Wallach Testifies He Did Not Know That Filing False Affidavit Is Federal Crime

San Francisco lawyer E. Robert Wallach, apparently rattled by the disclosure that he had understated his income in a sworn statement submitted to a federal court in 1984, testified at his racketeering trial Thursday that he did not know filing a false affidavit is a federal crime.

Prosecutor Baruch Weiss, in his first few minutes of cross-examination after Wallach had been questioned by his own lawyer, handed the defendant, who has practiced law for 25 years, a statement that the defendant had submitted to a Washington court in December, 1984.

The statement requested payment by the government of legal fees Wallach had earned representing then Atty. Gen.-designate Edwin Meese III, his longtime friend, during an ethics investigation of Meese by court-appointed counsel Jacob A. Stein.

‘I Earned No Income’

Wallach’s affidavit in which he sought payment included a statement that between March and September, 1984--the length of Stein’s inquiry--”I earned no income from any other source, including the practice of law.”

Wallach testified that he thought the statement was correct because he had performed no legal work for anyone but Meese during that period. However, Weiss declared that financial records showed Wallach had earned more than $200,000 from other sources during 1984, including at least $50,000 from Wedtech for allegedly lobbying Meese, who was White House counsel at the time.

To support his case, Weiss produced three checks for legal fees to Wallach totaling more than $125,000, which Wallach had deposited during the six-month period cited in his statement.

“Don’t you know,” the prosecutor demanded, “that the filing of a sworn affidavit which is false constitutes a felony?”

“No, I don’t believe so,” Wallach replied.

“Is it your testimony,” Weiss pursued, “that you don’t know after 25 years of legal practice that filing a false affidavit is a federal crime?”

“That is my testimony,” Wallach said softly.

Awarded $80,000

Because Stein’s six-month inquiry did not result in any criminal charges being filed against Meese, Meese was eligible to have his legal fees paid by the government under terms of the 1978 Ethics in Government Act. Wallach ultimately was awarded about $80,000 in fees.

In earlier testimony Thursday, Wallach told jurors that he was kept in the dark about the corrupt activities of Wedtech Corp. leaders while serving as a consultant to the now-defunct New York defense contractor.

Under questioning by his lawyer, Gary P. Naftalis, Wallach said that two company officers who have testified against him never told him about their “systematic looting” of the fledgling firm or the fact that they kept a secret $1-million slush fund to bribe congressmen and other federal officials.

Federal Investigation

Wallach said that he received an urgent phone call in 1986 in which Mario Moreno, then Wedtech’s executive vice president, told him that a federal investigation into the company had begun. Moreno later came to see him in San Francisco, Wallach said, adding that he arranged for Wedtech officers to be represented by a New York attorney.

Naftalis asked whether Moreno or Anthony Guariglia, who was Wedtech’s chief financial officer, “at that time disclosed to you that they had been systematically looting the company?”

“No,” Wallach replied, adding that neither did they tell him about the secret off-the-books fund used to make payoffs to government officials. Former Rep. Mario Biaggi (D-N.Y.) and a former high-ranking official of the Small Business Administration have been convicted of receiving bribes from this fund.

Pleaded Guilty

Moreno and Guariglia are among former Wedtech officers who pleaded guilty two years ago to conspiracy and other crimes in the Wedtech influence-buying scandal. Both have testified that Wallach was part of the conspiracy.

Wallach is on trial in Manhattan federal court with two other former Wedtech consultants, W. Franklyn Chinn, also of San Francisco, and R. Kent London of Honolulu. Upon conviction, they would face maximum prison terms of 20 years each and millions of dollars in fines.