. (1978-1985)

* 1979 Employee picks up laundry, drives family members, works at campaign events. $21,100. (1979-1991)

* 1981 Rostenkowski becomes chairman of the House Ways and Means Committee

* 1982 Employee, wife of renovation supervisor, does no official work. $121,400. (1982-1992)

* 1983 Employee performs no official work while employee's father pays Rostenkowski's daughters from Illinois State Senate payroll. $48,400 (1983-1986)

* 1985 Employee, Rostenkowski tenant, does no official work. $6,800.

* 1986 Employee, Rostenkowski tenant, performs little or no official work. $32,500. (1986-1992)

* 1991 Employee performs personal services, including engraving gifts and mounting souvenirs on plaques. $3,600. (1991)

SOURCE: Grand Jury Indictment, U.S. District Court

Selection Process

Coaches at more than 225 schools were invited to submit nominations. Selections were made by Post scholastic staff members J. Christian Davenport (girls lacrosse), Michael Sandler (boys soccer), Gene Wang (boys lacrosse) and Saul Wisnia (girls soccer).