Former Police Inspector Daniel Castro yesterday admitted his role in an extortion plot and may be headed to prison, and he could keep collecting his pension.

Castro's attorney, Brian McMonagle, said after the plea hearing in federal court that the crime to which Castro pleaded guilty - conspiracy by extortion - was a personal matter and unrelated to the performance of his official duties.

As a result, Castro, 47, might be able to hang on to a $57,540 annual pension, which he began receiving on Nov. 17. But city officials say Castro's pension is not an open-and-shut case.

Castro pleaded guilty yesterday in an extortion scheme to use some muscle to collect a $26,000 debt owed to a Philadelphia businessman who was a friend.

The former commander of the Traffic Division, who aspired to be police commissioner, could face 27 to 33 months behind bars when he is sentenced in September.

"The truth is I never sold my office for personal gain. . . . I accept responsibility for my conduct and will work every day to restore my reputation," Castro said in a statement emailed to the Daily News. "I have lost a career that I cherished but I now begin the process of rebuilding my life."

First Assistant U.S. Attorney Louis Lappen said prosecutors were pleased because Castro "was willing to plead guilty to the most serious charge in the case, which was extortion."

In April, a jury convicted Castro of lying to the FBI in connection with another extortion scheme in which Castro allegedly used a strong-arm collector - actually an FBI undercover agent - last year to try to recoup $90,000 he'd invested in a 2006 real-estate deal that flopped. It acquitted him of an extortion-related offense and deadlocked on eight remaining counts.

The feds agreed to dismiss seven of the counts. McMonagle said the feds' agreement to dismiss two counts of honest-services fraud at sentencing played a "very, very important part" in Castro's plea.

Those counts alleged that Castro had accepted a 42-inch, flat-screen television for running a license-plate number through a law-enforcement database for a friend.

"This will allow him, obviously, to keep his pension and to keep the integrity he had as a police officer," McMonagle said. "This was a personal situation and it didn't involve the Police Department."

The city code provides that a city employee who pleads or is found guilty of crimes loses retirement benefits only if the crimes were committed in the course of official duties.

But city officials say Castro's pension might not be as firm as McMonagle suggests.

Francis Bielli, executive director of the city board of pensions, said there's a process in which the city's inspector general sends the plea agreement to the Law Department, which determines if there's a case to strip a pension. The pension board then has to vote on it.

"It is by no means clear [Castro] is going to keep his pension," said the city's inspector general, Amy Kurland.

Castro, thought to be the highest-ranking cop here to face criminal charges in more than two decades, was indicted on Nov. 4 on several extortion counts and related offenses and was suspended for 30 days with intent to dismiss before resigning.