Federal prosecutors accused Annapolis lobbyist Bruce C. Bereano yesterday of defrauding four clients of about $16,000 by padding his bills for legislative entertainment and then using the money to make illegal political contributions through family members and office employees.
Mr. Bereano was charged with eight counts of mail fraud, a felony charge that carries a maximum sentence of five years in prison and a $250,000 fine for each count.
The indictment against Mr. Bereano -- the highest paid lobbyist in the state capital, in some years earning more than $1 million representing business interests before legislators -- was returned yesterday morning by a federal grand jury in Baltimore.
The charges are the culmination of a 17-month investigation that began with accusations of impropriety involving Mr. Bereano's representation of GTECH Corp., which won Maryland's lucrative $49 million lottery contract in 1992. Yesterday, prosecutors said that portion of their investigation yielded no evidence of wrongdoing and was recently closed.
Mr. Bereano, 49, who joined the governor and other top Maryland officials at a breakfast fund-raiser for a Western Maryland lawmaker early yesterday, said he learned of the grand jury's action in a telephone call from his attorney later in the morning.
For weeks, Mr. Bereano has been quietly telling associates that he expected the investigation to result in his indictment. While he seemed subdued yesterday, he clearly was not surprised. He declined to comment about the indictments.
"Very respectfully, I don't think it is appropriate to comment about it, or respond, other than in a judicial forum, in a courtroom, or within the judicial process," he said. "I think dealing with it in any other context is just not appropriate. It is a legal matter."
Prosecutors say the lobbyist defrauded four clients of about $16,000 by billing them for bogus legislative entertainment and using the money for political contributions in 1990 and 1991. The namesof the candidates who received the money were not disclosed, and they are not under investigation, said First Assistant U.S. Attorney Gary P. Jordan.
Lawyer minimizes charges
Mr. Bereano's lawyer, M. Albert Figinski, called the charges "a far cry" from the allegations of wrongdoing involving his client's representation of GTECH. He also minimized the extent of the alleged infractions, saying that, by his calculation, the total amount of money involved in the indictments is only about $600 -- a figure he said that, if true, may have simply been misbilled.
"That ain't a lot of money," Mr. Figinski said.
A date for Mr. Bereano's arraignment in U.S. District Court in Baltimore has not yet been scheduled and is not likely to occur for a week or two, said Mr. Jordan.
Meanwhile, Mr. Bereano said he plans to continue to represent clients before the legislature and in court. "I'm going to continue my work everyday. I, respectfully, don't see any reason to change it," he said.
The indictment alleges that between May 1990 and June 1991, Mr. Bereano instructed employees of his law firm to make campaign contributions in their names to candidates he specified. The employeeswere then reimbursed from the law firm's account, allegedly using money from the fraudulent bills.
The indictment also contends that employees were told to cash checks -- also drawn on a law firm account -- creating cash that Mr. Bereano gave to family members as reimbursement for contributions they made to the Bereano Political Action Committee on his behalf. Mr. Bereano, who already controlled the disbursement of funds from several PACs set up by his clients, established a PAC in his own name to distribute additional contributions at a time when PAC donations were unlimited.
The indictment contends that in the law firm's books, the expenses were recorded as legislative entertainment. Through these steps, Mr. Bereano disguised the source of the contributions.
Bereano PAC records from 1990, on file with the state board of elections, show that during one five-month period of the investigation, seven people who were either relatives of Mr. Bereano, or who listed his home address as their own, contributed more than $15,000 to the PAC. The relatives included his mother, father, son and his then-wife.
The clients he is accused of defrauding are Phillips Publishing Inc. of Potomac; Dental Benefit Providers of Bethesda; Medical Mutual Liability Insurance Society of Maryland, of Hunt Valley, and Maryland Saltwater Sportfisherman's Association of Glen Burnie.
Richard N. Novotny, executive director of the Sportfisherman's group, which had hired Mr. Bereano in the hope of making rockfish a game fish that was off-limits to commercial fishermen, said he was "not aware anything like that was going on and was very surprised the indictment came down."
"I've always thought of him as very forthright, upfront, honest person. . . . We feel no real misuse of any of our funds," he said.
Calls to the other Bereano clients identified in the indictments were not returned. Mr. Bereano currently represents just one of the four, Medical Mutual.
Varied list of clients
According to records just filed with the State Ethics Commission, Mr. Bereano had 46 clients who paid him more than $771,000 during the six-month reporting period that ended April 30. For years, he has been the top earner among legislative lobbyists in Annapolis, usually by a wide margin.
He probably is best known as the tobacco industry's chief lobbyist in Maryland. But his varied list of clients also includes the manufacturers of radar detectors, the state's largest medical malpractice insurer, other insurance companies, medical labs, computer firms, cable television companies, vending machine operators, brokerage houses, long-distance companies and a firm that provides medical services to prison inmates.
To augment his representation of clients, Mr. Bereano immersed himself in Maryland politics, particularly in campaign ) fund-raising. With boundless energy and exuberance, and a huge Rolodex full of contacts, Mr. Bereano blended a brazen mix of politics and legislative lobbying that made him into one of the leading power brokers in Annapolis.
Yesterday, the views were mixed on how fast, or whether, that could change. Some lobbyists and politicians privately speculated the federal action is surely the beginning of the end of Mr. Bereano's power in Annapolis.
State to investigate
The charges mean that an investigation will begin immediately by the state's Attorney Grievance Commission. If Mr. Bereano is convicted, it would mean almost certain disbarment by the Maryland Court of Appeals.
State officials and rival lobbyists alike, many of whom consider themselves friends of Mr. Bereano, expressed sadness about the indictments and noted he has not been found guilty of anything.
Gov. William Donald Schaefer, for whom Mr. Bereano was a tireless worker and fund-raiser, said: "I've known him to be charitable person and to give a lot back to the community. I've known him as a fund-raiser for good causes, the Annapolis Boys and Girls Club, the March of Dimes -- two annual events that raise a lot of money to help people.
"He's a very hard-working persistent lobbyist, but as far as doing anything illegal, I've never known him to do anything like that," Mr. Schaefer said. "You hate to see this kind of thing happen to anybody you know. We don't always agree on issues, but he never used high-pressure tactics on me."
Former Maryland Gov. Marvin Mandel, whom Mr. Bereano recruited to help lobby for the GTECH contract, seemed astonished.
"After all the noise and announcements of investigations into the lottery and so forth, we get down to campaign contributions?" he said.
"Then to call it mail fraud under the statute seems to me to be stretching it a little bit."
Said House Speaker Casper R. Taylor Jr., "When anybody is indicted, or accused of wrongdoing, who you have known and [with whom] you have had working relationships and social relationships and to some extent personal relationships over a -- long period of years, it is always very sad."
A spokesman at The Tobacco Institute in Washington, D.C., one of Mr. Bereano's key clients, said officials there had not reviewed the allegations and it is "way too early" to determine whether it will affect his status with the organization.
"He's always carried a lot of water for us through difficult times," said spokesman Thomas Lauria. "We'd want to see the outcome of this."
Governor Schaefer, who has long insisted the award of the GTECH contract was handled properly, said of that portion of the case being closed: "I'm not surprised they didn't find anything. We were meticulous in that contract and brought in the highest caliber individuals to review the process, each step of the way.
"It's too bad we had a cloud hanging over the lottery for that period of time,"
At GTECH yesterday, officials of the Rhode Island-based firm said it was not surprising that nothing came of the allegations.
"It's nothing more than we've known all along," said spokesman Robert Rendine. "We are indeed grateful that federal authorities recognized this."
Mr. Bereano continues to represent the company, which has no plan to change his status, he added.
Del. Leon G. Billings, a Montgomery Democrat whose letter to former U.S. Attorney Richard D. Bennett questioning the GTECH contract prompted the investigation, said, "If, in fact, the U.S. attorney has completed that investigation and found that there is no evidence of wrongdoing, then I'm fully satisfied."