The Antioch School of Law, which won the latest round yesterday in its ongoing struggle over finances with Antioch University, had an earlier run-in with its parent institution over a financially disastrous deal the law school made with P.I. Properties, Inc.
The law school hired P.I. to manage The Kenesaw -- an 85-unit apartment building that had been donated to the school -- at the same time that the three executives of P.I. were in the midst of stealing at least $600,000 while operating the federally funded Clifton Terrace Apartments.
The three leaders of P.I., who were reported -- in a series of articles last month in The Washington Post -- to have stolen funds, were Mary Treadwell, its executive director; Joan M. Booth, Treadwell's sister, and Robert E. Lee Jr., P.I. general manager. The three either denied any wrongdoing or declined to be interviewed.
During the 15 months that P.I. managed the Kenesaw beginning in April 1976, it took in $153,821.16 in rents, according to P.I. records. But it never forwarded any income to Antioch. And Michael Nussbaum, an attorney who represented Antioch, said that when P.I. turned the Kenesaw back to Antioch, it left the law school with $175,000 to $225,000 in unpaid bills.
"There were problems, some difficulties on our part with the firm conducting the management and our law school's conduct," William Birenbaum, president of Antioch University, confirmed this week in an interview.
Edgar Cahn, codean of Antioch School of Law who with his wife and codean Jean Cahn chose P.I. to manage The Kenesaw, declined to go into detail on the earlier episode, stating that he wanted to "concentrate on the matters at hand."
A D.C. Superior Court judge, meanwhile, yesterday temporarily reinstated the authority of the Cahns to write checks on behalf of the law school until a court hearing can be held next week on the law school's demand for financial independence from the university.
The trustees of Antioch University last Friday had revoked the authority of the Cahns to write checks on five District bank accounts after they had repeatedly refused to transfer law school funds to the university's central account.
Attorney John W. Karr declared in Superior Court yesterday that the "survival of the law school" was at stake in what he described as a "power play" by university officials to gain control of law school funds.
During yesterday's court hearing, which lasted almost two hours, it was clear that the Cahns are seeking total and permanent financial independence from the university.
Cahn, in discussing The Kenesaw earlier this week, said he and his wife had given the property at 3060 16th St. NW to P.I. to manage in the spring of 1976 "because P.I. had a good reputation and we knew Mary Treadwell personally and knew her reputation and Pride's reputation."
Treadwell, who was head of the Pride, black, self-help organization as well as P.I., its real-estate spinoff, had taken courses at the Antioch law school. She also was a friend of Jean Cahn.
At the time the Cahns turned the Kenesaw over to her, however, P.I. had been managing Clifton Terrace for two years and its reputation at that point was hardly good. By its own records, it owed creditors about $150,000, including $30,000 to Potomac Electric Power Co., $25,000 to Washington Gas Light Co., and $20,000 in back mortgage payments to the Department of Housing and Urban Development.
Nevertheless, after turning The Kenesaw over to P.I., an examination of Kenesaw records and correspondence shows that the law school's handling of what was going on at its apartment complex was, at best, ineffective.
While P.I. sent the law school monthly computer printouts that purported to explain where the money was going, there was little backup documentation, according to sources at the law school.
"P.I. asked us not to come around to Kenesaw because it would interfere; we thought this seemed legitimate," said one former law school staff member who asked not to be identified.
Kenesaw records and correspondence show that the law school administrators asked few questions and, when they did, got even fewer satisfactory answers.
For example, after receiving a long list of unpaid bills, Nina Small, the Cahn's designated liaison with P.I., wrote to Booth complaining that she had "difficulty understanding" how revenue had been spent the previous month.
"I am really concerned and would like to get together with you and your bookkeeper," Small wrote, then added plaintively:
"I spent $25,000 for something . . . but I do not see it on the printout."
According to a law school source, Small never was able to examine the P.I. books on Kenesaw.Treadwell and Lee claimed that they provided the records that Antioch asked to see.
Treadwell and Lee, in separate interviews with The Washington Post, denied that they spent any money improperly at The Kenesaw.
Other former P.I. employes, however, said that Treadwell, Lee and Booth helped themselves to Kenesaw rents and cited the following examples of improper or fraudulent expenses:
$17,479.37 for security services provided by Youth Pride Economic Enterprises Special Police, another Treadwell-owned corporation. Most of the security services paid for were not provided, according to several sources, including former YPEE Special Police cocaptains Peter J. Reed and Curtis Clark. Often, no security guard was on duty at Kenesaw.
$650 to $700 per month in salary to Treadwell's father, James W. Miller, who was 72 at the time and did virtually no work at The Kenesaw.
A $500 check, listed in Kenesaw records as having been disbursed on Sept. 22, 1976, to Atlantic Plumbing Supply Co., for a "capital improvement contract" at The Kenesaw, that actually was for Lee's use at the house he was renovating at 1446 Corcoran St. NW. Invoices at Atlantic Plumbing show that Lee bought plumbing supplies for the Corcoran Street house with a $500 check the day after a check for that amount was written on the Kenesaw account.
A check for $516.46, listed by P.I. as having been spent at Ace Electric Supply Inc., for "repairs" at The Kenesaw, that was actually used to buy electrical supplies for Lee's Corcoran Street house. An examination of records at Ace disclosed that the check, combined with one drawn from Clifton Terrace funds the same day, bought recessed lighting for Lee's house.
Meanwhile, The Kenesaw tenants, mostly low-income blacks and Hispanics, complained to P.I. about lack of heat, inadequate security, filthy hallways and common areas, peeling plaster, falling ceilings, fires caused by faulty wiring and broken elevators. In court submissions and interviews, they said that P.I. did not respond to their complaints.
P.I. Properties withdrew as management agent for Kenesaw in the summer of 1977, after HUD pressured Treadwell to concentrate P.I.'s resources on Clifton Terrace.
A year later, the law school sold the apartment building to the tenants for $825,000. After all bills, fees, and the existing mortgage were paid, Antioch netted about $200,000 on the building, according to university president Birenbaum.
Considering the building was a gift from a Washington physician in memory of his daughter, and that it was valued at about $1 million at the time Antioch sold it, the Kenesaw experience "was quite a loss" for Antioch, Birenbaum said.