Combining of Young probes proposed by U.S. attorney Corruption cases would be transferred to federal grand jury

Timing called unusual

November 12, 1998|By Walter F. Roche Jr. | Walter F. Roche Jr.,and Scott Higham. SUN STAFF

Nearly a year after state and federal prosecutors launched separate investigations of former state Sen. Larry Young, the U.S. attorney's office has made an unusual proposal to combine the cases and transfer them to a federal grand jury, according to sources close to the investigation.

The proposal comes as a state grand jury in Anne Arundel County nears the end of its examination of the West Baltimore Democrat, who was expelled from the Senate in January. The grand jury is expected to vote in the next few weeks on whether to indict Young on bribery and possibly other charges.

In the federal system, Young and his defense attorneys face a formidable threat. The federal government has far more resources than the state, and federal laws carry stiffer penalties for public-corruption crimes.

Under the proposal by U.S. Attorney Lynne A. Battaglia, made in late October, the state's case would be transferred to a federal grand jury in Baltimore. That panel has been examining several allegations against Young, including claims that he misused his office by serving as a paid consultant to Coppin State College in Baltimore.

State Prosecutor Stephen Montanarelli would be designated as an assistant U.S. attorney and would work alongside the prosecutor directing the federal investigation, Assistant U.S. Attorney Barbara S. Sale.

The state's investigators also would be designated as federal agents for purposes of the Young investigation, which would allow them to review secret testimony taken by the federal grand jury and documents gathered by FBI and Internal Revenue Service agents assigned to the case.

The sources said Montanarelli has not responded to the offer.

Montanarelli declined to discuss the proposal this week, as did First Assistant U.S. Attorney Stephen M. Schenning. David R. Knowlton, special agent in charge of the FBI in Maryland, also declined to comment.

The proposal could give more impetus to the investigation, but law enforcement experts said the timing is unusual. They also noted that Montanarelli's office was created to examine state public-corruption cases of the kind the office is developing against Young.

Traditionally, the federal government has an advantage in investigating complex cases because it has far more resources, said David Marston, former U.S. attorney in Philadelphia. He said it is unusual for federal prosecutors to consider coordinating state and federal investigations nearly a year after they began.

'The right move'

Jervis S. Finney, a former U.S. attorney who was lead lawyer in the legislative ethics investigation of Young, said the proposal "sounds like the right move. Joint federal and state investigations and prosecutions are often very appropriate for focus, efficiency and conservation of law enforcement resources."

David B. Irwin, a former federal prosecutor who specializes in white-collar defense work, said, "From the standpoint of Larry Young, it's not a good thing to have the FBI and the IRS on your tail."

Probe began last year

The state investigation of Young began late last year, spurred by an investigation by The Sun that found the 24-year politician was charging up to $300 an hour in consulting fees to represent companies with business interests in Maryland. Young collected those fees directly or through corporations he controlled and ran out of his publicly financed district office in West Baltimore.

Early in its investigation, the state prosecutor's office focused on PrimeHealth Corp., a Lanham-based health maintenance organization that won a state license and multimillion-dollar contract to serve Medicaid patients in Maryland. The license and contract were made possible because of Young's assistance.

Records show that Young met at least three times with top state officials on behalf of the corporation. Key members of the Glendening administration also were intimately involved in PrimeHealth's efforts to become an HMO.

In an affidavit filed in Superior Court in Washington early this year, investigators in Montanarelli's office stated that PrimeHealth's financial records showed Young might have been paid more than $90,000 in bribes.

The affidavit also says that checks made out to cash had "SLY" written on the memo line. According to the affidavit, someone had tried to erase or obliterate the notations, which investigators say stood for "Senator Larry Young."

This week, the state grand jury hearing the case in Annapolis took testimony from a PrimeHealth official, Anthony "Ike" Isama. A former employee of an affiliated company, Diagnostic Health Imaging Systems Inc., also testified.

In recent weeks, several other PrimeHealth officials have appeared before the panel under grants of immunity. They include Edward A. Thomas, the company's president, and Christian Chinwuba, a radiologist who owns 81 percent of the company. They have declined to comment.

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