A group of investment funds affiliated with one of Washington's oldest brokerage houses has filed for bankruptcy reorganization after running up debts of more than $6 million in risky stock index options trading.

The nine funds were operated by Vincent Checchi, a Washington investment adviser, and did their trading through Folger, Nolan, Fleming and Douglas, an old-line firm with offices at 725 15th St. NW.

Folger, Nolan is owed almost $5 million by the insolvent funds, according to bankruptcy court records, and is the largest creditor listed in each of the nine petitions for reorganization in bankruptcy. The firm's chairman, Lee Folger, was an investor in at least six of the funds, bankruptcy court records show, and is owed more than $150,000 by the investment funds.

Other prominent investors who are listed as creditors include B.F. Saul II, head of several real estate companies and Chevy Chase Savings and Loan., congressman-turned-lawyer James F. Symington, Murray Gart, former editor of the defunct Washington Star, and Edward P. Morgan, the veteran radio correspondent.

Checchi sold limited partnership interests in his investment funds to small groups of investors and used their funds for what clients described as sophisticated computer-managed trading strategies in stocks and stock index options.

"Back in the bull market days, he was doing extremely well," said Morgan.

William B. Dale, a former managing director of the International Monetary Fund who was a Checchi client said, "He was doing very well, very well indeed, until Black Monday" -- Oct. 19, when the stock market plunge caused a 508-point collapse in the Dow Jones industrial average. Checchi "believes what he did wrong was he didn't factor in as great a crash as occurred," said Mary Jo Dowd, an attorney with Arent Fox Kintner Plotkin & Kahn, which represents Checchi's funds. "He did factor in a crash of the size of 1929, but the one that occurred was greater."

Checchi referred all inquiries about the bankruptcy filing to his attorneys. Checchi said the funds "are not bankrupt, they're reorganizing." Under Chapter 11 of the federal bankruptcy law, firms are protected from their creditors to give them time to try to rearrange their business so they can eventually pay off all or part of their debts.

Bankruptcy Court filings list the combined liabilities of nine Checchi operations as $7.9 million and their assets at just over $6 million.

Lee Folger said he would not discuss the investments of Checchi or any client and could not comment on how much the bankruptcy of the nine funds would cost his firm, which traces its origin to W.B. Hibbs & Co., the first New York Stock Exchange member in the Washington area.

"The one thing I can say is that it will have no effect on the firm," said Folger. "We remain one of the most active, most heavily capitalized investment firms in the area."

Folger said he "was a limited partner like everybody else" who invested the the Checchi funds. "He ran them, it was his business," added Folger. Several clients said they were referred to the Checchi funds by Folger or his firm.

Folger said bankruptcy court filings indicating he and family trusts were owed more than $180,000 by the funds "might overstate it somewhat."

The nine related organizations that filed for bankruptcy reorganization are Checchi Growth Inc., a parent firm owned and operated by Checchi and Co. of 1730 Rhode Island Ave. that acted as general partner for eight limited partnerships listed as C/F Options Trading Fund I through VIII.

Checchi Growth Inc. is "primarily engaged in securities investments and stock options trading," its bankruptcy filing said. The other funds said they specialized in stock index options, a sophisticated investment vehicle that makes it possible to speculate on the overall direction of the stock market without actually buying shares in the market.