Defense fund formed for Gadhia

THE BALTIMORE SUN

A circle of prominent Baltimore businessmen -- including a deputy Cabinet official in the Glendening administration -- is circulating an anonymous letter trying to raise $100,000 to defend the governor's ousted campaign treasurer against allegations that he laundered election money.

Seeking to distance himself from an FBI investigation into the charges, the governor forced Lalit H. Gadhia to resign as his campaign treasurer last month and take an unpaid leave from his $80,000-a-year appointed job as deputy secretary of international economic development.

This week, another Glendening aide emerged as a chief organizer of the defense fund.

Richard Pecora, who oversees state contracts and purchasing for the governor, said he agreed to serve in his free time as a trustee for the group -- "Friends of Lalit Gadhia" -- without consulting the governor.

"Frankly, I fail to see how it's any of the governor's concern," Mr. Pecora said. "Why would he want to know what I do on my private time? I'm not trying to tie the governor to this, or the administration, or anyone else in state government. And I fail to see why my position with the state should disqualify me."

A spokesman for the governor said Mr. Glendening had "no idea" that one of his aides was involved in the defense fund, adding that "there's not a lot he can do about what people do in their free time."

"The governor didn't condone this activity," said Raymond C. Feldmann, the spokesman. "It is his understanding that Mr. Pecora has been a friend of Mr. Gadhia for some time. I don't see how that ties the administration back into this controversy."

Mr. Gadhia is an immigration lawyer from Bombay who galvanized Baltimore's thriving Indian-American community into a major source of campaign funds for Maryland Democrats, including the governor.

Mr. Gadhia became the subject of an FBI probe last month when witnesses said he had sought their help in circumventing federal election laws.

Timothy P. McNally, special agent in charge of the Baltimore FBI office, confirmed yesterday for the first time that his agency is investigating the allegations but declined to say whether Mr. Gadhia is a target. He urged anyone with direct knowledge of the allegations to call his office.

"Our allegations are that false statements were made to the Federal Election Commission and that contributions prohibited by federal election law were made to this political action committee," Agent McNally said. "As far as the scope of the investigation, we are not prepared to get into that."

Mr. Gadhia and his nephew, Uday Gadhia, have denied the allegations and refused to grant repeated requests for interviews since the investigation began.

"We will continue to have no comment," Mr. Gadhia's lawyer, Daniel F. Goldstein, said last week.

Subpoenas obtained by The Sun show that a federal grand jury in Baltimore is investigating claims by more than a dozen people who say Mr. Gadhia or his nephew asked them in October to write large checks to an obscure New Mexico political action committee known as the Indian-American Leadership Fund. They say the two men reimbursed them.

The checks -- $34,900 in all -- were then mailed to the PAC by Mr. Gadhia's office, records show. Correspondence, memos and notes obtained by The Sun detail a series of conversations between the PAC's treasurer and Mr. Gadhia in which the 56-year-old immigration lawyer named 13 Democratic politicians to whom he wanted the money sent.

In the weeks leading up to the November election, the PAC donated the money to members of the U.S. House and Senate who sat on key committees with oversight of foreign aid, trade and immigration matters. At the time, issues of prime importance to India and those with business interests there were being debated by those committees.

Most important, heated negotiations were under way over the General Agreement on Tariffs and Trade, or GATT -- a treaty to sharply reduce tariffs on foreign goods entering the United States. More than 120 nations signed the agreement, promising to drop trade barriers.

India, with its textile, petroleum and chemical conglomerates, stood to gain greater access to U.S. markets, which it had sought for years.

Two weeks after the checks were mailed by the PAC, the U.S. House passed the treaty over the strong objection of unions and lawmakers from states with hard-hit industries. The Senate then ratified the treaty.

In Baltimore, two men who wrote checks to the PAC and claim they were reimbursed said this week they both received the same sales pitch: The contributions were necessary to promote India's interests in Washington.

A government researcher, who asked that his name be withheld for fear that he would lose his job, said he was told his $900 check would be given "to political leaders who had Indian views and would protect Indian interests in this country. . . . It was an investment for India. It was an investment for our children."

About 7,500 Indian-Americans -- many of them with business holdings in India -- live in Baltimore.

The two men, both of whom have turned their bank records and canceled checks over to the federal grand jury, said they would have been willing to make legitimate donations to the PAC but were never asked. Instead, they were asked to write checks in exchange for cash.

The source of that cash is now one of the central questions in the FBI's inquiry, according to witnesses who have been questioned by federal agents.

In a May 1 interview at his Spartan Charles Street law office, Lalit Gadhia denied the allegations and described himself as a "man of very modest means" who could not possibly have afforded to disburse $35,000.

"Where would I get that kind of money?" he asked, adding that he had been so preoccupied raising more than $600,000 for Governor Glendening's campaign that he scaled back his own law practice for nearly two years.

Now, federal agents are asking precisely the same question -- even as thousands of dollars in new contributions are rolling in to Mr. Gadhia's defense fund.

Citing Mr. Gadhia's service to the Indian community and his success in winning state appointed jobs for Indian immigrants, the fund-raising letter beseeches his countrymen to send cash.

"As you are well aware by now," the letter says, "our good friend and dedicated community leader, Lalit Gadhia, needs our help."

Mr. Pecora, deputy secretary of the state General Services Administration, said he has been contacted by seven people -- including at least three prominent Indian-American doctors in Baltimore -- about serving as trustees. Efforts to contact those people so far have been unsuccessful.

Mr. Pecora refused Wednesday to release records pertaining to the fund, saying "I don't see how it's any of your business."

He said the fund is a "private, not-for-profit trust" that was established at NationsBank a few weeks after Mr. Gadhia left the Glendening administration. A review of state records turned up no document showing that the trust, know as "Lalit Gadhia Defense Fund," is incorporated as a nonprofit entity in Maryland.

Mr. Pecora also refused to say how much money the fund has raised.

"Would the prosecution want it printed in The Baltimore Sun what their budget is?" he asked. "I don't think so. Why should I tell you what ours is?"

Michael A. Millemann, a professor at the University of Maryland School of Law, also serves as a trustee. He said the fund has raised about $13,000 in small donations.

Mr. Pecora said he has no idea why the fund-raising letter was sent out anonymously, nor does he know who the contributors are. It is his responsibility to make sure the money is spent on Mr. Gadhia's legal defense -- not to ask about its source, Mr. Pecora said.

"I would be personally, morally offended if I were to find out it

was coming from some nefarious source, and I would resign," Mr. Pecora said. "But it is not my job to check every contributor on the list to be sure they're legitimate."

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