The U.S. Marshals Service and the Federal Bureau of Prisons are investigating alleged illegal practices at two halfway houses for federal prisoners that are operated by the Volunteers of America (VOA) in the Mount Pleasant area.

Officials say the investigation is unrelated to the fire that killed nine mental outpatients earlier this month at another group home on Lamont Street NW, operated by the VOA.

J. Jerome Bullock, chief U.S. nay shal for the District, would not say who raised the allegations, but he said they folowed the mid-March arrest of

The allegations include the claim that inmates were able to "buy extended passes that allowed them to live outside the house in violation of Bureau of Prisons regulations.

The VOA is under contract to supervise 40 inmates at the two houses. Most of the inmates are within three to four months of parole or release.

According to another allegation, inmates paid halfway house staffers to falsify tests monitoring for drug use. The VOA is required to test urine samples of inmates for the presence of narcotics. Inmates caught using drugs could be sent back to prison.

VOA official would not comment on (Text Ommitted) York that they are unaware of the investigations.

"Following up on rumors like this is just not fruitful," said Ernest Black, of the Hill and Knowlton public relations firm that represents VOA.

On Thursday, two federal auditors and two investigators from the prison system's Office of Inspections began a full financial and program audit of VOA's two houses in Washington.

VOA staffers, who asked that they not be identified, have described practices similar to one of the allegations currently under investigation.

The staffers say that inmates are routinely placed on extended passes as long as they continue to pay the $2-per-day inmate contribution for their VOA bed. In the meantime, VOA officials bring in other inmates to occupy those beds. VOA thus charges the Bureau of Prisons double the $20.50-a-day government payment for a single inmated bed, the staffers say.

In the past two months, one staffer said eight inmates were placed on extended passes -- for as long as two weeks -- and the empty beds were filled with new inmates under the double-billing procedure.

"If they've cheated us, it's going to be their a--," said E. Michael Aun, spokesman for the Bureau of Prisons, which operates under the Department of Justice.

Aun said the audit of the two halfway houses was ordered after the FBI declined to investigate the allegations that were made to the Marshals Service.

"This is an administrative audit, but if we find any criminal culpability, we'll go back to the FBI." said Aun.

VOA's 14th Street halfway house was certified by D.C. inspections officials to hold 30 residents. Last fall VOA opened the second house on 13th Street to absorb the growing numbers of federal inmates returning to the community. tory, but noted several deficiencies, including a lack of staff training, group counseling, referral services and emergency financial assistance.

A monitoring report prepared at the time showed that the 14th Street house was overcrowded and in violation of its D.C. occupancy permit. The permit allows a 30-inmate capacity, but the prison officials noted a "population" of 36.

Sources inside VOA said that as many as 41 inmates were packed into the 14th Street house last summer. At the 13th Street house, which has a permit to shelter 10 inmates, sources said 12 beds were set up until the day after the fire at VOA's Lamont Street group home for mental outpatinents, where nine women died. The day after the fire, the sources said, VOA maintenance men disassembled the excess beds and -- for the first time since it opened -- posted the required occupancy permit.

James F. Whitt, executive director of VOA's halfway house operations in D.C., denied through his public relations spokesman that beds were disassembled or that they had failed to post the occupancy permit.

The VOA has received more than $500,000 in federal payments since October 1976 when the nonprofit service organization signed a three-year contract to house federal inmates.

Prior audits of VOA's use of federal funds are not available from prison officials. There is nothing in the files that shows they have ever been audited," said the prison system's Aun.

In a 40-page report, GAO auditors concluded that "Nationwide, excessive charges" by nonfederal jails and halfway houses holding federal prisoners "could amount to as much as $1 million annually."

New accounting controls have since gone into effect, but Aun said VOA's contract was exempted under a grandfather clause. The organization will not come under the new controls until