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ROSTENKOWSKI PLEADS NOT GUILTY, VOWS TO FIGHT

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Rep. Dan Rostenkowski pleaded not guilty to a 17-count federal corruption indictment Friday and defiantly predicted, "I will be vindicated." His new lawyer said he would argue it was unconstitutional for prosecutors to "decide for Congress how it can spend its money."

Rostenkowski entered his plea in U.S. District Court a few blocks from the Capitol where he has long reigned as one of the most powerful lawmakers in Congress."We're going to fight this case. We're going to go to trial, and I'm confident that the congressman will be exonerated of all wrongdoing and will be returned to his rightful place as the chairman of the House Ways and Means Committee," attorney Dan Webb told reporters, with Rostenkowski at his side.

Rostenkowski was defiant: "I entered these pleas because I am not guilty," he said, vigorously reading a statement. "I will fight these false charges and will prevail. I will walk away from mud that has been splattered upon my reputation."

Also Friday, it was disclosed that more than $750,000 had been raised in the past four months of 1993 for a legal defense fund.

Webb said the defense would show that Rostenkowski's actions - ranging from his hiring practices to gift purchases - were official. And any decision that Rostenkowski acted improperly, Webb declared, "has to be determined by Congress."

Rostenkowski was released with no bail but ordered not to discuss the case with potential witnesses - including his own employees.

Asked if he agreed to abide by all the conditions, he replied to the judge in a low voice, "I do."

The Chicago Democrat, unaccustomed to a supporting role, stood quietly before Judge Norma Holloway Johnson during the 25-minute arraignment.

But outside the courtroom, he was not so passive.

"Talk is cheap, allegations come easily," Rostenkowski declared. "I will be vindicated."

Johnson set July 8 for a hearing on the status of the case but excused Rostenkowski from attending.

Webb said he may file motions asserting congressional immunity for his client - an action that could delay a trial.

Webb, a former U.S. attorney and prosecutor in the Iran-Contra case, suggested his first line of defense would be a constitutional challenge - on grounds that the executive branch cannot decide for Congress how it can spend its money.

"This indictment raises some grave and serious constitutional concerns," Webb told a crowd of reporters with Rostenkowski standing by his side. "Who determines what are official expenditures? We will examine that."

The charges include accusations that Rostenkowski converted nearly $640,000 in federal money to personal and family use. He is also charged with hiring ghost employees, arranging for kickbacks, tampering with a witness and receiving illegal cash at the House Post Office.

Webb described that as a "kitchen sink indictment."

The arraignment came after Rostenkowski spurned a widely reported plea-bargain agreement that had been negotiated with federal prosecutors by his previous attorney, Washington lawyer Robert Bennett. Rostenkowski and Bennett parted company shortly afterward.

Webb said the defense would show:

-"At no time" did Rostenkowski place anyone on his payroll "with the knowledge and intent" that the employee would perform no work. "There are no ghosts," he said.

-Congressional rules explicitly allow employees to voluntarily do personal work for a lawmaker on their own time.

-Nine of 14 individuals that the government calls "ghost" employees "are ancient history" because the statute of limitations has run out.

-"Every one" of the furniture and gift items Rostenkowski purchased from the House stationary store was related to official duties.

-At no time did the congressman ever misspend any congressional money.

By coincidence, the court proceedings were held on the day the House made its annual release of financial disclosure reports, providing the first glimpse of the legal defense fund started on Rostenkowski's behalf last August.

The fund collected more than $750,000 through last Dec. 31, as money poured in from longtime political allies, lobbyists and groups and individuals that bring matters before the Ways and Means Committee.