Officials of P.I. Properties Inc., a non-profit real estate spinoff from the Pride Inc. black, self-help organization, diverted, misappropriated and stole at least $600,000 from the U.S. government and low-income tenants between 1974 and 1978, according to records and the former P.I. bookkeeper.

Three P.I. officials, including Mayor Marion Barry's former wife, Mary Treadwell, systematically siphoned the money from the operation of the federally funded Clifton Terrace Apartments complex and from two privately owned projects, the Kenesaw and Buena Vista apartments.

These apartment complexes were occupied mostly by low-income black and Hispanic tenants. During P.I.'s management, living conditions were among the worst in the city with tenants existing amid hundreds of housing code violations and periodic absences of heat, electricity and trash collection because bills were not paid. When tenants complained, P.I. told them there was no money.

The other P.I. officials involved in the thefts and misappropriation of funds were Robert E. Lee Jr., the firm's former general manager, and Joan M. Booth, Treadwell's sister who acted as project manager for the Clifton Terrace Apartments.

No allegations in any way implicate Mayor Barry, one of the founders of the Pride organization in 1967. Although he and Treadwell were married and living together during three years in which the alleged theft was taking place, Barry had no connection with P.i. Properties. He said in an interview that it was a matter of record that he and Treadwell always filed separate income tax returns. Barry and Treadwell separated in 1976 and were divorced in 1977.

A one-year investigation by The Washington Post, which included 200 hours of interviews with Zellene Laney, the P.I. bookkeeper from 1974 to 1978, found that huge sums were stolen through elaborate schemes that included falsified records and two sets of books -- one secret, the other for U.S. Department of Housing and Urban Development (HUD) auditors.

Laney, who acknowledged her own direct involvement in these criminal schemes, said she did so on the orders of Treadwell, Lee and Booth. She said her personal benefits were minor, compared with those of the others, and included a pair of eyeglasses and several meals purchased with project funds.

Many of Laney's on-the-record allegations about P.I. Properties are supported by documents. Others are confirmed by one or more of at least 30 witnesses to the transactions or participants in the various schemes.

"Nothing was ever correct that was sent to HUD," Laney said. "They never got a true picture. I don't think they were really interested."

Treadwell, who was interviewed for a total of 30 hours during the year of the investigation, repeatedly denied all allegations of wrongdoing. She said that at one point during P.I.'s ownership of Clifton, she discovered that Lee had stolen "something under $15,000."

Beyond that, she said, "I found somethings that I would judge as mistakes.

Not theft. I'm talking about stuff that you'd find in anybody's books, less than a few thousand dollars, but not that I would judge theft."

The chief vehicle for the alleged thefts by Treadwell and her associates was the 285-unit Clifton Terrace Apartments, a once-grand, fortress-like complex that gazes out over the city from Cardozo Hill, at the brow of 14th Street NW, one of the riot corridors of the late 1960's.

HUD sold Clifton to P.I. in June 1975 in an extraordinary deal that Treadwell worked out with HUD's then assistant secretary, H. R. Crawford. P.I. acquired, ownership of Clifton with a unique, no-down-payment HUD mortgage. It was portrayed as an experimental program to give ownership and management opportunities to a minority business.

The sale price of $820,400 as it turned out, was almost irrelevant. P.I. not only put up no money to buy Clifton Terrace but made only four monthly mortgage payments during the three years it owned the apartments.Treadwell and her associates also paid only part of the required taxes, ignored utility bills and slashed maintenance and security at the complex.

Burdened by few of the normal expenses that most apartment house owners bear, the P.I. officials set up a system for siphoning off for their own use much of the $45,000 they were collecting monthly in rents -- a lucrative scheme that continued until HUD finally foreclosed on the project in August 1978.

Bookkeeper Laney said that from April 1974 -- when Treadwell first was brought in to manage Clifton Terrace for HUD as a kind of trial run for ownership -- to August 1978, she was sure that between $800,000 and $1 million was taken out of the apartment complex.

Edward Oast, a HUD auditor who spent months reviewing P.I.'s performance following inquiries by The Washington Post, said that government auditors now conclude that between $500,000 and $1 million was "unaccounted for" at Clifton.

But Laney, in a detailed review of hundreds of pages of records obtained by The Post, was able to pinpoint how more than $600,000 was allegedly stolen by Treadwell, Lee and Booth during the years 1975, 1976 and 1977 from Clifton and the other two apartment complexes.

The records show and Laney alleges that:

$365,000 was stolen directly by Lee through fake loans, false invoices, by manipulating the checking accounts of P.I. and a related corporation, Youth Pride Economic Enterprises Special Police.

$80,000 was stolen directly by Treadwell.

$10,000 was stolen directly by Booth.

$78,000 was siphoned off from P.I. to the Special Police, from which it was then stolen by Treadwell, Lee and Booth.

$43,200 was stolen by Lee and Booth through fraudulent rent concessions to tenants.

$15,000 was diverted to Sticks and Stones Inc., another Treadwell corporation, in loans that never were repaid.

$10,600 was misappropriated by Treadwell, Lee and Booth to pay personal automobile expenses.

$7,400 was misappropriated by Treadwell, Lee and Booth to pay personal American Express bills.

$3,800 was stolen by Booth through fraudeulent petty cash disbursements.

$3,500 was diverted to T. Barry and Associates Inc., another Treadwell corporation.

In addition, Treadwell drew a monthly management fee from P.I. that brought her an extra $37,000 a year.

Asked in a final interview last Wednesday night whether she had ever taken any money she was not entitled to from the housing projects, Treadwell stated simply, "not me."

Lee in an interview, said: "I've done nothing I feel I could be prosecuted for. I'm aware of my exposure. I've talked with my attorney. Everything I did, Mary told me to do."

Booth, who could be contacted only by telephone, declined to comment on the phone when asked if she had stolen money during her years with P.I. Asked when a meeting could be arranged, she said: "In about a year and a half."

Some of the techniques through which the three P.I. officials allegedly stole and misappropriated money were compellingly simple and succeeded largely because of HUD's failure to react; other were relatively complex. Here are a few examples of the methods: Phony Payrolls

Beginning in late 1976, Laney said Treadwell stole $1,000 to $1,200 a month from Clifton Terrace by cashing paychecks made out to employes who had been terminated.

"I took the latest (employe) printout to Mary," the bookkeeper said. "She saw who was coming off and who was going on and told me what to do for the coming month Janitors and maintenance men yielded about $500 a month. Where you see termination pay [on the P.I. reports filed with HUD], we put these people back on after they had been terminated." Treadwell denies ever padding any payroll.

Booth would then either cash the ghost checks at nearby liquor stores, or send P.I. staffers to cash them, Laney said. "Joan would call the [liquor store] owner and say, 'I got some checks I want you to cash cause these niggers owe me some money and I want it.'" Laundry Machines

Bakst Service Inc. paid P.I. about $7,500 a year for the coin-operated laundry machine concession at Clifton. The money should have been treated a project income, according to HUD rules. But Lee controlled this account, Laney said, and he and Treadwell took from it freely. "Bob got most of it," she said, "about a two-to-one split." Checks Made Out to 'Cash'

Treadwell stole an average of $12,500 a year from the various accounts by instructing Laney to make out checks to "cash," the bookkeeper said. Treadwell said this never happened.

Lee said Treadwell would call him and say, "Bob, I need $2,500" Lee said he would then 'look through all the accounts and get it where it was available . . . She drew out of everything."

Several of these checks were cashed for Treadwell by former Special Police captain Curtis Clark, who delivered the cash to her in her office. He said in an interview that Treadwell ordered him to stop the procedure after he began questioning her about the checks. Security Deposits

Treadwell, Lee and Booth stole freely from the tenants' security deposits, Laney said, exhausting some $40,000 from Clifton Terrace; $7,000 from The Kenesaw, which P.I. managed for a year for its owner, the Antioch School of Law; and $1,000 from the Buena Vista Apartments, which P.I. managed for two years for Youth Pride Economic Enterprises Inc.

Very few tenants at these projects got their security deposits back during this period. "Joan always had an excuse, like 'You put up contact wall paper,'" Laney said.

Jones, Wells and ASSOCIATES, WHICH REPLACED P.I. as managers of Clifton after HUD foreclosed, said P.I. did not transfer any security deposit money to them. The tenants' association that bought the Kenesaw from Antioch likewise reported that the security deposits were not received. Rental Applications

P.I. charged prospective tenants $10 to apply for apartments at Clifton, and Booth allegedly pocketed many of these fees. "Joan told me to rip up our copy of the receipts," said former P.I. secretary Barbara Clark. "I saw her put the money into her purse."

These fees, which Laney said brought in $350 to $400 a month, were themselves a violation of HUD regulations, which bar application fees. Void Checks

P.I., in its required monthly accounting reports to HUD, stated that certain checks had been "voided" -- that is, never cashed. In fact, said Laney, two or three "voided" checks a month -- at an average of $2,000 a check -- were cashed with the money going to Treadwell and Lee.

"It was a way of getting rid of unreported income," Laney said. "Mary called me down to U Street [Treadwell's office] and told me how much to make out the checks for," Laney said.

Until he left in mid-1977. Lee was the middle man for Treadwell in arranging these checks, Laney said. She said Lee helped himself to additional project funds with "void" checks of his own.

During a 1977 HUD audit, bank records were not checked to verify whether P.I. checks listed as "void" had been used, according to officials who conducted the audit. The reason: HUD officials felt it would take too much time. "Concessions"

When tenants paid their rents with cash or with blank money orders -- a common practice among illiterate and elderly tenants -- Lee or Booth would keep the money, Laney said. They would then order her to write the month's rent off on the books as a "concession" to the tenant, ostensibly because of fire, water or smoke damage to the apartment. Lee and Booth would split an average of $1,200 a month in this way, Laney said.

Other free rent concessions were traded to tenants for stolen goods, Laney said.She said Booth bought a fur and leather coat valued at $2,200 in this way. "They bought TVs, air conditioners, record players, radios, a lot of stuff -- whatever they wanted," Laney said. "Joan or Bob would just tell me, 'Give this guy three months free rent, four months free rent, whatever.'"

Alvin Catlett Jr., a P.I. bookkeeper during part of the first year the company managed Clifton Terrace, said while he was there Booth gave about $1,000 a month in rent concessions -- much of it in exchange for stolen merchandise. "Joan was a crook," Catlett said. Special Police

Treadwell formed a separate organization, the Youth Pride Economic Enterprises Special Police, to take over the security for Clifton Terrace and the Kenesaw apartments.

P.I. paid the Special Police about $65,000 a year. Where the contract called for two or three men or sometimes no one would show up, according to former P.I. employes. Booth and some of the Special Police forged the rounds reports in the log book, at time doing a month's worth in one evening.

The guards were sometimes paid, moreover, not out of the Youth Pride Special Police contract fee of $65,000 as they should have been but with project operating funds, according to P.I.'s own reports on file at HUD.

The Special Police unit was thus taking in more than $5,000 a month and incurring minimal expenses. With cash piling up, Lee and Booth helped themselves, Laney said. Treadwell drew, as a base figure, $2,000 a month.

Treadwell also used a Special Police check for $1,000 to pay for a week's stay in December 1976 at Tryall Estates, a luxury resort near Montego Bay in Jamaica. A desk clerk at Tryall told the Post that Treadwell frequently stays there in a villa named "The Pinnacle" that comes equipped with the services of a cook, laundress, chambermaid and gardener. Treadwell acknowledged that she stayed at Tryall, but said that she lived cheaply on the local economy, eating "a lot of red beans and rice." She emphatically denied using any company funds for her vacations. Fraudulent Expenditures

In November 1975, Booth paid AAA Ornamental Iron Works for window bars the firm installed at her home at 827 F St. NE, with a P.I. Properties check for $1,000 drawn on a Clifton Terrace operating account. AAA owner Glenn Short said in an interview that in the summer of 1977, Booth phoned him and told him that federal auditors were going over the P.I. books and said that if anyone asked him about the transaction, he should lie.When contacted by a federal official, Short said he would have to review his records. He never was contacted again.

On Sept. 3, 1976, Booth drew a P.I. check for $1,145.65 on a Clifton operating operation account to pay a lawyer who handled her child custody case. The lawyer was Patricia R. Harris, who became secretary of Housing and Urban Development less than five months later. HUD auditors said Booth later claimed the check was a "loan" from the project to her. A confidential FBI investigation was halted when Treadwell said the amount had been repaid. Laney said, however, that Booth "repaid" P.I. by secretly withdrawing the same account from the Youth Pride Special Police account, depositing it in her personal account, and then writing a personal check for the sum to P.I.

On Sept. 22, 1976, Lee drew a check on P.I. for $500 and used it as a partial payment on plumbing supplies -- including an oversize "pink champagne" bathtub -- that he bought from Atlantic Plumbing Supply Co. Inc. for a house he was renovating at 1446 Corcoran St. NW. The check is listed in records on file with HUD as having been paid to Atlantic Plumbing for a "capital improvement contract" for the Kenesaw apartments.

On June 10, 1977, P.I. paid James (Pete) Harrison $1,100 for plumbing work done at Clifton. Harrison said in an interview that he never performed any work at Clifton. He said he was paid the $1,100 for work at 1428 Swann St. NW, a private property owned by Sticks and Stones Inc., another Treadwell enterprise.

There is irony in the way Treadwell, Lee and Booth were able to trade on the reputation of Youth Pride -- which Treadwell helped found in 1967 in pursuit of the dream of helping poor black youth.

HUD sold Clifton Terrace to Treadwell largely on the basis of "Youth Pride's track record," according to former HUD official Crawford. Treadwell created P.I. Properties virtually overnight when she realized that she needed a nonprofit corporation to buy the troubled apartment project.

But Treadwell's commitment at that point, according to one of her former attorneys, was no longer to poor blacks. "The only color she cared about was green," the attorney said.

While the tenants of Clifton Terrace had to plead for such basic services as heat, hot water and electricity, Treadwell lived in a $900-a-month apartment at the Watergate and drove Mercedes and Jaguar sports cars.

Laney said that Treadwell, Lee and Booth customarily referred to the tenants of Clifton Terace a "niggers" and "animals."

"I don't give a damn about them in terms of their problem," Lee declared in an interview. "My intention was never to help anyone but me."

As for Booth, said Lee, "Joan was in Clifton for the same reason Mary was in it and I was in it -- for the money."

Lee and Laney both said that P.I.'s long-term goal was to force all the tenants out of Clifton Terrace and to convert the apartments into luxury condominiums.

Profits were the only goal.

Laney said she had a "standing order" from Treadwell to call her if for some reason the books showed an excess of money, which P.I. would then be obligated to pay HUD.

"If you told her there was more income than disbursements, she wouldn't stand for it," Laney said. "She would say, 'fix it up, you know how.' She would say, 'We're not running a charity here. We're out to make money.'"

"We felt that what was going on at Clifton Terrace was going on everywhere," Laney added, "that we were taking what we were entitled to. Mary would say, 'What's the point of being in command if you can't get something out of it? Whites do it all the time.'"

Meanwhile, during the years of P.I. management, tenants at Clifton lived in some of the most degrading ghetto-like conditions in the city, according to dozens of interviews with former tenants. During the winter of 1976-77 the heat was shut off several days at a time, because of unpaid bills. Electric power was cut off several times, again because of unpaid bills.

Maintenance was minimal. Rats roamed freely through apartments and hallways. Garbage accumulated for weeks at a time. The stench of trash and urine regularly filled the halls and other public areas.

Tenants complained and organized. But little was done to improve living conditions.

"We had no heat on weekends," said Gussie Jackson, a tenant, "no lights, no heat, no nothing. There was trash in the building, right in the hallway."

Windows were broken and not fixed for years. Doors and even walls had holes in them. They were never repaired.

"Mary Treadwell ran that place like a penitentiary," said former tenant Theodore Walker. "They had a speaker system and sat in the office on their cans and barked out, 'Mrs. Smith, you got a dog in your apartment; Mrs. Smith, take those tires off the front porch.' It was like Lorton [prison],"

Lee had a nicely furnished office at Clifton with brown carpeting halfway up the wall behind his large desk.

"Can you believe it!" said tenant Lenora Pruitt. "Here they couldn't pay for oil so we could have heat. How could they do something like that?"