A federal grand jury yesterday indicted former House member Joseph P. Kolter (D-Pa.) on charges that he embezzled more than $40,000 in taxpayers' funds.

Kolter, a congressman from 1983 to 1993, was accused of conspiring with the House postmaster to convert stamps into $11,000 in cash for his personal use. He also is charged with making taxpayers foot the bill for more than $33,000 worth of merchandise -- including china, luggage and jewelry -- that he got from the House Stationery Store.

Specifically, Kolter is charged with conspiracy, embezzlement of public funds, concealing material facts through a coverup and aiding and abetting the conversion of postage stamps to cash.

The case is the latest in an ongoing federal investigation of the House Post Office scandal. So far eight people, including former House postmaster Robert V. Rota, have been convicted. Rep. Dan Rostenkowski (D-Ill.) is awaiting trial on charges of embezzlement, mail fraud, concealing material facts and obstructing justice.

U.S. Attorney Eric H. Holder Jr. said in a statement that the Kolter indictment "demonstrates our office's continuing commitment to hold accountable all those connected to the House Post Office who have engaged in criminal conduct."

Alan I. Baron, Kolter's lawyer, said, "Congressman Kolter has maintained throughout that he was not guilty of any wrongdoing. We continue to maintain that position. We will plead not guilty to the indictment."

According to the five-count indictment, Kolter personally instructed Rota to give him cash in exchange for congressional vouchers -- forms used by members of Congress to request stamps to mail materials that cannot be covered by the congressional frank. Kolter also allegedly told Rota to give him cash for stamps that he previously had received from the House Post Office.

The grand jury said Kolter obtained $6,300 from January 1985 to May 1987 through Rota, who also is from western Pennsylvania and was a good friend of Kolter's. Rota is cooperating with the government, according to court records.

Between 1987 and 1989, however, Kolter and Rota could not continue their practices, the grand jury said, because a new employee was working in the House Post Office. After that employee left, the two men resumed their business, the indictment said. From December 1989 to December 1990, Kolter allegedly received $5,000 in cash in the same manner.

The indictment said Kolter used a computerized list to compare his stamp purchases to those of other House members. Rota instructed post office employees to keep the list, according to the grand jury.

Under law, members of Congress are prohibited from using government funds for any personal, political or campaign-related expenses.

From 1986 to 1992, the federal grand jury said, Kolter also improperly obtained more than $33,000 worth of merchandise from the House Stationery Store. These items included more than 650 pieces of china and glassware worth a total of $21,000; 40 wristwatches and clocks, worth $4,300; more than 30 Mont Blanc pens, worth $3,300; about 30 pieces of luggage, worth more than $2,000; and two gold necklaces, worth almost $500.

Under House rules, members could use the stationery store to obtain office supplies. When they did so, such purchases were charged to accounts kept by the store. The House Finance Office would then pay the bills and deduct the purchases from each member's official expense allowance.

The store also had a practice of obtaining some merchandise that members bought for personal use. Such personal purchases, however, were supposed to be paid for by the members individually, with a 10 percent service charge tacked on, the indictment noted.