"Cortes Randell is a Christian like I've never seen before," says a man who's known him for years. "But he doesn't believe in mixing religion and business."

Court Randell, the Christian, donates his services to Community Bible Study, a Falls Church organization that conducts bible classes in half a dozen states.

Court Randell, the businessman, went to jail for his first stock swindle, faces a seven-year sentence for a second series of 17 white-collar crimes and created yet a third business venture that now is in financial trouble.

Randell's latest scheme "amounts to a plan to print his own money," say federal investigators who have tried to untangle the dealings of a pair of Randell companies called the International Trade Exchange and the Washington Trade Exchange.

The Securities and Exchange Commission, U.S. postal inspectors and the U.S. Attorney's Office in Alexandria are investigating ITE, which ran a nationwide network of barter franchises, and Washington Trade Exchange, its local affiliate. The State of Michigan has issued a permanent injunction to halt sale of ITE franchises by Randell and his partner, James Dyer.

Federal authorities in Virginia say they cannot discuss the ITE case because it is still under investigation.The U.S. Attorney's Office in Alexandria prepared a confidential report on ITE while prosecuting Randell and Dyer for their operation of two other companies, National Commercial Credit Corp. and Research Homes Inc.

U.S. District Court Judge Albert Bryan in Alexandria Friday ordered Dyer to serve six months in jail for selling unregistered stock in Research Homes and earlier gave Randell a seven-year sentence for 17 securities law violations.

Randell served time at the federal correction facility in Allenwood, Pa., in 1975 after he admitted inflating the profits of National Student Marketing Corp. in one of the biggest stock frauds in the history of Wall Street. Investors lost millions when the price of NSM stock plunged from $106 to $6, but Randell made more than $1 million from the company.

Even as federal authorities were prosecuting Randell and Dyer on the Research Homes and NCCC charges, the two were selling ITE franchises in some 70 cities, collecting more than $1 million in license fees and handling millions more in difficult-to-trace fees and trade credits, an investigation by The Washington Post has revealed.

Since Randell was convicted by a jury and Dyer entered his guilty plea, their ITE operation has virtually collapsed, leaving a number of creditors with unpaid bills. Several Washington business owners involved with the trade exchanges say they do not expect to collect money owed to them.

Some of the exchange's obligations supposedly are secured by liens on the homes of Dyer and Randell, but Dyer's lawyer admitted in court Friday that Dyer's home is "mortaged beyond its worth."

The Washington Trade Exchange continues to operate from an office in Dyer's home, but its future is uncertain now that Dyer is going to jail on the Research Home charges.

This is not the first time Randell has pulled off one of his schemes under the noses of federal investigators. Randell launched National Commercial Credit while the National Student Marketing case was being investigated. Two weeks after he was sentenced to Allenwood, Randell gave what investigators call "bad collateral" to Maryland National Industrial Credit Corp. in order to get a loan for NCCC. And while he was in prison, Randell collected $625 a week in salary from NCCC.

But Randell will not be able to run his International Trade Exchange from jail. He is under court order not to engage in business activities while he is appealing his NCCC convictions, and he has told Judge Bryant he has resigned as a director and consultant to the compaby.

Like Randell's earlier ventures, ITE is an ingenius-though not original-business idea with the potential for making millions of dollars. Most of the 70 local franchise holders who paid $15,000 or more to learn Randell's business are still operating, successfully they say.

A trade exchange is a complicated barter brokerage system which allows businesses to trade goods and services with other businesses. It makes its money by charging a fee for matching up firms that want to trade.

A butcher and a baker can swap their goods directly every day, but a candlestick maker might have trouble finding someone willing to trade candlestick after candlestick for daily bread.

That's where the exchange comes in. Instead of giving the butcher and baker candlesticks, the candlestick maker gives them "trade credits" which can be spent like money at the candlestick shop or any other member business of the exchange.

An office supply firm might ship a desk to a lawyer and receive $1,000 in "trade credits" that the lawyer earned by doing legal work for the butcher or baker. The desk dealer, in turn, could trade his credits for meat or bread or candlesticks or anything else offered by a member of the exchange.

The exchange does several things. It signs up businesses as members (for a fee of about $275 a year in the case of ITE.). It arranges the trades (the lawyer who needs a desk calls the exchange and is directed to the participating office supplier). And it keeps the books, crediting the office supply firm with $1,000 in credits for the desk and deducting that amount from the lawyer's account.

The exchange collects a 10 percent fee on every trade it arranges. International Trade Exchange franchise holders in turn passed on 3 percentage points of the fee on every transaction to Randell and Dyer's company.

With 70 franchises, ITE took in hundreds of thousands of dollars in service fees in addition to the money it made selling franchises, persons familiar with its operation say. Randell and Dyer's company collected thier 3 cents worth every time an ITE affiliate in Denver, Atlanta, Cincinnatti or any other franchised city arranged a swap.

Where and when the trade exchange idea started is not clear, but there are more than 200 trade exchanges operating around the country, and industry sources estimate they handle several billion dollars worth of swaps every year.

But federal investigators who have studied the exchanges say they are not really bartering, they are printing money.

"The definition of money is a medium of exchange," one government lawyer pointed out. "And that's what trade credits are. Every time they issue trade credits, they've printing money."

Theoretically, printing money is against the law because only the government is supposed to do it, but the flourishing trade-exchange industry has not yet been challenged on that basis.

Theoretically, too, trade transactions are taxable just like cash purchases, but Internal Revenue Service officials believe millions of dollars of barter business are being hidden from the tax collectors every year.

Trade exchange operators deny they are running a money machine or a tax dodge, insisting their function is to help firms develop new markets and save money with non-cash transactions.

Randell and Dyer's ITE operation came to the attention of federal investigators for other reasons, not the least of which is Randell.

"Cortes Randell, whose consistent way of life has been fraud, poses an economic danger to the community," federal prosecutors said in a report urging Randell be jailed in the NCCC case.


IT WAS ALLEGEDLY DECEIVING INVESTORS THAT GOT ITE in trouble in Michigan. The state's attorney general accused ITE, Randell and Dyer of failing to disclose financial information to prospective investors. Without admitting or denying the charges, Randell and Dyer consented to a permanent injunction prohibiting them from violating the Michigan franchise law.

Michigan officials said Randell and Dyer should have made public the ownership of their company and its capital structure and should have reported Randell's prior legal problems.

Papers filed in a Fairfax County lawsuit against the Washington Trade Exchange disclose that Randell owned 50 percent of the company, Dyer 45 percent and Beatrice McConnell, their bookkeeper, 5 percent. Most of the stock ITE was held in a trust fund for the children of Randell and Dyer, said Colin A. Hanna, operator of a former ITE exchange and chairman of a council of ITE exchange operations.

Hanna said his business in West Chester, Pa., near Philadelphia, and most others disassociated themselves from ITE early this year after the company notified them it was unable to handle data processing for its licensed exchanges.

ITE had maintained a computerized accoungtin system for all its exchanges, sending monthly bills to businesses all over the country that had joined local trade exchanges. That billing system gave Randell and Dyer access to millions of dollars in trade credits, federal investigators point out.

Several businessmen who joined, the Washington Trade Exchange told The Post they have been unable to use up the credits they have with WIT. "I'm going to write it off on my income tax as a loss," said Arthur Liedel, whose Mailing List Systems company has both a backlog of unusable trade credits and a batch of unpaid bills for mailing services.

To reassure members who feared their exchange credits might be misused, Randell and Dyer in 1977 gave the Washington Trade Exchange Members Representative Council liens on their two costly McLean homes-a $400,000 lien on Randell's property and a $300,000 lien on Dyer's home. Randell recently asked the members' council to release its claim on his home. Fairfax County records show several other mortgages and claims against the property, and it is unclear which creditors have priority.

In the NCCC investigation, Randell was charged with pledging the same property for two or more loans and with misleading lenders about the amount of collateral backing up loans.

Randell recently was sued for more than $1 million by the trustee of NCCC, which filed for bankruptcy owing creditors more than $4.5 million. Randell and a former Labor Department official, John B. Mumford, "mismanaged, wasted, diverted and siphoned off" money from the bankrupt company, the lawsuit charges.

Before Randell went to jail in the National Student Marketing case, he and his wife set up a Virginia corporation that was used "as a vehicle to divert assets (of NCCC) to their personal benefit and gain at the expense of the creditors and investors" of NCCC, according to the lawsuit brought by trustee Richard Stahl.

Seeking to force Randell to repay any profits from the collapse of NCCC, the case lists nearly $250,000 in commissions and other payments to Randell. The suit also charges that Randell diverted second mortgages from NCCC to Federal Mortgage, then resold the morgages and kept the cash.

Stahl apparently sued Randell in an attempt to establish a claim on any assets that Randell has, including any profits from the sale of his home.

Randell is asking $3.5 million for his castle-like home and 18 acres on the Potomac off Crest Lane. Dyer's resisdence, a short drive away on Burford Drive in McLean, is a 10,000-square-foot, California-style house with an indoor pool and gymnasium.

After learning that a reporter was contacting his former business associates, Randell telephoned The Washington Post about 10 days ago and offerred to answer written inquiries about the trade exchanges. Last Thursday, an acquaintance of Dyer and Randell delivered responses she said had been written by the two men.

In the letter, Randell said the Washington exchange is being reorganized. "The new owners are expected to be Beatrice McConnell (the bookkeeper), Frank Huddleston (an employe of the firm) and possibly one of the members of the exchange. Mr. Dyer may be an owner." the letter said.

Randell did not answer a question about when or how he disposed of his interest in the firm, nor did he respond to an inquiry about how much money ITE took in.

The letter said, "ITE was profitable in its first year of operation, 1977, however in 1978 it did not make a profit."

But Randell gave a different accounting of ITE's 1977 business to Clyde Fabretti, an ITE employe who quit the company a year ago to start his own exchange, the National Commerce Exchange of Springfield, in partnership with Robert G. Nunn III, another former ITE worker.

Fabretti said he was to receive a percentage of ITE's 1977 profits and expected the company would make more than $1 million, based on its franchise sales and service fees. But Fabretti said Randell showed him a handwritten statement last May indicating ITE operated at a $200,000 deficit in 1977. "I told Cort I couldn't believe it and I quit," Fabretti recalled.

He said the figures shown him indicated that ITE had paid more than $400,000 in "consulting fees" to the Washington Trade Exchange and that the company had other "unexpected expenses" that pushed it into the red.

Fabretti said he believed that if ITE did lose money, it was because it was being charged for expenses that should have been paid by WTE or other operations. After WTE got into financial trouble last year, Dyer and Randell suggested using Nunn and Fabretti's National Commerce Exchange as a model for selling ITE franchises, Fabretti said, adding that he and Nunn said no thanks.

Randell said the problem was that "ITE was providing more services or exchanges than it was being paid for. It was planned that ITE would break even on setting up its national network of exchanges. ITE planned to earn its profits from the 3 percent fee for continued services."

Randell contended a major factor in ITE's downfall was a computer malfunction at ADP network, a Michigan firm that once did datd processing for ITE. He said the computer foulup is the reason that ITE has not paid a $100,000 bill to the data processing company. An ADP lawyer refused to comment on the firm's dealings with ITE.

Several former ITE franchise holders also disputed the claim that ITE made no profit on its franchise sales, pointing out that franchise fees ranged from $15,000 to $30,000 or more, and gave the buyer only a rudimentary training session and the printed materials needed to set up an exchange.

Despite the data-processing problems that forced them to set up their own accounting systems, ITE license holders had few complaints about their dealings with Randell and Dyer.

"Dyer bent over backward to be fair with people," said Hanna. "They went out of thier way to give money back to people" who bought franchises and then failed to get their business off the ground. Despite the failure of ITE, Hanna predicted that "90 percent of the exchanges will survive. Only a handful will fold."

"Jim and Cort did not set our to hurt anybody," said Nunn. "They aren't the kind of guys who get up in the morning and say, 'Hey, who can I screw today'."

"They just blew it," added Fabretti. "They could have had the biggest network of exchanges in the country, they could have had a great operation. But they got greedy. Very greedy."

A previous story on Randell incorrectly reported he was fined for his convictions in the National Commercial Credit Corp. case. No fine was imposed. Randell has appealed the convictions. CAPTION: Picture, Cortes Randell's home: His castle-like dwelling in McLean on the Potomac is up for sale for $3.5 million. By Ken Fell-The Washington Post