Federal housing officials made virtually no attempt during the mid-1970s to investigate the high expenses that P.I. Properties Inc. claimed it was incurring in the operation of the Clifton Terrace apartment complex, a former chief manager of Washington-area federal housing testified yesterday.
Kenneth M. Long, a Department of Housing and Urban Development director of housing management during the mid-1970s, said: "We really didn't look behind" the reports being submitted monthly by the now-defunct company, which first managed Clifton Terrace for HUD and then bought the property from the federal agency in 1975.
Long, who is still with HUD but in a different job, said that because of a shortage of staff, HUD only looked at "those things that became flagrant or obvious.
"We learned it was costing quite a bit to manage Clifton Terrace," Long testified, but said that he and his staff had not monitored P.I. Properties' spending "as vigorously as we should have."
Long's testimony came on the ninth day of the fraud and conspiracy trial of Mary Treadwell, the former president of P.I. Properties, who is accused of using the firm to defraud the federal government and impoverished tenants at Clifton Terrace of thousands of dollars to enrich herself. P.I. Properties was a real-estate spinoff of the Youth Pride self-help organization.
Despite HUD's generally lax oversight, Long said that in early 1975 he wrote to Treadwell "to question several expenses . . . which we felt were excessive and asked P.I. Properties to explain."
Under questioning by Assistant U.S. Attorney Stephen R. Spivack, Long said that Treadwell at one point attempted to justify the need for the purchase of a new station wagon for P.I. Properties' use at Clifton Terrace. Long testified that the car Treadwell wanted to buy had such features as power steering, power windows, electric door locks, air conditioning and deluxe wheel covers.
The HUD official told the federal court jury of eight women and four men that he denied the request, saying, "I didn't feel the project needed a vehicle."
But he said that Treadwell, without HUD's permission, then leased the same car she had wanted to buy. Long said that he asked Treadwell to discontinue the lease, but that she refused.
John W. Nields, Treadwell's court-appointed defense attorney, attempted in his cross-examination to get Long to admit that he had approved the car rental when he approved P.I. Properties' operating budget for Clifton Terrace, but the housing official said that was not the case.
P.I. Properties' expenses amounted to $100,000 more than its rent receipts during a year-long trial-management period at Clifton Terrace, according to earlier testimony in the trial. Long said that record led him to recommend that HUD not sell the property to the firm.
Long said that while P.I. Properties had made some improvements at Clifton Terrace, located on a hill in Northwest Washington with a commanding view of downtown, "the bottom line was cost. It just cost too much for P.I. Properties to operate the project."
D.C. City Council member H.R. Crawford, who was HUD assistant secretary at the time of the sale, testified Thursday that he approved the sale in hopes that the venture would prove to be an example of successful minority entrepreneurship. HUD foreclosed on P.I. Properties' largely unpaid mortgage in 1978.
Long's March 18, 1975, recommendation against the sale was made a day before Treadwell responded to his allegations that there was excessive spending at Clifton Terrace.
"I was not persuaded by the response I received," the HUD official said, but he said he made no further attempt to require Treadwell to validate the expenses and did not even respond to her letter.