ALATORRE DENYING COCAINE PROBLEM.

Byline: Patrick McGreevy and Peter Hartlaub Daily News Staff Writers

Despite failing a recent test for cocaine use, embattled Los Angeles Councilman Richard Alatorre on Wednesday denied he has a drug problem but said he is prepared to enter a rehabilitation program if that is the price of regaining custody of his niece.

Alatorre, who has been under siege from an ugly custody fight and conflict-of-interest allegations, refused to answer directly about when he last used cocaine. He recently testified in the custody case that he has not used the drug for nine years.

Widely regarded as the council's most influential member, Alatorre has seen his political reputation soiled in recent months, and it has been widely speculated that he will not seek re-election next year.

But in a brief interview Wednesday, Alatorre insisted he will run again and that he will do whatever is needed to get custody of the 10-year-old girl, Melinda, who has been living with the councilman and his wife since her mother, Belinda Nykoluk, died of cancer two years ago.

``I'm going to do everything humanly possible to get my little girl back,'' Alatorre said. ``Of course, if the judge says that (rehab) is what it takes, that's what I'll do.''

Alatorre said he first will pursue a legal challenge of the results of the drug testing as being ``flawed and improper,'' charging there is evidence that the testing lab's address is that of an apartment complex.

Around City Hall, friends and colleagues privately voiced disappointment at disclosure of the failed drug test, and some suggested that Alatorre resign.

``It's been pretty shocking and sad,'' said one close friend. ``He has to go into rehab, but he's still in denial.''

A council member added, ``I think it's tough to hold public office under those kinds of circumstances.''

The council member, who requested anonymity, worried about the damage to City Hall's reputation coming on top of Councilman Mike Hernandez's arrest for cocaine possession.

``How could you not be concerned about how it makes the council look?'' the council member said.

Alatorre has told friends he is prepared to enter a drug rehabilitation program as soon as he recovers from hernia surgery scheduled for Friday, if Superior Court Judge Henry Shatford requires him to do so.

Shatford ruled Tuesday that Alatorre could no longer serve as guardian for his niece and is prohibited from visiting the girl at her grandmother's house until he completes a drug program.

The judge issued the ruling based on a surprise drug test two weeks ago that indicated Alatorre had used cocaine.

``Richard Alatorre's credibility has been totally shredded as to his profound declaration he has been clean from the use of cocaine,'' Shatford wrote. ``Court-ordered testing has proved to the contrary.

``The fact that Mr. Alatorre has been unable to cure his cocaine use is indeed a tragedy.''

In his 11-page ruling, the judge indicated he was ready to let the Alatorres retain custody. But after the positive test for cocaine, he said he had no choice except to terminate their guardianship.

``It is terribly unfortunate the very fine family situation provided by the Alatorres has been destroyed by the acts and conduct of Mr. Alatorre,'' Shatford wrote.

The judge denied custody to the girl's father, East Los Angeles political activist and Alatorre rival Henry Lozano, who sought custody although he never married the girl's mother or supported the child.

Shatford granted temporary custody of the girl to her maternal grandmother and ruled that she can only visit Alatorre's wife, Angie, when the councilman is at least 200 yards from the house.

He said he would not consider modifying the order until a doctor determines that Alatorre has successfully completed a detoxification program.

The judge also noted accusations made by Lozano's lawyers during the custody dispute that Alatorre had financial ties to people doing business with the city.

``Actually, if Alatorre could have remained clean and did not have questionable conflict of interest financial dealings as a (councilman), the arrangement to have the Alatorres care for Melinda would have been an excellent one,'' Shatford wrote.

While some City Hall officials privately questioned Alatorre's political viability, most public statements were supportive.

Mayor Richard Riordan, who had called for Hernandez to resign over his drug charges, said he is concerned for the well-being of the Alatorres and their niece.

``While the matter is reviewed by the courts, I believe it would be improper and premature for me to cast judgment,'' Riordan said. ``I hope the Alatorres receive the help and support they need to get through this difficult time.''

However, one source close to the mayor said Riordan's support could change depending on the outcome of the court challenge filed by Alatorre to the drug test and the results of any future tests.

City Council President John Ferraro also withheld judgment.

``I am disappointed at this turn of events in the Alatorre custody case,'' Ferraro said. ``This is a tragic situation and my heart goes out to that sweet little girl, who clearly is being used as a political pawn.

``I've known Richard a long time, and he has been a good personal friend over the years. I hope he can come through this and work everything out.''

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PHOTO (color) ALATORRE