CHICAGO - The Chicago Police Department will disband an elite drug and gang unit under state and federal investigation for allegations ranging from armed violence and home invasion to kidnapping and plotting a murder-for-hire, officials said yesterday.

"The recent incidents involving officer misconduct have been disheartening and demoralizing, especially to the officers who serve this department honorably every single day," said interim Police Superintendent Dana Starks.

Seven members of the Special Operations Section have been charged with belonging to a rogue band of officers who used their badges to shake down residents and intimidate people. All have pleaded not guilty.

One of those officers, Jerome Finnigan, was charged two weeks ago with plotting to hire someone to murder another member of the unit to keep him from talking to the government.

Starks said the SOS will be reorganized and all specialized units will be organized under one unit and closely supervised. *