SECTION: Suburban; Pg. 51

FINE STEW OF POLITICS, SECRET TAPES & MONEY

By JOE CALDERONE

A former state senator who heads a South Bronx health care company says he expects to be indicted on charges he used $70,000 from a city-financed HMO to fund his reelection campaign.

Pedro Espada Jr., who has been feuding with the Bronx Democratic Party, says politics is behind the investigation into his Soundview Health Clinic.

He produced a secretly made video tape of a political rival boasting that the party had influence over the Bronx district attorney, who is investigating Espada.

The tape shows State Sen. David Rosado predicting the probe of Espada will "chill out" if Espada keeps his promise not to challenge party bosses by trying to reclaim his Senate seat from Rosado.

A spokesman for Bronx District Attorney Robert Johnson denied the charge, and declined to comment further.

Espada, president of Soundview Health Clinic, said investigators have questioned more than a dozen aides and associates about allegations he steered a contract to pay off a debt to a consultant.

When Espada ran out of funds during his unsuccessful 1996 reelection bid, he asked his media adviser, Gil Rentas of RCR Inc., to lend his campaign $70,000, Espada said.

About the same time, Espada recommended that Rentas' firm receive a $70,000 contract to do marketing for Universal Health Plan, which is 50% owned by Espada's company.

Espada said that there was no quid pro quo involved in the transaction, and that he reported the debt to Rentas on his campaign disclosure forms. The health plan serves city Medicaid recipients.

Bronx Democratic Party officials have tried to use the investigation to intimidate him from running this fall, Espada said.

"I know if I run, I'm indicted," said Espada, who said he has decided nonetheless to challenge Rosado.

"They think they can control me through law enforcement," said Espada, referring to Rosado and Bronx Democratic Party chairman Roberto Ramirez. "That they can reduce candidacies. I can't live with that. I've done nothing wrong."

Just two weeks ago, Espada said he would withdraw from politics. In exchange, he said Democratic Party leaders agreed to stop freezing out his son, Councilman Pedro G. Espada (D-Soundview).

But following that announcement, the Bronx district attorney's office informed him that his son also is involved in the investigation, he said. The councilman has denied any wrongdoing.

The Espadas disclosed they secretly video taped a May 23 meeting between Rosado and Councilman Espada at the councilman's Mott Haven office.

Using a miniature camera hidden in a painting, Councilman Espada captured Rosado making several references to the behind-the-scenes Bronx politics. At one point, Rosado indicates that if Espada's father does not challenge him for his Senate seat and proves it by not filing petitions by the July 15 deadline, the investigation of the Espadas "will chill out."

"It's all politics. It all goes away on July 15 at midnight," Rosado said.

Ramirez yesterday defended Johnson as a man of the highest integrity and blasted the Espadas for secretly video taping a fellow politician.

Rosado acknowledged trying to dissuade Espada's father from running against him and indicating that the investigation might "chill out" if he didn't run.

He told the Daily News he was just trying to win Espada's confidence.

"I lied to the indivdual because I knew I was lying to a liar," Rosado said. "I'm a politician. I'm interested in no one running against me. I needed to tell him what he needed to hear."

With William K. Rashbaum

Copyright 1998 Daily News, L.P.