The former bookkeeper of P.I. Properties Inc. testified yesterday that on orders from Mary Treadwell, the firm's president, she twice falsified the company's financial records in 1975 so that reports sent to federal housing officials would make it appear that the Clifton Terrace apartment complex was losing money.
Zellene Laney, P.I. Properties' bookkeeper from mid-1975 to 1978, said that Treadwell, through the firm's general manager, Robert E. Lee, directed her to make certain that the firm's monthly financial reports on Clifton Terrace never showed a surplus so that P.I. Properties, which was managing the complex for the U.S. Department of Housing and Urban Development, would not have to send any money to the federal agency.
"Bob said Mary told him we should never show more income than expenses," Laney testified on the 10th day of Treadwell's fraud and conspiracy trial. "He told me I was going to do the HUD reports the way Mary wanted them done."
After receiving the instructions, Laney said that she listed bogus expenditures in the April and June 1975 reports that were sent to HUD so that actual surpluses were transformed into deficits.
In addition, she testified that on another occasion, she altered P.I. Properties' internal records to show expenditures that the firm actually incurred in the management of another, privately owned apartment complex, the Buena Vista, as money that had been spent at Clifton Terrace.
Laney, testifying for more than two hours in a drawling voice with little emotion, said that when she prepared her first HUD report, for Clifton Terrace's operations in April 1975, she found there was a surplus of $1,509 and handed the report to Lee.
But she said that Lee returned it to her the next day. "He told me to redo this, that Mary didn't want to give any money to HUD," Laney testified.
Laney said she then altered the April report to show that a $15,808 check had been sent to the Internal Revenue Service, a check that P.I. Properties had legitimately sent to the IRS several months before. As a result, she said, a $1,509 surplus, which P.I. Properties would have had to pay HUD, was turned into a deficit of more than $14,000.
In the June 1975 report, Laney said she computed that "we would have owed about $1,200" to HUD. She said her solution was to list a bogus $3,191 expenditure for insurance at Clifton Terrace in order to create a fictitious deficit of $1,917.
In another instance, Laney said she changed P.I. Properties' books to list $4,300, some of which were expenses incurred at the Buena Vista project, as expenditures made at Clifton Terrace, a 285-unit project located on a hill in Northwest Washington. The Buena Vista project was owned by another Treadwell firm, Youth Pride Economic Enterprises.
In addition to giving the federal court jury of eight women and four men an initial glimpse at the activities she says she witnessed inside P.I. Properties, Laney testified about the attitudes exhibited by Treadwell, Lee and Joan M. Booth, Treadwell's sister and Clifton Terrace's project manager, toward Clifton Terrace and its impoverished tenants.
Although P.I. Properties was created as a nonprofit company to manage Clifton Terrace for low- and moderate-income tenants, Laney recalled that in October 1974, Treadwell told her that Clifton Terrace " 'was there to make money. It wasn't for job training. Pride the parent company of P.I. Properties was for training.' "
Under questioning by Assistant U.S. Attorney William D. Pease, Laney said that at about the same time, Lee told her that P.I. Properties "might turn Clifton Terrace into condominiums . . . in the near future." Laney quoted Lee as saying the condominium conversion might occur by late 1976.
The former P.I. Properties bookkeeper, who now lives in North Carolina, said that while she eventually moved into Clifton Terrace as its resident manager, Treadwell, Lee and Booth disdained the property.
Laney said both Lee and Booth did not want to live in the complex "because Clifton Terrace was a slum and the people who lived there were beneath them."