Federal prosecutors issued subpoenas yesterday for the records of 12 former and present members of the D.C. City Council, including Mayor Marion Barry, in connection with a now-abandoned plan to give an exclusive and potentially lucrative bus shelter advertising contract to a spinoff of Youth Pride, Inc.
The court orders, which caused a stir and some consternation at the District Building, also directed the council members to turn over all records regarding a trash can advertising franchise held by the same firm, Pride Environmental Services, Inc.
That 15-year contract was granted in 1972 and then canceled last year after years of failure and mismanagement that one council member referred to as a "comedy of errors." The bus shelter contract, proposed and scuttled in 1978, had been intended to rescue the foundering trash can venture.
The prosecutors' demand for the records yesterday was the latest development in a two-year-old criminal investigation. The probe centers on allegations that Youth Pride's executive director, Mary Treadwell, and two other officials of P.I. Properties, Inc., another spinoff of the self-help group, stole, diverted and misappropriated $600,000 from the U.S. government and from low-income tenants at Clifton Terrace Apartments in northwest Washington between 1974 and 1978.
The information requested from council members yesterday was the first public confirmation that federal investigators also are examining the trash container franchise and the aborted bus shelter advertising plan.
Herbert O. Reid, legal counsel to the mayor, said yesterday that a federal grand jury hearing evidence in the Pride case briefly questioned Barry about the bus shelter proposal when the mayor appeared before the panel in September.
"I believed that they were winding up and closing up (the investigation)," Reid said. "I did not know this transaction had any importance in this investigation."
A federal agent from the Internal Revenue Service who has worked on the Pride case since the outset roamed through the District Building yesterday seeking out council members, many of whom later said they were unaware that the matters involving PES were included in the investigation.
Not all those named were formally served with the court order yesterday, but many informally agreed to supply whatever documents they had on the two matters.
"Whatever the grand jury wants, I'll present it if I can find it in this mess," council member David A. Clarke (D-Ward 1) said yesterday afternoon.
It was understood yesterday that the investigation into the PES business deals with the city was a separate stage of the overall federal investigation into the tangled financial affairs of Youth Pride, a now defunct self-help organization whose founders included Treadwell and her former husband, Barry.
PES, set up to help Youth Pride carry out its job training efforts, received an exclusive, 15-year franchise from city government in 1972 to place 10,000 bright blue trash cans on the city streets within 30 months and sell advertising space on the cans. The venture had been expected to provide 200 jobs and earn the D.C. government $100,000 a year, to be paid by PES from advertising revenue.
Instead, by the time the contract was canceled in 1980, only 3,000 trash containers were on the street, no more than two-dozen jobs had been provided at any one time, PES had defaulted on $500,000 in government-backed loans and had not paid the city any franchise fees.
There also were numerous complaints that trash cans were in poor condition and that PES did not respond to repeated complaints from city officials about maintenance of the cans. Treadwell had blamed the problems on the failure of the city to regularly empty the cans and to protect them from vandals, and complained that advertisers had not supported the program.
In early 1978, Treadwell sought support from some council members for a plan to salvage the failing trash can operation by broadening that contract to include another exclusive franchise for PES -- this one involving 500 bus shelters.
PES would pay fees to the city government -- a minimum of $675,000 over the 15-year franchise period -- in exchange for exclusive rights to erect the shelters and sell advertising space on them.
Treadwell at first told the council that she had agreed to a joint venture with BusTop Shelters, Inc. of New York City, which would pay for construction and maintenance of the shelters.
Treadwell then unexpectedly asked the council to delay its decision on the franchise and announced that she intended to acquire a new partner, which she would not name at the time.
At that point, in late June, Council member Wilhelmina J. Rolark (D-Ward 8), a principal sponsor of the proposal and then chairman of the Council's Committee on Employment and Economic Development, withdrew her support, complaining that Treadwell appeared to be seeking bids on a city franchise.
"If there is going to be some competitive bidding going on, it ought to be under the auspices of the government," Rolark said at the time. The council never formally voted on the proposal.
Last night, the president of another New York based business said he had an "understanding" with Treadwell in the summer of 1978 to be a partner in a joint venture with PES to provide the bus shelters.
Henry Silverman, president of Convenience and Safety Corp., said the deal with PES "seemed like a normal business affair" and added he had not heard anything on the subject in three years.
The subpoenas issued yesterday specifically demanded that those named surrender all records pertaining both to BusTop Shelters and Convenience and Safety Corp., as well as documents related to PES.
Treadwell could not be reached for comment late yesterday.