BOSTON--Federal government attorneys continued to press their case yesterday in the trial of Cambridge city councillor William H. Walsh at U.S. District Court in downtown Boston.

Walsh is accused of 59 counts of bank fraud and conspiracy for heading a scheme to defraud Dime Savings Bank of New York of approximately $8 million to finance condominium developments in Massachusetts.

If convicted on all counts, the Cambridge councillor faces a maximum sentence of 208 years in prison and $14.75 million in fines.

Walsh allegedly tricked Dime into issuing mortgages on condominiums to his friends and allies by offering to cover their down payments with "second mortgages" which he concealed from Dime. Dime required 20 percent down for its mortgages.

Walsh allegedly orchestrated this scheme to save a multi-million dollar loan that he had guaranteed to finance development of condominiums. The loan was in jeopardy unless more condominium buyers could be found.

Walsh alleged scheme was revealed when Dime searched for answers after many borrowers defaulted.

Second Mortgages Testimony

Yesterday's proceedings featured the continued testimony of A. Frances G. Schwartz, a lawyer who worked with Walsh at his firm, Ferraro and Walsh, and a co-defendent in the case. Schwartz testified as part of a plea bargain arrangement.

Schwartz, who allegedly was romantically involved with Walsh in the '70's, testified regarding files that documented the concealment of the second mortgages.

Schwartz testified that she requested the files during a phone conversation with Walsh on September 30, 1992.

The telephone conversation took place while Walsh was fleeing to the West Coast on the day of his indictment, according to Schwartz. Walsh disappeared for eight days after he was indicted and was classified as a "fugitive from justice."

Assistant US attorney Peter J. Mullin, the prosecutor for the case, referred to documents in the files and asked Schwartz to verify that Walsh had whited out and otherwise concealed and sale agreements.

Schwartz's testimony, which lasted for most of the day, became somewhat dry at times with one spectators having to be awakened when his snores began disrupting the trial.

Neither Mullin nor California attorney Thomas G. Kontos, who is representing Walsh, returned phone calls yesterday.

Three other major figures were indicted in the Dime scheme along with Walsh and Schwartz: Dennis Cargill, a real estate broker and a former close business associate of Walsh; Ann Jarosiewicz, a paralegal at Ferraro and Walsh; and Arthur E. Peach, a loan representative at Dime.