U. S. Indicts Witness for Purported Crime Figure

A San Fernando Valley physician who testified that reputed underworld figure Jack M. Catain was too ill to stand trial on federal counterfeiting charges is now under indictment himself.

A federal grand jury handed down a nine-count indictment late Thursday alleging that Encino internist Peter P. Koenig, 48, falsified income-tax records on an application to refinance his Hidden Hills home. The indictment--charging Koenig with conspiracy, mail fraud and filing a false loan application--said the physician inflated his income to increase the amount he could borrow.

Koenig was a key defense witness in the government’s conspiracy and counterfeiting case against Catain, 56, of Tarzana.

Although the charges against Koenig are not related to the counterfeiting alleged in that case, Catain’s attorney quickly charged that the indictment of Koenig was a “vindictive prosecution” designed to intimidate a key witness.

A prosecutor said Friday that the government will use the charges against the physician to discredit him if he testifies at an upcoming hearing on Catain’s medical condition.

Koenig declined Friday to comment on the indictment.

Testimony Led to Dismissal

Because of Koenig’s testimony in April that Catain suffers from chronic heart problems, U. S. District Judge William P. Gray dismissed the counterfeiting charges against Catain, ruling he was too ill to stand trial.

Two weeks later, however, a federal grand jury re-indicted Catain on similar charges.

The new case against Catain came before Gray on Thursday for preliminary motions, just hours before the grand jury issued the indictment against Koenig.

Gray rejected a motion by Catain’s attorney, James A. Twitty, to dismiss the charges against Catain because of his health, but set a hearing for Oct. 6 on testimony about the defendant’s fitness.

The judge told federal prosecutors that he is leaning toward dismissal at that time unless the government can change his mind with new evidence.

Edwin J. Gale, a prosecutor with the Justice Department’s Organized Crime Strike Force, said he intends to introduce evidence from the case against Koenig to show that the physician might be biased on Catain’s behalf.

Allegedly Sought Catain’s Aid

The indictment handed down Thursday alleges that Koenig “solicited the assistance” of the reputed organized crime figure in his conspiracy to defraud a bank.

The indictment says that Koenig provided false income-tax documents as support for a loan he sought from South Bay Savings & Loan in Costa Mesa and also gave false information to other financial institutions. Koenig gave the Costa Mesa institution a “purported” 1983 income tax return showing adjusted gross income of $153,700 when the correct figure was “substantially less than $153,700,” according to the indictment.

Gale declined to say how Catain had assisted Koenig, but said he expects to introduce some of those details at the Oct. 6 hearing.

Defense attorney Twitty charged that the Justice Department’s investigation of Koenig was intended to discourage the internist from testifying at the October hearing.

“He’s out to get Jack with a vengeance,” Twitty said of Gale.

Twitty said the strike force has three pending grand jury investigations of Catain.

“He’s not been able to get anywhere with any of those, so he’s turned to watching anybody who’s close to Jack,” Twitty said.

Catain and Stanley N. Sarubbe, 52, of Northridge are accused of giving $50,200 in counterfeit bills last year to two other men who were named as co-conspirators but were not indicted.

Sarubbe has pleaded guilty, Gale said.

Catain was named as a member of the Mafia in a 1969 Senate investigation headed by Sen. John L. McClellan (D-Ark.).

He was called to testify in a 1984 federal grand jury investigation into scalping of Los Angeles Rams Super Bowl tickets in 1980. Gale said Catain was granted immunity from prosecution in that case.

Songwriter Dominic Frontiere, husband of Rams’ owner Georgia Frontiere, was indicted in June on charges that he failed to pay income taxes on profits he made from scalping Super Bowl tickets.

Catain is free on $50,000 bail.