Stamps Of Disapproval

By NANCY TRAVER WASHINGTON

"Your agenda is my agenda," said Dan Rostenkowski when he greeted Bill Clinton on Capitol Hill last week. Coming from the powerful chairman of the House Ways and Means Committee, who will be a key player in shepherding the new President's economic program through Congress next year, that seemed a reassuring pledge. But there may be a problem: TIME has learned that this mainstay of Clinton's legislative strategy could be severely shaken -- if not toppled -- by the results of a criminal investigation into the alleged misuse of Rostenkowski's $1.3 million campaign fund.

Launched 18 months ago by U.S. Attorney Jay Stephens, the probe initially focused on what looked like a bizarre money-laundering scheme involving the House post office, which has been rocked by charges of drug use, mismanagement and embezzlement by employees. Last September, after pleading guilty to embezzlement and misuse of public funds, the post office's former chief of staff Joanna O'Rourke agreed to cooperate with investigators. The inquiry was expanded after she told federal prosecutors that the post office frequently cashed campaign checks that purported to be for stamps.

Investigators then zeroed in on House members whose stamp purchases seemed excessive. Rostenkowski was the hands-down leader with $29,672 worth of stamps -- enough to mail 50 first-class letters every day of the six-year period under review by the grand jury. Joe Kolter and Austin Murphy, both Pennsylvania Democrats, were also big customers at the House post office.

Federal officials are puzzled as to why the three needed so many stamps when the congressional franking privilege allows them to mail almost anything official simply by displaying their signature on the envelope. "I mail a lot," shrugs Rostenkowski when asked about his voracious appetite for stamps. "Overseas mail, you've got to put stamps on."

Called to testify before a federal grand jury in July, Rostenkowski refused, citing his Fifth Amendment rights against self-incrimination. Instead, he invited investigators to his office to talk "informally" about the House post office; prosecutor Stephens turned down the offer. Murphy and Kolter also refused to testify.

Last month prosecutors subpoenaed records from Rostenkowski's 1992 re- election campaign as well as records of Serafin Associates in Chicago, a company that worked for Rostenkowski's campaign. The Illinois Democrat has also been ordered to turn over his vouchers for goods and services over the past six years. In addition, at least 20 of Rostenkowski's former and current staff members have been called to testify. Federal prosecutors are trying to learn whether Rostenkowski and other legislators made efforts to coerce staff members into shielding them from criminal charges by taking responsibility for the alleged scheme. So far, Rostenkowski has spent more than $91,000 from his campaign fund to pay his legal fees and those of his staff.

U.S. Attorney Stephens, who was criticized for setting up the 1990 sting operation that led to former Washington Mayor Marion Barry's drug conviction, last week described the probe simply as "an ongoing criminal investigation into allegations relating to operations of the House post office and efforts to obstruct that investigation." TIME has learned, however, that investigators believe the stamp purchases make up only a small part of a larger scheme to launder campaign funds and convert them for personal use. Subpoenas issued in the case have made it clear that investigators are looking into whether lawmakers or their aides illegally channeled campaign contributions through the House post office.

Investigators initially suspected that Congressmen were buying stamps with office-expense vouchers, then trading them in for cash. Now it seems that the thousands of 29 cents stamps may never have physically changed hands at all; Rostenkowski's campaign may have written checks for postage and, instead of getting stamps, received cash from cooperative employees at the House post office. A source close to the investigation frames the central question in these terms: "Did they bring checks and, instead of buying stamps, get money and then take that money and run?"

Rostenkowski's office denies the allegations, and has reacted indignantly. "Why doesn't Stephens look into typewriter ribbons or pencils, instead of stamps?" demanded spokesman Jim Jaffe last week. "Maybe he'd find some criminality there too." As for the chairman, he waves off the federal probe as a "fishing expedition." But fish can be caught -- even big ones -- and the trawlers seem to be circling.