Lawyers for Mary Treadwell, former head of the Youth Pride job-training program, told the U.S. Court of Appeals yesterday that Treadwell's 1983 conspiracy conviction should be thrown out because a trial judge gave erroneous instructions to the jury.

Treadwell was convicted of conspiracy and seven counts of making false statements to the government in connection with the ownership and management in the mid-1970s of the low-income Clifton Terrace apartment complex in Northwest Washington. She was acquitted of 13 other charges.

Prosecutors charged that P.I. Properties, a corporation set up by Treadwell to buy the housing complex from the Department of Housing and Urban Development, was a sham and that she and others conspired to enrich themselves at the expense of the tenants and HUD.

Defense lawyer John W. Nields Jr. argued yesterday before a three-judge panel that District Judge John Garrett Penn, who presided over the seven-week trial, failed to single out and emphasize to the jurors the sole basis on which Nields said Treadwell could be convicted of conspiracy.

That was the charge, said Nields, that Treadwell conspired to "misappropriate, misapply, divert and steal" funds from Clifton Terrace. The defense has maintained that other management personnel -- three of whom pleaded guilty in the case -- stole the funds without Treadwell's knowledge.

Instead, Nields said, Penn instructed the jurors that they could convict Treadwell of conspiracy if they found she had schemed to carry out "any" of several alleged frauds against HUD and the Internal Revenue Service that were mentioned in the indictment.

"The jurors were never told what the issue was," said Nields. "No wonder they were out so long." The jury deliberated for a record 131 hours over 17 days before returning its verdict.

Government lawyers argued yesterday that Penn, who read much of the indictment to the jurors, including the part that mentioned misappropriation of funds as "the object of the conspiracy," had made the thrust of the charges sufficiently clear.

They also contended that the conspiracy charge applied not only to the theft of money from Clifton Terrace but to "a continuous pattern of concealment" by Treadwell.

The conspiracy was "far vaster than simple misappropriation," said Assistant U.S. Attorney Helen M. Bollwerk. She termed it "inconceivable" that the jurors "didn't understand that the scope was greater" than stolen money.

The length of the jury's deliberations "doesn't suggest that they were at sea and didn't know what to find," said Bollwerk. "It suggests that they were being conscientious."

Treadwell, former wife of D.C. Mayor Marion Barry, was sentenced last year to three years in prison and fined $40,000 by Penn. She is free pending the outcome of her appeal, which could take several months, and was present during yesterday's arguments.

The case is being considered by appeals judges Robert H. Bork, Carl McGowan and Edward A. Tamm.