The books are not much help in re-constructing the rapid advance and painful decline of the General Financial Services real estate empire, because the books were incomplete, sometimes inaccurate and kept partly in pencil with the use of eraser.

But the doctors and others who had invested thousands of dollars in buildings, apartments and stocks offered by GFS salesmen began to get clues of trouble late in 1974 when their dividend checks were late or their inquiring phone calls to GFS went unreturned.

Confirmation of big trouble came for Dr. Arthur Coster and the others who had invested in the Annandale Medical Building in May, 1975, when they got a threatening letter from a mortgage-holder who demanded to be paid.

"They were talking about lawsuits for thousands of dollars," Dr. Coster said. "I couldn't believe it. The way it was set up I could have been wiped out." He sought legal advice.

What Dr. Coster did not know was that for months the promoters themselves had been holding frantic weekly meetings in the GFS offices to decide, as one promoter later said, which "squeaking wheel" would get the grease - which investor would get a dividend check or his money back.

But there wasn't enough grease.

Investors began to complain to the Securities and Exchange Commission (SEC). Its investigators started to put together the history of a company that grew from a small pension-planning business in only three years to what one knowledgeable lawyer called "the most active real estate syndicator in the (Washington) area" with thousands of dollars passing through its offices.

General Financial Services was started in 1970 as Employee Benefit Planning (EBP), a pension consulting firm. It was organized by Harry Ruddy, Walter T. Banziger and David L. Woody, among others. Ruddy and Banziger had both been stockbrokers; Woody had sold real estate and was a lawyer.

EBP, an early brochure states, "is a consulting firm specializing solely in the creation and administration of IRS qualified corporate retirement programs. We do not sell any product such as insurance, securities or real estate; as a result, EBP provides totally unbiased consultation."

Regardless of whether investment advice is given, however, the company that incorporates doctors and administraters their pension programs learns everything there is to know about how much money is available. Although it depends on a number of factors, a doctor in a metropolitan area can easily gross $100,000 a year and many make several times that, according to a number of sources.

So at some point in 1971 it was decided, probably by Harry Ruddy, that there were greater financial opportunities for EBP than just the pension planning business.

EBP because the pension planning subsidiary of a new holding company, General Financial Services. An undated GFS brochure headed "private stock offering" says the basic corporate philosophy of GFS was, "All new business should lead to repeat sales."

In contrast to the promise of "unbiased consultation" in the old EBP brochure, subsidiaries of GFS were selling real estate and insurance.

GFS subsidiary Realty Equities Corporation organized partnerships that bought a garden apartment complex in Gaithersburg, a warehouse in Wheaton, two warehouses in Northeast Washington, some inner city apartments off East Capitol Street and in Baltimore, garden apartments in Prime George's County and five office buildings throughout the the metropolitan area.

There were plans for other projects - a restaurant in Falls Church, shopping centers in Fairfax and Crofton, even for a distillery in Pennsylvania - but they never came to fruition.

In virtually all of the projects, GFS subsidiary Realty Equities Corporation retained an interest as the "managing general partner" - the entity responsible for operating the buildings, keeping them rented, paying the bills, maintaining tax records and for distributing the profits (or losses) among the partners.

A lot of money turned over in 1972 and 1973. GFS bought a plane, on credit of course. Some of its officers went to the Super Bowl by way of Las Vegas, and there were lavish Christmas parties for investors and other GFS business associates. There is no record of how all this was paid for.

But not all was well, particularly with the office buildings. The U.S. government left as prime tenant in a building at 1835 K St. NW (which also houses the Jean Pierre restaurant). The space has still to be filled.

There are lawsuits scattered through area courthouses from various firms and individuals trying to collect bills from GFS for janitorial services here, security forces there, carpeting at another place. There is even one suit filed by a worker in the K Street building who charged she was badly injured when the door to a stall in the women's room came off and hit her in the head.

There was undeniably a recession in the Washington area office rental market that came at the time of the energy crisis. Businesses were not renting new space, and some existing long-term leases in GFS buildings did not return enough money to cover the dramatic increases in heating costs.

Proceeds from new sales were apparently being used to pay old bills and commitments from other projects, according to testimony.

An SEC attorney asked Walter Banziger, "Is it true that $9,000 of income generated by Old Chillum (a warehouse in Northeast) was not distributed to partners, that that $9,000 was used to pay operating expenses or rent on the K Street venture? And that when the Chillum investors complained, the money went back in and was distributed to the Chillum investors? Is that an accurate statement of the transaction?"

And Banziger replied, "Yes."

A court-appointed certified public accountant, Rubin and Schimel, examined the books of GFS in concert with the SEC. The accountants told the court that general ledgers did not exist for some of the partnerships, that ledgers that did exist were not maintained in accordance with accepted accounting practices, that a "significant amount" of journals were posted in pencil instead of pen "with some erasure marks."

In short, the CPA firm told the court, a reconstruction of where the money came from and where it went "could prove to be impossible."

For many of the same reasons, it is impossible to say which of the real estate ventures have worked and which have failed - except in some obvious cases.

One of the five office buildings - at 11125 Rockville Pike next to the new White Flint Shopping Center - was sold to its tenants as a medical office condominium. According to GFS, the original investors got back 80 cents on the dollar. Some of them are suing.

The building on K Street is for sale. There is little prospect for the original investors to get anything back except losses for their tax returns.

The other three office buildings - in Annandale, Suitland, and a major three-building medical complex in Seven Corners - have been lost to GFS and its original investors in bankruptcy proceedings. In Seven Corners and Annandale, however, some of the partners bought their way back into the projects to protect themselves against heavy personal liability. Lawsuits abound.

One warehouse went to bankruptcy just last November; other projects have been sold, some remain in GFS control.

Investors allege that once the buildings were acquired, they were badly mismanaged by GFS. Vacant offices or apartments would stay that way while inquiries from potential tenants would go unanswered, several investors told The Washington Post.

GFS, in a 16-page unsigned statement to The Washington Post, dealt with that charge by saying, "All of the properties . . . have either had brokers managing the properties or outside real estate management and leasing firms handling the properties." That does not say that the management was not poor.

The problems at GFS peaked at the end of 1974, and Ruddy, described as "autocratic" in depositions by his former partners, resigned or was forced out. Ruddy's resignation, GFS said in its statement, "was accepted and he left shortly thereafter to go back to New York to work for his rich father."

Ruddy, interviewed at his home in Islip, N.Y., says there was "no dispute," he simply walked away from it. "I look on it as something that happened years ago," he told a reporter. "It's over with."

But for the promoters who have remained, and for the investors who are suing them or who are afraid to sue them for fear of losing whatever might be left, it is still very much alive.

Hans Banziger, a brother of Employee Benefit Planning founder Walter Banziger, joined the firm in its early years and is now GFS president. He has been described by investors and friends as personable, a devoted family man, and a great salesman. He was able to retain some of that quality even during his interrogation by the SEC.

"I hate to appear to be evading your questions or seem to be stupid," he told one SEC attorney, "but we do some very stupid things around there as far as organization goes."

Next: The Investors