A federal jury deadlocked Thursday in the retrial of San Francisco financier J. William Oldenburg, accused of conspiring to defraud a Utah savings and loan of $26.5 million.

Oldenburg sobbed and hugged his wife after the jurors declared it was deadlocked 8-4 in favor of acquittal of Oldenburg and 10-2 for acquittal of his former Los Angeles attorney Martin Mandel.Oldenburg said as he left court, "This is a victory for every honest person in banking . . . print that in bold letters."

Oldenburg was charged with five counts including conspiracy and wire fraud. Mandel was charged in six counts stemming from the same alleged sale of undeveloped property in Richmond, Calif., owned by an Oldenburg company to now-defunct State Savings and Loan in Utah, also owned by Oldenburg.

The government charged Oldenburg greatly inflated the value of the property in the sale to State Savings.

In the first trial, jurors convicted the pair on a single fraud count in December 1989 but were unable to reach unanimous verdicts on six remaining counts, deadlocking 9-3 for conviction.

U.S. District Judge Eugene Lynch overturned the sole conviction in March 1990, citing improper jury instructions and lack of evidence on a key point.

Oldenburg's trial in 1989 was the first major trial in northern California to test allegations of fraud stemming from the nationwide savings and loan crisis.

Assistant U.S. Attorney Joel Levine said his office would have to review the potential of a third trial.

Nanci Clarence, Oldenburg's attorney, said a third trial "would be a complete waste of taxpayer money. I hope this ends the seven-year government harassment of Mr. Oldenburg.

The once high-living Oldenburg was known for his flashy lifestyle, traveling by Rolls-Royce and private jet. He was the onetime owner of the Los Angeles Express of the defunct World Football League.

Oldenburg was accused of directing the sale of 363 acres of undeveloped land in Richmond to State Savings and Loan, a Salt Lake-based thrift, at a vastly inflated price, allegedly costing the faltering thrift tens of millions of dollars.

Oldenburg bought State Savings in 1983. The government contends he and Mandel engineered the Richmond sale to the Utah thrift in 1984, allegedly defrauding the S&L of more than $20 million they used to pay off mounting debts at his San Francisco brokerage firm.

Levine maintained Oldenburg was in desperate need of cash in 1984.

The government contends Oldenburg took money from State Savings to buy the Park Glen Estates in the Richmond hills and later sold the parcel back to the Utah thrift in January 1984 for $26.5 million.

Appraisors later valued the property at closer to $4 million.

Jury Forewoman Janene Benway of Santa Rosa said the jurors desperately wanted to reach a decision but could not agree whether there had been an intent to defraud State Savings.

"I don't think anyone would say (Oldenburg) was innocent. We did think he did things that should not have been done, but we could not agree on the intent to defraud," she said.

The government attempted to show that Oldenburg's appraisals were inflated, allowing him to sell the parcel to State for much more than its actual value.

Clarence maintained that the Park Glen property would have been a lucrative deal for the Utah firm if regulators had not stepped in.

A second mistrial is particularly galling to the U.S. attorney's office because it was Oldenburg's case that was cited in a scathing 1988 report by the House Committee on Government Operations that accused former U.S. Attorney Joseph Russoniello of failing to prosecute it and other bank fraud cases.

Russoniello, who personally prosecuted Oldenburg's first trial, left the prosecutor's office last year for private practice.

Oldenburg's plush lifestyle became a minor issue at the start of his second trial, when Russoniello called into question Oldenburg's claim that he had no cash.

Just prior to the second trial, Russoniello waved a copy of an Oldenburg bill from the ritzy Fairmont Hotel for $15,075 in August 1990 at the time Oldenburg was seeking a public defender.

Clarence said Oldenburg never paid, nor was he expected to pick up the tab by the Fairmont.