Depositors seeking to recover funds from the financially troubled Latin Investment Corp. filed a petition yesterday in U.S. Bankruptcy Court to try to force the firm into bankruptcy and have a trustee appointed immediately to police the firm's assets.

"We determined that we had no choice but to move ahead and file the bankruptcy petition immediately," said Brian Leitch, of Arnold & Porter, who is heading a team of volunteer lawyers advising more than 1,500 Latin Investment customers.

By forcing Latin Investment to declare bankruptcy under Chapter 7 of the U.S. Bankruptcy Code, depositors would immediately block all attempts to collect debt from the firm. The primary purpose of Chapter 7 is to liquidate all of the firm's assets and distribute the proceeds fairly among creditors, most of whom are the depositors. Typically, creditors receive only a percentage of what they are owed.

So far more than 2,000 customers have come forward, showing records of deposits adding up to about $13 million. On average, customers had deposited about $5,000 with Latin Investment.

Latin Investment's customers said they believed the company was a federally insured bank, and many entrusted their life savings to the firm. Most of the customers are Salvadoran immigrants who were unfamiliar or mistrustful of the U.S. banking system.

If the president of Latin Investment, Fernando Leonzo, does not contest the bankruptcy proceeding, the court would appoint a trustee charged with overseeing the sale of assets and the distribution of cash.

In the event that Leonzo challenges the petition, the court would be forced to rule on the validity of the creditors' claims.

Leonzo, who closed the firm Nov. 29, could not be reached for comment yesterday. Leitch said attempts to negotiate a settlement with Leonzo on behalf of the depositors had never gotten off the ground.

"We scheduled two meetings with him and he never showed up," Leitch said. Jorge Guerrero, spokesman for the 1,500 depositors, said Leonzo refused to accept telephone calls from depositors and did not respond favorably to public appeals for a meeting to discuss the status of his company. Leitch said he had intended to give depositors a chance to vote on a plan of action at a meeting tonight at La Pena Community Center in Adams-Morgan. But he said yesterday that the "swiftness of events" forced his hand.

According to sources, Leonzo is trying to sell one of Latin Investment's most valuable assets, its 60 percent stake in El Latino, the largest Spanish-language newspaper in the District. Depositors also have split into two camps represented by different attorneys who are pursuing different legal strategies.

Leitch, whose legal team represents the majority of depositors, said filing the petition to force bankruptcy was the "the best way to move forward and protect everyone's interests."

Richard Deering, who represents another group of Latin Investment customers, already has won a temporary restraining order that prevents Leonzo and anyone associated with him from making withdrawals from the firm's accounts at Riggs National Bank. Yesterday's Chapter 7 filing ensures that Deering's clients would be treated like all the other creditors.

A court hearing is scheduled for this morning on a motion to name an interim trustee for Latin Investment, an independent party who would watch over the assets until a permanent trustee can be appointed by the court. The trustee ultimately identifies all assets and is responsible for selling them for fair market price.

In his petition requesting the appointment of an interim trustee for Latin Investment's assets, Leitch wrote, "Creditors have no assurance that assets have not been, and will not be, transferred out of the country, or otherwise out of creditors' reach. It would appear that the debtor {Latin Investment} has a demonstrated track record of operating in knowing or negligent violation of the law . . . . Part of the debtor's business involves the transfer of assets to El Salvador, and the debtor appears to be an expert in such transfers."

Leonzo's business began as a wire transfer service in 1983, making it possible for Central American immigrants to send money home safely, associates said. As Latin Investment grew, so did the services customers were offered, including check cashing and savings accounts.

In other developments, the D.C. Department of Consumer and Regulatory Affairs has begun investigating Latin Investment and Casa Latinoamericana de Inversiones (Latin American House of Investments), D.C. officials said. The president of Casa Latinoamericana, which is not associated with Latin Investments, has said he offered banking services without a charter.