P.I. Properties, a private nonprofit spinoff of Youth Pride Inc., the black self-help organization, reported at least $175,169.93 in improper, illegal or fraudulent expenses to the U.S. government during one of the four years it ran the federally funded Clifton Terrace apartments, according to the former P.I. bookkeeper and records.
The year June 1976 to June 1977 was selected for a detailed examination of the alleged misappropriation of money by officials of P.I. Properties, which managed Clifton Terrace from 1974 to 1978.
Based on a year-long investigation, The Washington Post reported yesterday how three top P.I. officials systematically diverted or stole at least $600,000 during the time the firm ran Clifton Terrace.
Today's story focuses on a single year and is based on an examination of every claimed expense of the $594,332.22 reported to the federal government as the legitimate cost of running Cllifton Terrace for that year.
Overall, more than 25 percent of expenses claimed were improper or fraudulent, according to the investigation. In some months, nearly half the expenses claimed were unjustified.The improper claims ranged from petty ones like money for groceries, flowers and credit cards, to more substantial ones like renovation of a private home and systematic cashings of Clifton Terrace checks for personal use.
The three former P.I. officials allegedly involved in the fraud and theft are Mary Treadwell, former wife of Mayor Marion Barry and with Barry the founder in 1967 of the Pride organization; Joan M. Booth, Treadwell's sister, who acted as project manager for the apartments at 14th and Clifton streets NW; and Robert E. Lee Jr., the P.I. general manager. Treadwell denied all wrongdoing, Lee declined to discuss specifics, and Booth declined to be interviewed.
No allegations in any way implicate Mayor Barry.
Zillene Laney, the former P.I. bookkeeper, other former P.I. employes, government officials and local businessmen provided the information on which the calculations were made. The method has been checked with three U.S. Department of Housing and Urban Development auditors.
In general, bookkeeper Laney alleges and the records and interviews show that for one year:
$22,182.92 was drawn out of Clifton Terrace funds, part of it in improper loans to other Pride-related corporations. The rest was taken by Lee and Booth, ostensibly in repayment for loans they claimed to have made to the project. In most cases, no such loans had been made.
$16,744.35 was drawn out of Clifton Terrace funds, mainly by Lee, ostensibly in payment for repair work that was, in fact, never done or for material that was never purchased.
$5,600 was drawn out of Clifton Terrace funds and given to Treadwell's father for roofing repairs he never made.
$5,000 was improperly taken out of Clifton Terrace operating funds and shifted into the apartment security deposit fund, which had been stolen by P.I. leaders.
$3,521.08 was drawn out of Clifton Terrace funds and used by P.I. officials to pay personal automobile expenses and gasoline bills.
$2,500 was taken out of Clifton Terrace funds by Treadwell for unauthorized Christmas bonuses to the staff. At least one employe who was listed as having received a bonus said he never got any such bonus.
The records and interviews also show some of the techniques that P.I. officials used to keep purported monthly operating expenses for Clilfton Terrace above the actual rental income.
The officials, Laney ssaid, were anxious that the reports they were providing HUD showed no surplus that could have been used by P.I. to meet its monthly mortgage payments to HUD -- payments that by this point P.I. had ceased making. To help accomplish this, she said, P.I. listed:
$26,373.03 in payments for goods and services -- payments that were never made.
$19,298.68 in payment of taxes that were not paid.
The individual misappropriations from which these examples are drawn total $118,452.34. In addition, there are several other categories of improper, unauthorized or fraudulent uses of project money:
$7,038.38 in claimed expenses previously disallowed by HUD officials monitoring the monthly reports filed by P.I. These included Lee's membership to Kentucky when Treadwell's uncle died ("Mary told Bob to have the company send flowers," Laney said); long-distance telephone calls; and part of Booth's petty cash expenses.
$1,679.21, the rest of Booth's claimed petty cash expenditures not previously disallowed by HUD. According to Laney, Booth spent so much of the petty cash fund (some $200 a month) on her personal expenses it was known around the office as "Joan's grocery money."
Former P. I. employes Barbara Clark and Alvin Catlett Jr. confirm Booth's personal use of petty cash.
$18,000 for Lee's salary. This should have been paid out of the management fee. Instead, Treadwell kept the $37,000 annual management fee for herself, and Lee drew a salary out of the Clifton Terrace operating account.
$30,000 in inflated special police fees. Special police provided only a fraction of the service P.I. paid them for, according to Laney and several former P.I. and special police employes. Guards, instead of working at Clifton, ran errands for Booth and Treadwell, according to these employes. The errands included picking up food and dry cleaning for Treadwell, helping Booth move, escorting Booth's daughter to and from her private elementary school, and guarding Marion Barry in a hospital room after he was shot by Hanafi Muslims in early 1977. Treadwell said she ordered the guard on Barry "as a community service."
This all totals $175,169.93 in improper, illegal or fradulent expenses.
P.I. acquired Clifton Terrace in 974 from HUD under a unique no-down-payment mortgage. It was an experimental model housing project designed to give ownership and management opportunities to P.I., a minority business.
In 1978 HUD foreclosed on Clifton Terrace and took back ownership. At that point P.I. owed HUD more than $400,000 in back mortgage payments and other loans. In addition, P.I. owed the D.C. government $100,000 in real estate taxes and advances for heating oil, trash removal and utilities.
Instead of paying this money, according to the bookkeeper and records, P.I. officials stole and misappropriated it. At the same time tenants in Clifton Terrace's 285 units lived in some of the worst ghetto-like conditions in the city.
The following is a month-by-month summary of the plunder of Clifton Terrace: June 1976
The improper, fraudulent and unauthorized claims this month were $23,313.65. They included a mortgage payment of $10,665.68 to HUD. The check for that payment bounced, but no correction was ever made on subsequent reports of disbursements, leaving the impression that the money actually was spent, that the project was operating at a loss, and that other bills and back mortgage payments could not be paid. With nonexistent expenses like these, the P.I. leaders then could use money actually in the bank accounts as they wished. "Whatever there was was always used up," Landy said. July
The improper, fraudulent and unauthorized claims this month were $5,202.95. They included $3,160.75 for "management fee -- July," but in the August report to HUD, P.I. took another $3,039.90 for "July management fee." The monthly fee averaged around $3,000. Only one such fee for a month is proper but there is no indication that HUD ever caught this. Treadwell, in an interview last week, said this was a bookkeeping error and suubsequently was corrected. She could not produce any paper to substantiate this nor could any be found during a search of records at HUD. August
The improper, fraudulent and unauthorized claims this month were $7,482.83. They included the purchase of pistols for Booth, ($173.20), life insurance for staff members ($571.60) and payments on the company station wagon that Booth used as her personal car ($302.88). All these are improper expenditures, according to HUD rules.
The firm also reported making a $5,000 payment to the Clifton Terrace security deposit escrow account. This was necessary because P.I. officials kept using the tenants' security deposits, Laney said. Few tenants got their deposits back, she said. At least $40,000 of the security deposits are unaccounted for. September
The improper fraudulent and unauthorized claims this month were $7,122.44. They included $650 for skylight work and $485 for a door for one of the apartments. Laney said both these expenses actually were part of the renovation costs for Lee's home at 1446 Corcoran St. NW.
Dan Merritt, the roofer whom P.I. paid for the skylight work, said he never did any such work at Clifton Terrace. He said he did install a skylight on the Corcoran Street house for Lee at about the time of this payment.
Charlie Frost, P.I.'s supervisor of maintenance at this time, said that no door costing anywhere near $485 was installed at Clifton. Michael Burton, a P.I. maintenance man who replaced the door. A fireproof apartment door for a project suuch as Cllifton should cost about $150. October
The improper, fraudulent and unauthorized claims this month were $8,868.10. They included one of $4,600 (following two earlier ones of $1,000 each), to James Miller for roofing work. Miller, now deceased, was the father of Treadwell and Booth. Laney said that Miller did not do the roofing work for which he was paid.
In a letter to HUD, Treadwell described the work as repairs to the roof and drainage system, and criticized the agency for a poor rehabilitation job that made the work necessary. Frost, the former maintenance supervisor, said Miller never did any such work. Merritt, the roofer, said he did the work Treadwell described, at about the time of this disbursement, and that Miller paid him about $720 in cash for it.
Laney said that Miller never got all the $6,600 for the nonexistent work; rather, Booth wired some of it to him in Ohio, where he lived half the year, and kept the rest herself.
Treadwell, in an interview last week, said she thought her father was paid a "consultant's fee" for some roof work, but that she couldn't find papers to back that up.
Also listed in the October disbursements was a payment of $618.40 to Ace Electric, purportedly for "electrical repair material" for Clifton Terrace. In fact, that check of Ace, plus one for $516.46 from the operating account of another P.I.-managed apartment building, the Kenesaw, drawn the same day, went for electrical supplies for Lee's home, Laney said. The total cost was $1,134.86.
Records at Ace Electric show that on the same day these checks were written, precisely $1,134.86 worth of electrical supplies was sold to P.I. Properties. Most of it was recessed lighting. The three types of lights purchased, identified through a store catalogue, are now in the Corcoran Street house. Robert Arrington, who bought the house from Lee after it was renovated, said in a recent interview that Lee had told him he got the recessed lighting at Ace Electric.
The October disbursements also included a $357.41 payment to Exxon for automobile expenses. A company car was not necessary for the block-long Clifton Terrace project and auto-related expenses should not have been charged to the project, according to HUD rules. These expenses, including car payments, totalled $3,521.08 for the year surveyed.P.I. started with a Buick station wagon, ostensibly to ferry the elderly on errands. Instead Booth used it as her personal car, then traded it in on a small pickup truck that Frost used as his personal car. Other staff members used the company's gas credit cards at will, Laney and Barbara Clark said. November
The improper, fraudulent and unauthorized claims this month were $11,330.11.
Although P. I. Properties owed, by its own count, more than $250,000 to creditors at this point, this month's disbursements show a $3,000 loan to Pride Environmental Services, another Treadwell corporation. This was unauthorized and improper under HUD regulations. December
The improper, fraudulent and unauthorized claims this month were $10,984.08. The include a total of $6,706.26 in paymentss to Lee for alleged loans he made to the project to help meet operating expenses. These were part of $22,182.95 in such loan "repayments" to Lee, Booth and some Treadwell corporations during the year surveyed. Most of the loans were never made Laney said. "It was just another way for Bob to get money," she said. Whether Lee actually made any loans or not, HUD rules prohibited P.I. from repaying any loans until the deliquent mortgage payments were made.
P.I. also improperly disbursed $2,5000 in Christmas bonuses to the P.I. staff. Treadwell said that good people needed to be rewarded. January 1977
The improper, fraudulent and unauthorized claims this month were $3,770.75. They included a $2,000 check to Booth for "repayment of loan for fuel to Clifton," another of the loans never made, Laney said. "Joan claimed it was her Christman bonus and that Bob had borrowed it and put it into the operating account," Laney recalled. "I never saw any evidence of that and I handled all the deposits."
Also included in the month's disbursements were payments of $125 each to Frost and a maintenance man as a "housing allowance" in lieu of free rent at the project. No employe should have been getting free rent at Clifton Terrace. In fact between five and ten were living free at Clifton at any given time. February
The improper, fraudulent and unauthorized claims this month were $19,574.73.
They included a total of $6,676.09 to banks, businesses and individuals to replace checks that bounced the previous month. Because there was no correction made to reflect acutal disbursement figures for the previous month, this constitutes double disbursement. Treadwell said she disagrees. Expenses claimed in February also include checks of $2,476.66 to Youth Pride Economic Enterprises "to repay loan" and $1,300 to the same organization for "painting and repair of units."
The loan was not made, Laney said, and the painting work was not done. Instead, Lee and another official split the money, with the official getting the smaller share. "Bob used to talk about how dumb he was" for getting so little, Laney said. The official is not named because he could not be located for comment. March
The improper, fraudulent and unauthorized claims this month were $1,146.77. They included $1,500 to Lee "to repay loan to Clifton Terrace made to help meet payroll" -- a loan that was never actually made, according to Laney. In addition, $990 and $860 was paid to YPEE for painting and lawn work never done. April
The improper, fraudulent and unauthorized claims this month were $6,737.77. They included claimed payments of $1,400.12 to the District of Columbia and the federal government for employer's withholding taxes. In fact these and most other tax payments are not made, Laney said. The checks were routinely written and listed on the disbursements sent to HUD, but were never sent, she said.
"We kept carbon copies in case anyone asked where the money was," Laney said. "We would tell them that we sent it, and they must have lost it."
Treadwell, in an interview, said that P.I. fell behind in tax payments because the project was not making money. She said P.I. still owed between $1,500 and $4,000 in employer's withholding taxes. May
The improper, fraudulent and unauthorized claims this month were $6,918.16. The included $750 to Youth Pride Enterprises for lawn work and $1,314 to Theodore Williams, a carpenter who worked on Lee's Corcoran Street house, Laney said. Williams declined to be interviewed.
This month-by-month summary does not include $8,690.19 purportedly spent on janitors' supplies, $4,046.96 for Xerox copying, $4,803.95 in additional painting fees, another $1,375 to Treadwell's father, and Booth's salary of $13,300.
Janitors' supplies paid out of Clifton Terrace funds were also used at two other private, profit-making projects P.I. managed. The Kenesaw on 16th St. NW, and the Buena Vista Apartments in Southeast Washington. Likewise, Xerox work for the other two projects was run off the Clifton Terrace machine, as was paperwork for Treadwell's other profit-making corporations, according to Laney and former P.I. secretary Arlene Calloway.
All the top P.I. staff members used project-purchased paint in their houses or apartments, Laney said in a interview. On one occasion, she and other staffers painted Treadwell's house at 411 7th St. NE with paint bought with project funds, at a time when they should have been at Clifton Terrace, Laney said. Former special police captain Curtis Clark confirmed this, and said Treadwell was in the house during part of the repainting.
Records at Duron Paints show that from June through December 1976, P.I. Properties paid $2,424.53 for paint delivered to Clifton Terrace. Much of this was top-of-the-line paint normally used in private residence, according to Duron. Employes at the four painting firms who did the bulk of painting at Clifton during this time said they used their own paint.
Treadwell's father and sister made virtually no contribution toward the efficient operation of Clifton Terrace according to five former P.I. employes, including the three who worked most closely with them, Lee, Laney and Colloway.
Miller was 72 at the time, a retired contractor from Columbus, Ohio, who spent the warm months in Washington, on the P.I. payroll.
"Most of the time, he slept or read magazines in the office," Laney said. "He sat around doing nothing," Calloway said. Said Lee, "One day he was just there. Mary never asked me about it. It was a very nice thing for a daughter to do for her father."
Besides the money for purported roof repairs, the only compensation listed as paid to Miller on reports filed with HUD is $1,375 in assorted salary payments. Additonal payments weere made from other P.I. accounts, Laney said.
Booth held a position comparable to resident manager, according to a HUD analysis. But she did not reside at Clifton Terrace. In fact, there was no resident manager for the 1,200-to-1,500 tenants.
There are HUD regulations in various management handbooks that set forth in great detail the proper way to monitor projects. These regulations caution the monitoring official to be suspicious about the type of claims P.I. Properties was submitting to HUD.
The official directly responsible for seeing that P.I. Properties was properly monitored during the year surveyed ws Kenneth Long, director of the local HUD office housing management division.
Asked about Clifton Terrace, Long said:
"What's behind me is behind me. I can't remember what happened three years ago, or even three weeks ago. The record speaks for itself. I don't have a day or even an hour to sit down with you and tell you why something happened." Tomorrow: Pride and HUD