"So I said to him," recalled Alexandria podiatrist Arthur Coster, "How do I know this investment is going to be good?" And he said, "If it weren't good, would we go into it?"

That was all the assurance Dr. Coster needed at the end of a long day. It was a pleasant conversation in his suburban living room with an investment salesman who had long been on a first-name basis with Dr. Coster, his wife and children.

Without asking any more questions, Dr. Coster sat down, wrote a check for $8,500 and handed it to the salesman from General Financial Services (GFS), a local company with a number of sibsidiaries that specialized in pension-planning and investments for physicians here.

The money put up by Dr. Coster and 18 other investors most of them doctors, totaled $272,000 and bought them each a little piece of an office building at 7023 Little River Turnpike in Annandale. Instead of producing profits, which the doctors say they expected, the building developed a voracious appetite for more of their money - in some cases eating up three times their initial investment with no return as yet.

"What we have here," said one attorney familiar with the tangled case of GFS "is another classic example of doctors making stupid investments."

Altogether, tens of thousands of dollars - it is impossible to be more precise - have been lost by many of the 325 investors, most of them Washington area doctors, who purchased $3 million in interests in real estate-downing partnerships organized by General Financial Services. Its subsidiaries and related companies.

At least four of the 20 GFS real estate projects in Washington and Baltimore have gone bankrupt. Others are running big losses. Responding to complaints of Dr. Coster and others, the Securities and Exchange Commission, (SEC) won a court order last summer stopping certain GFS sales practices.

An intensive Washington Post inquiry - based n the SEC investigation, other documents and interviews - has produced an unusually detailed look inside the world of investment amateurs playing the professional's game of high-stakes risk-taking with silver-tongued promoters offering tax breaks and big profits, without underlining the dangers.

Attorneys for the SEC say such promotions are a major problem anywhere there is a lot of money - and particularly in Washington, where there are hundreds of doctors, dentists and other professionals with big incomes who make attractive targets for assorted schemes.

A few of them make the headlines, like the one promoted by McLean entrepreneur Robert Dale Johnson who collected between $20 million and $40 million from doctors and others - who invested in his nonexistent wine importing business. And there was the Silver Spring man who sold doctors, lawyers and others here shares in an equally nonexistent new town on the Eastern Shore, as well as rights in a nonexistent cable TV franchise that would serve the nonexistent new town.

As for Dr. Coste, he not only wrote the $8,500 check, but later signed a partnership agreement that eventually cost him thousands of dollars - more, he claims, than he ever intended or originally invested. He neither read the agreement before he signed it, nor asked an attorney to review it for him, he testified in a deposition.

"You signed a document without reading it?" the lawyer for one of the promoters asked incredulously.

"Exaclty," Dr. Coster replied.

When a newspaper reporter asked him why, the doctor said, "Because I trusted him (the promoter)" Dr. Coster was by no means the only one.

Some doctors who bought into GFS projects have seen an initial investment of $10,000 balloon to 10 times that amount as they continue pouring money into failing buildings to keep them afloat and protect themselves from enormous liabilities they claim were not explained when they invested.

Some investors were steered to the promoters by their own accountants or pension consultants, some of whom accepted undisclosed finders' fees. In one case, a doctor himself recruited a number of colleagues to purchase a medical building in Suitland. When that began to fail along with several other of the doctor's business-endeavors, he hanged himself.

Some doctors took out huge personal loans to make the down payments on their investments and have been forced to borrow again to keep building s going.

Many doctors own shares in more than one GFS investment. Some, even after discovering that one GFS investment was not going well, bought another.

Investors were persuaded to put up money from more than one of the sources they controlled. For example, Dr. Coster invested in the Annandale Building as an individual, but his tax-sheltered pension fund purchased an interest in a downtown Washington office building.

Because of such investments, the Department of Labor is known to have made at least preliminary inquires into the affairs of General Financial Services. Labor enforces parts of the so-called pension reform act.

That law requires that such pension funds be invested on behalf of employees - nurses, receptionists, etc. - as well as the doctors, themselves. It also requires that the investments be "prudent."

GFS - through its subsidiaries - was selling interests in real estate partnerships. Normally, GFS would buy a contract on a building or apartment complex, then it would organize two partnerships.

One partnership would own the land and collect "ground rent" from the building. That partnership was usually sold to doctors' pension funds. The other partnership would own the building. The building was usually sold to the doctors as individuals. Rental income from offices and apartments was supposed to pay the bills of the partnership - the mortgages, utilities, etc.

The officers of General Financial Services insist that the investment opportunities financially were sound and fully explained. The failures, they say, can be attributed to a sag in the Washington office rental market brought on by the 1974 recession.

The SEC, in a complaint filed in U.S. district court in Alexandria, charged among other things that GFS did not disclose its profit in the ventures, that it comingled the funds of the various partnership accounts and that it misrepresented many of the risks of real estte investment.

Further, the SEC alleged, the promoters were selling "unregistered securities" because they had not sought and received SEC approval of a formal statement about each real estate project. Such a statement, listing the risks and disclosing the financial arrangements, should have to be given to each prospective investor, the SEC says.

After the SEC filed its complaint in courts, GFS and its officers signed a "consent decree" in which they agreed to a court order prohibiting certain sales practices, but did not admit having done anything wrong.

According to the U.S. attorney's office in Alexandria, the case is not being pursued for possible criminal prosecution.

Those promoters still with General Financial Services refused to be interviewed for this series of articles. But GFS gave The Post a 16-page statement in response to 102 written questions that The Post hand-delivered to GFS attorneys.

"All provisions of the consent decree now are being followed" by those promoters still with GFS, the statements said. Although one key figure left the firm at the end of 1974, he, too, has signed a consent decree.

The remaining promoters are doing business out of offices in a new highrise at 7926 Jones Branch Drive in Tysons Corner. They were evicted from their previous location - the building that Dr. Coster and other partners bought - for not paying the rent.

Their attorneys say they are hanging tough, running the pension consulting business that started it all, and attempting to make investors well, although it will take years. The promoters have been or are still being sued by investors and creditors in U.S. and local courthouses from Baltimore to Fairfax.

The story of General Financial Services and how it grew has been put together from a number of sources, including interviews with investors, tax attorneys, prosecutors, securities lawyers and experts from the Department of Labor and the Internal Revenue Service.

Transcripts of the SEC's interviews with the promoters and other documents were obtained by The Post through the Freedom of Information Act. There are dozens of depositions and other documents in the many lawsuits against the firm, its subsidiaries and principals.

Some months after Dr. Coster and his fellow investors began to realize that their Annandale building - and their pocketbooks - were threatened, they had a series of meetings, Dr. Coster was asked about this in a deposition:

"Q. What did you do?

"A. We sought advice from counsel . . . in an attempt to straighten out the total fiasco . . .

"Q. What was the result . . ."

"A. Tremendous bills."

NEXT: The promoters