When Hispanic immigrants in Northwest Washington were robbed in a series of brutal muggings in 1988, it wasn't their wallets that were stolen, it was their shoes.

Street-savvy youths had discovered that the immigrants, most of whom were in the country illegally, were walking banks. With no other place to safely store their hard-earned savings, the victims put their money in the most secure place they could find: underfoot.

With the bankruptcy of Latin Investment Corp., which was offering banking services without a bank charter or federal deposit insurance, Hispanic community leaders said they fear that habits such as banking by shoe will once again become popular.

"There is a real concern about what people are going to do with their money," said Elaine Grant, who has been collecting the names of Latin Investment depositors trying to recover millions of dollars from the bankrupt firm. "The joke is: 'How wide is your mattress?' "

Although most of the illegal Hispanic immigrants in the area will be granted temporary clemency in January from U.S. immigration laws, giving them access to U.S. banks, Grant and other community leaders said they expect few will take advantage of their new banking status.

"It's very impersonal to do business at most banks, and for these people -- who don't speak English, who don't understand American culture -- it just makes them even more uncomfortable," said Grant, who is executive director of the Wilson Community Center in Adams-Morgan.

Alternatives have been proposed. Jerry Apodaca, former governor of New Mexico, hopes to open a chartered, federally insured bank in Adams-Morgan that would offer special services for Hispanic clients. But his hope is still far from reality. To open the bank, Apodaca must raise at least $4 million from investors, money that will be used as a cash cushion to protect the bank and the federal deposit insurance fund from potential losses.

Meanwhile, only a handful of bank branches in the District employ bilingual tellers or offer Spanish-language literature explaining their operations. Even if more banks offered special services, many Hispanic leaders said they doubt the community would make use of them.

"Most of these immigrants are just learning to read and write -- in English and Spanish," said Adelina Callahan, a restaurateur and community leader. "Most of them have never had money to save before. They don't trust many people with that money, especially strangers."

That mistrust led as many as 3,500 immigrants, mostly Salvadorans, to the doors of Latin Investment at 1704 R St. NW, where the tellers spoke Spanish, the owner was a well-known Salvadoran businessman and there was no need for a Social Security number to open an account.

For illiterate customers, there were special services. Tellers filled out deposit slips, helped keep track of savings and explained all the paperwork. Latin Investment also was a lifeline to El Salvador, where many immigrants still have relatives who need their hard-won U.S. dollars.

Carlos Cortes, who banked at a company called Casa Latinoamericana de Inversiones that operated much like Latin Investment, said he closed his American Security Bank account and deposited his $4,000 at Casa.

"They're too strict," he said, referring to American Security. "They require three or four signatures to cash my mother's checks."

His mother, Manuela Cortes, banked at Casa for a much simpler reason.

"I like it at Casa because they speak Spanish," said Manuela Cortes, who deposited $5,000 with the firm, which closed its doors shortly after Latin Investment failed.

But for everything that Casa and Latin Investment were to the District's Hispanic community, which numbers about 80,000 people, they were not real banks. And the thousands of immigrants who had entrusted at least $6.8 million to Latin Investment and $500,000 to Casa have now lost faith.

Latin Investment's depositors forced it into bankruptcy this month. The Securities and Exchange Commission, which is investigating Latin Investment's operations, said the owners used $1.2 million of the depositors' money to buy themselves houses and support their other businesses.

"It's going to be very hard to convince these people to put their money someplace else," said Sonia Gutierrez, the principal of Gordon Adult Education Center. "If they cannot trust one of their own, how are they going to trust someone else?"

To help convince the community that there are alternatives to Latin Investment, Gutierrez said, she is planning a special education program on banking when her students return to school next semester. Although it is common for English classes to teach basic banking skills, such as how to write checks and read bank statements, Gutierrez said she's never lectured about where her students should bank.

"If I had known {that they weren't using a real bank}, I would have alerted my students," she said. "This has taught us all a lesson."

Educating Latin Investment customers about federally insured institutions already has started. Since Nov. 29, when Latin Investment closed, Grant has been answering the questions of concerned depositors. She has advised many to take their business to the American Security Bank at 1835 Columbia Rd. NW, where there is a Hispanic teller at all times.

Callahan has taken her efforts one step further. The owner of La Fonda restaurant escorted more than a dozen of her employees, all of whom lost money in Latin Investment, to Capital Bank, where she introduced them to the Spanish-speaking tellers and helped them set up new accounts.

"That's what it took to get them to do it," said Callahan, who is a member of the board of directors at Capital, which was founded to serve the District's minority residents. "I had to tell them all, 'I'll help you, I'll take you up to the bank and we'll all walk through the steps together.' They're very skeptical."

Callahan said Capital's board of directors has been discussing ways to better educate the Hispanic community, but she said more than education is needed to persuade recent immigrants to use U.S. financial institutions.

"You're talking about people who come from very, very poor stock," Callahan said. "Their goals are simple: They want to work to make money to send their families in El Salvador. They don't really understand what a bank is for."

"It's an age-old problem," said Sandy White, an immigration lawyer. "As each new generation comes to America, they fall into the same trap. It happened with the Poles and the Irish and the Jews. And later, it happened with the Koreans, the Vietnamese and now the Hispanics. It's not until the second or third generation that these people really begin to assimilate."

Former governor Apodaca is trying to speed the process. Last year, Apodaca received preliminary approval from federal and local regulators to establish a bank in Adams-Morgan. He said he hopes the new institution, called The Development Bank of Washington, can find the market once served by Latin Investment.

"The events of the last few weeks have only reaffirmed my belief that there is a great need for this bank," Apodaca said. "These people are here to stay, to work, to become part of the American dream. I know it's hard for us to understand their lack of trust, but we must accept the reality and try to serve them."

Tellers at The Development Bank would be bilingual, and its board of directors would be chosen from among the Hispanic business leadership, Apodaca said. The bank would offer educational programs and special services for customers who cannot read or write.

"It's clear that this is what it's going to take to ensure that another Latin Investment cannot prosper," Apodaca said.

But raising the $4 million needed to open has been difficult, and Apodaca already has missed his planned opening in April 1990. He said he now expects to begin operating sometime this summer.

Business associates of Fernando Leonzo, who ran Latin Investment and is now facing civil charges for misleading his customers, said Leonzo ran into similar problems. When the District's banking office told Leonzo that he had to obtain a charter to continue offering banking services, Leonzo said he would comply with the law.

"But when he realized the kind of money it would take to start a real bank, he just decided to keep doing it his way," said a former partner. "He knew he'd never get that kind of cash and, well, things seemed to be going just fine the way they were."