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Niagara County District Attorney Matthew J. Murphy III ruled Friday that no crime was committed by former Industrial Development Agency Executive Director Leo J. Nowak Jr., although Nowak's last contract with the agency was "in conflict" with state law.

The district attorney said Nowak himself raised questions in 1994 about the legality of paying him 1.5 percent of the fees the IDA collected from companies whose projects it assisted. Since County Attorney Glenn S. Hackett, who was then also IDA attorney, held that the arrangement was legal, Nowak "should not be criminally punished for relying on that opinion."

Nowak was out of town Friday, but his attorney, Terrence M. Connors, declared, "The name Leo Nowak has always been synonymous with honesty and integrity, and I'm glad Mr. Murphy has kept his reputation intact."

Murphy added that neither Hackett nor anyone else in the agency committed a crime. He said Hackett "is responsible for, at worst, inadequate legal research, not a criminal offense. If failure to perform optimal legal research were a crime, then the jails would be filled with lawyers.

"I will leave it to cynics to decide whether society would be better off with such a result," Murphy commented.

Nowak, 72, decided in July to retire rather than seek a new contract. His successor, John R. Simon, receives a salary of $72,760 a year, plus a $600 monthly car allowance but no extra fees.

Hackett, 58, who suffered a stroke in 1996, resigned as IDA attorney last month, blaming ill health. He continues as county attorney, but said he would step down by the end of the year. He could not be reached Friday.

Nowak was paid $69,000 a year during his final three-year contract. The fee arrangement, in Murphy's opinion, violated a 1993 state law which barred full-time IDA employees' salary from being dependent on how much financial assistance the agency gave to companies.

He said Nowak received $21,000 in fees over three years, not $18,000 as reported. The IDA charges companies 1 percent of the value of the assistance given as an administrative fee.

The issue of possible illegality was raised June 23 by State Sen. George D. Maziarz, R-North Tonawanda, who held a news conference to ask Murphy to investigate Nowak's contract. The move came in the wake of the IDA approving a $2.5 million bond issue for a new medical office building in North Tonawanda, a decision bitterly opposed by many political figures in that city.

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