U.S. SAYS PUERTO RICAN OFFICIALS STOLE FOR THEMSELVES AND A PARTY

SAN JUAN, P.R. -- A wave of corruption scandals that has already led to
dozens of arrests of officials and police officers crested today with the
federal indictment of 17 people, including a former education secretary
charged with stealing money for himself and for his political party.

Victor Fajardo, Puerto Rico's education secretary from 1994 to 2000 under
the administration of Gov. Pedro J. Rossello, is accused of extorting
millions of dollars, a house worth nearly $1 million and a valuable
painting from contractors. He was so flush with cash that he kept more than
$300,000 hidden at home, law enforcement officials said.

Also indicted were Richard D'Acosta, president of the Puerto Rico Chamber
of Commerce; his wife, Victoria Vargas; Jose O. Cruz, associate education
secretary; a sister-in-law of Mr. Fajardo, Maria Ramos Matos; 10
contractors; a subordinate of Mr. Fajardo; and a man accused of setting up
a sham company.

Beyond the charges, what has drawn analysts's attention and public
indignation is the connection to the New Progressive Party, one of the two
main parties here.

The indictment accuses Mr. Fajardo of engaging in an extortion plot that
siphoned federal money not only to himself and his associates, but also to
the progressive party, which favors statehood. It says Mr. Fajardo, who is
cooperating with the authorities, asked Education Department contractors
for 10 percent of each contract in kickbacks that they could pay in one of
two ways, in cash or by paying the party's bills for purchases and services
like car rentals.

The indictment said Mr. Fajardo and two subordinates extorted a total of
$4.3 million from the contractors and "delivered hundreds of thousands of
dollars in cash of extortion money to their political party."

At a news conference, United States Attorney Guillermo Gil, who said the
party received $1.5 million, said his office had no evidence of whether
party officials had ordered the scheme or even knew about it. The inquiry
is continuing.

Mr. Gil and others, including the Puerto Rico Comptroller's Office, called
for changes in campaign financing to prohibit the use of private money to
finance political campaigns. Mr. Gil condemned the practice in which
parties in power assign fund-raising quotas to the heads of government
departments to help pay for campaign debts and party activities.

"If they want to combat corruption, there has to be a change in the way
both parties raise funds," Mr. Gil said, referring to the progressive party
and the governing Popular Democratic Party, which favors the prevailing
commonwealth system. "There's no way they're going to collect those sums of
money through raffle tickets."

Mr. Gil said his office, which is seeking forfeiture of the stolen money,
had recovered $1 million, more than $300,000 of that from Mr. Fajardo's house.

Prosecuting corruption is a priority of Gov. Sila M. Calderon, who won the
election in 2000 on a platform to fight corruption and belongs to the
Popular Democratic Party, and the Federal Bureau of Investigation, whose
field office here now ranks second, behind Newark, N.J., in the number of
agents assigned to corruption investigations.

The assistant special F.B.I. agent in charge of corruption cases here, Jane
M. Erickson, said that since 2000 there had been 107 indictments on
corruption charges, with 16 convictions. The prosecutions have led to the
arrests of cabinet members, police officers, mayors and legislators. These
are among the most significant:

- -Twenty-three police officers were indicted this month on charges of
protecting drug traffickers for cash. They were accused of lying in court
and missing court appearances to have charges against drug defendants
dismissed.

- -Twenty-nine police officers were indicted in August, accused of using
their police powers to protect cocaine shipments. All but one officer were
charged with conspiring to possess and distribute cocaine.

- -A former House speaker from the progressive party and a Republican Party
national committeeman, Edison Misla Aldarondo, was indicted in October on
charges of extortion, money laundering and witness tampering. He is accused
of demanding money in exchange for using his influence in a public hospital
sale.

The indictment today says Mr. Fajardo recruited others, including his
sister-in-law, to set up two companies as fronts to hide federal money
diverted from his department through contracts awarded to the bogus
corporations and by the extortion of contractors, who would pay false
invoices to the sham companies.

Starting in 1995, the contractors, the charges say, gave cash and "things
of value" like paintings to Mr. Fajardo and Mr. Cruz, the associate
education secretary, to obtain contracts for their companies. They also
paid party invoices, the indictment says.

Mr. Fajardo said he would plead guilty to the charges.

"That I used a position of power to advance ideological and personal
positions does not excuse my actions," he said.

Mr. D'Acosta, the chamber of commerce president, and his wife were accused
of paying thousands of dollars to Mr. Fajardo to obtain a contract. Some
political experts here said the cases reflected a general malaise seen in
other countries.

"There's a climate in which if the subordinate sees the boss stealing, he,
too, wants to steal," said Marco A. Rigau Jr., a former senator for the
pro-commonwealth party and a lawyer for a police officer arrested this
month on drug charges. "There's been an acclimatization to corruption. Many
people are immune to it."

Mr. Rigau said the indictment was particularly alarming because although
corruption and patronage were not new, the charges suggest something new, a
possibility of institutionalized corruption by a governing party.

"The question is who knew about it," said Mr. Rigau, who also has a radio
talk show. "This is a who's who of indictments."

The president of the progressive party, Carlos Pesquera, called the
indictment "a disgraceful event" that he particularly repudiated because
Mr. Fajardo was responsible for overseeing public schools. Mr. Pesquera and
other party supporters have ascribed political motivations to the
prosecution. They say the patterns of cases at the federal and local levels
are selective, and say their party has been singled out for prosecution at
the instigation of the current administration.

Luis Davila Colon, an author, a newspaper columnist and a radio commentator
who favors statehood, said, "The statehood movement will survive because
it's a mass of 900,000 voters."

He also said some of the cases seemed frivolous and intended just to
destroy reputations.

Officials from the United States attorney's office and the F.B.I. denied a
political agenda existed.

Governor Calderon said today that she was being as vigilant in her own
administration. She said she was proposing legislation to change campaign
financing and a code of ethics for the business.

"I ran a campaign of clean government, and that's exactly what I'm doing,
cleaning up," she said in a telephone interview. "I believe countries
should have a government that reflects its people, and the Puerto Rican
people are honest people."

Many Puerto Ricans seemed to agree that the time was ripe to clean house,
voicing disgust about the charges.

Francisco J. Murga, 48, a security guard with two schoolchildren, said the
allegations against the former education chief and his deputies were
particularly egregious in view of the schools' many needs.

"They don't even give good maintenance to the bathrooms," Mr. Murga said.
"These were the same people who complained there were no funds, and they
themselves were stealing the funds."