On the two points, federal prosecutors and defense attorneys agree.

On just about every other aspect of the case, the two sides are at loggerheads and engaged last week in a highly unusual public mudslinging match.

In an acrimonious exchange of faxes, the two sides exchanged accusations of attempted extortion and payoffs, as well as broken commitments. They cited an FBI sting operation during which an undercover agent allegedly "disguised" himself by wearing a yarmulke.

Grunwald, who leads a group of Pupa Chassidim in Brooklyn, and his assistant, Yehudah Friedlander, were arrested on May 31, 1995, as they stepped off their plane at Los Angeles International Airport, following an overnight flight from Melbourne, Australia.

The arrests were based on allegations by a then-15-year-old girl that, during the darkened flight, Grunwald had fondled her breasts, while Friedlander touched her private parts.

Friedlander subsequently pleaded guilty to a felony charge and is serving a 22-month prison term.

A lesser misdemeanor count against Grunwald of abusive sexual contact with a minor was dropped one month after the arrest, but reinstated last October. His trial was to have started on Aug. 26 of this year; it was then reset for Sept. 22.

The exchange of heated statements was initiated by Grunwald's attorney, Nathan Lewin of Washington, D.C.

Lewin said the government had dismissed the charge against his client, adding that the girl's father had attempted to extort between $800,000 to $2 million from the Chassidic communities in Melbourne and Brooklyn, and promised in return that his daughter would not testify against Grunwald.

U.S. Attorney Nora Manella in Los Angeles responded with a statement that the charges against Grunwald remained in place and that he had acknowledged that "the government possesses sufficient evidence from which a jury could find him guilty." Lewin denied that Grunwald had ever made such an acknowledgment.

She added, however, that the government would defer prosecution if the rabbi did his community service, which must be unrelated to his congregation, and if he underwent psychological counseling.

Manella also claimed that on two occasions, representatives of Grunwald contacted the girl's father, offering an undisclosed amount of money to settle the case.

Lewin escalated the transcontinental confrontation by issuing a four-page fax, which started with the accusation that Manella's statement was "false, unethical and outrageous," and ended with a demand that the U.S. attorney withdraw from the case in favor of an independent federal prosecutor.

Lewin said he had notified federal authorities when he heard about attempts to extort the Chassidic community. He said there was a meeting on Aug. 24 in Burbank, in which $50,000 in cash was turned over to the father and daughter as a "down payment."

Grunwald's local attorney, Edward Medvene, said in a phone interview that during the transaction, an undercover FBI agent, wearing a yarmulke, handed over the $50,000, which was later seized by other government agents on the scene.

An FBI spokeswoman declined to comment.

A few hours after Lewin's fax, Manella shot back that she still believed that the original charges against Grunwald were valid, and therefore had decided on a "deferred prosecution" agreement, rather than dismissing the charges.

Spokesman Thom Mrozek of the U.S. Attorney's Office said that in cases in which the defendant has no criminal history, and his charged conduct could be considered an aberration, it was not unusual to opt for a year's probation before dismissing the case.

In a phone interview, Lewin was asked why, if his client was innocent, he had accepted the prescribed community service and counseling.

"Have you ever gone through a Los Angeles jury trial?" Lewin responded. "You don't want to submit anyone to that."