When Dr. John N. Sheagren, an internist on the faculty of George Washington University Medical Center, wrote his 1972 book, Financial Advice for Physicians, he emphasized investment in insurance and stocks. Investing in real estate, he warned, requires "specialized skill and advice."

"I would have to say I did not follow my own advice," Dr. Sheagren observed in a recent interview after he had himself invested $12,000 in the Annandale Medical Building, one of at least five projects of General Financial Services (GFS) that have failed.

"It was my own stupidity," Dr. Sheagren said. "It is not (the GFS promoter's) fault. Survival of the fittest. I'll take full responsibility and use it as part of my own growth."

A lesson learned - that is the attitude expressed by many disappointed GFS investor, most of them doctors. A few who are genuinely angry at the GFS promoters feel that they were deceived. Many more are simply embarrassed.

They are not destitute. As a class, Dr. Sheagren said, doctors "are able to invest. They can sustain losses and can afford high-risk, high-growth ventures. Besides, the losses are in many cases tax write-offs."

When the Annandale building, at 7023 Little River Turnpike ran into trouble, the partnership was reorganized to avoid a complete collapse. The GFS subsidiary that had been the managing partner was forced out, at substantial expense to the investors who remained.

That process, and the burden of continuing to operate the building, has cost Dr. Sheagren "dramatically more" money than his original $12,000 investment, he said. If there is ever to be any profit from it, he knows, it will be a long time coming - a far cry from the 50 per cent to 100 per cent return within a year or two that, he said, the promoters had suggested was possible.

Dr. Sheagren invested only once with General Financial Services. Other doctors did so several times in different projects. According to the Securities and Exchange Commission. GFS raised more than $3 million from 325 investors for about 20 real estate projects.

Dr. Michael Corrado, an internist who works in the Seven Corners Medical Center, invested in several GFS offerings. He bought a partnership share in a downtown Washington building and his pension plan invested in a warehouse. He also purchased stock in Realty Equities Corp., a GFS subsidiary, he said in a deposition.

In addition, the Seven Corners Medical Center where Dr. Corrado practices a three-building complex across Rte. 7 from the Seven Corners Shopping Center, is another GFS project that went bankrupt. In the process, it has consumed more than $100,000 of his money. Dr. Corrado estimated in a deposition.

In telling his story to the flock of attorneys assembled for the deposition-taking, Carrado said he was persuaded by GFS founder and president Harry Ruddy to make the investment.

Ruddy wanted to sell him a $50,000 share in the project, Dr. Carrado said. "He told me that it was safe, he told me that there was no way it could lose money." The plan was to buy the buildings, convert them to doctor-owned office condominiums and then sell the units.

Even if the condominium concept did not work, Dr. Corrado said, Ruddy told him the buildings would carry themselves, even "make a handsome profit" as rentals. He signed up putting $20,000 down.

"As this thing evolved," Dr. Corrado said, "the one person that got further and further on the hook was me . . . When I bought this I only wanted a small percentage . . . to own a part of a little depreciation (tax writeoff), etc. I got forced through one way or another by my own stupidity, mostly by believing what I was told."

The buildings went bankrupt after a months-long Perils of Pauline saga that required a constant infusion of money. Since Dr. Corrado and others had signed on as general partners, they had individual liability for mortgages totaling about $1.5 million. They bought it at foreclosure to protect themselves.

Dr. Carrado said in a deposition that it was costing him $5,000 a month to operate the building. He has by far the largest share of the remaining partners.

GFS sought out many of the doctor-investors after a GFS subsidiary had set up their pension plans and knew of their wealth. But, in the Seven Corners project, $200,000 was raised from the pension funds of many Virginia doctors and dentists who had never heard of GFS or its pension-planning subsidiary, Employee Benefit Planning.

Those pension programs were set up through master plans offered by the Medical Society of Virginia and the Virginia Dental Association. The plans were administered by Suter Associates Retirement Planning Co., an Arlington-based firm with offices in Washington and Norfolk.

Charles Suter, president of the company, was adamant in both an interview and in court depositions that he did not advise his pension clients about investments - including Seven Corners.

It is quite clear from the court record that one of his former employees - Timothy F. Pegler - did.

"Dear Doctor," began a form letter from Pegler, the Seven Corners Medical Building Condominium Proposal is a project "that we unqualifiedly recommend for your participation through your" pension plan. The proposal, the letter said, "has got some of the greatest possibilities of gain with the minimum of risk . . ."

Pegler signed the letter. It appeared on the letterhead of the pension fund master plans of the Medical Society of Virginia and also contained the name of the Suter Associates Retirement Planning Co.

Suter's company received $37,231.16 in finders' fees for raising $200,000 invested in Seven Corners, according to court records.Pegler and Suter parted company, Suter said, shortly after Suter became aware of the Seven Corners letter. The Suter company continues to handle the housekeeping chores for the plans, but the medical and dental associations have appointed a bank to oversee the investments.

Pegler is now associated with the GFS subsidiary Employee Benefit Planning, and shares the same Tysons Corner office with EBP. His services, he said in a brief telephone interview, are provided to EBP through its own company, Timothy F. Pegler & Co. Ltd.

Finders' fees were paid by GFS or its subsidiaries in at least two other cases that have found their way into the court record. In one case, a finder sued to get his fee.

Under the Pension Reform Act of 1974, which was enacted after many of these transactions took place, it could be illegal for a pension plan administrator to provide investment advice for the plan or to accept a finders fee on behalf of a promoter selling to the plan.

Many doctors cited a lack of business knowledge as a reason they invested in GFS offerings. "We go to medical school, spend years learning a specialty, then suddenly find outselves making a lot of money and we just don't know how to handle it," one doctor said.

"The medical schools don't teach anything about it; it takes a lot of time to learn to be a wise investor, and with all our professional obligations we just don't take the time."

Although all of those interviewed said they were certainly aware of the tax advantages of some kinds of investments, they also said they wanted to make money, not lose it.

Harry Ruddy, one of the founders of GFS, said in an interview that "many of these projects were sold as tax shelters. Obviously, when you invest in a tax shelter, you take a risk."

He told the same thing to the SEC, and the SEC attorney pressed the point, wanting to know if "any [offering] literature characterized a venture as a high-risk venture?"

"If you are asking me if I recall those specific words in an offering," Ruddy said, "I don't recall those specific words."

All of the investors interviewed by The Post or who deposed spoke of the ability of GFS promoters to make the rough places plain. David Woody, one of the GFS officers and salesmen, often is mentioned.

Dr. William Weber, a Potomac psychiatrist who originally invested $6,600 in Seven Corners, said of Woody in a deposition:

"I was very impressed with him. He is probably a billiant guy and very facile with words and he has a way of talking so that you get excited by listening to him, and I think he gets excited, too. And so whatever was going on was very infectious . . . I really didn't ask a whole lot of questions and probably also didn't ask a whole lot of questions to ask . . .

"I remember one time I asked, in particular. 'Do I have to read this and can I understand it if I read it?' And he said, 'This is just some sort of contract . . . just go ahead and sign it.' So I did."

Later in the deposition, Weber said, "I am not sure that I have learned my lesson yet because I still suspect he [Woody] is some sort of a wizard; but things seem to have gone wrong just the same."

"Wizard though he may be?" an attorney interrupted.

"Wizard though he may be," Dr. Weber replied.