A federal grand jury investigation into the theft of at least $600,000 by officials of P.I. Properties Inc., has been expanded to include the parent self-help organization, Youth Pride, Inc., informed sources said yesterday.
As part of the broadening investigation, the FBI yesterday attempted to serve a subpoena on Mayor Marion Barry for all city records on Youth Pride, the organization he helped found, and other Pride-related organizations.
The mayor was unavailable to receive the subpoena, his aides said, and an FBI agent left the District Building on the understanding that the Mayor's office would designate a custodian of the records who could receive the subpoena today.
"We will obviously cooperate with any investigation into Youth Pride through District of Columbia records," said Herbert Reid, Barry's legal counsel. He said that Dwight Cropp, executive secretary of the District of Columbia, was Barry's designee to receive the subpoena.
In addition to the mayor's office, subpoenas have been sent this week to the U.S. Department of Labor, the Department of Commerce, the Department of Health, Education and Welfare, the Small Business Administration and other federal agencies seeking their relevant records.
At least 65 subpoenas have been issued thus far in the investigation, which is in its sixth week. Those subpoenaed included present and former employes of "Pride" organizations, businesses that dealt with P.I. Properties, accountants who worked on the P.I. books and representatives of at least nine local banks.
According to informed sources, the principal targets of the investigation are Mary Treadwell, the former wife of the mayor; Joan M. Booth, Treadwell's sister, and Robert E. Lee Jr. The three are former board members of P.I. Properties, which owned and managed the Clifton Terrace apartments from 1974 to 1978.
The Washington Post has reported that Treadwell, Booth and Lee diverted, misappropriated and stole at least $600,000 from the U.S. government, which financed the mortgage at Clifton Terrace, and from the low-income tenants while P.I. ran the 285-unit complex at 14th and Clifton streets NW.
The three have either declined comment or denied any wrongdoing. No allegations in The Post articles implicated Barry. Federal prosecutors opened an investigation into the charges after the articles were published in October.
Federal prosecutors already have subpoenaed all the records on P.I. Properties from the U.S. Department of Housing and Urban Development, which financed P.I.'s mortgage at Clifton, sources said. The records arrived at the U.S. District Courthouse here in a moving van, and a team of FBI agents are understood to be poring over them in an attempt to determine what happened to more than $2 million in rental income.
The HUD records and bank records are said to be so voluminous that prosecutors already are attempting to secure the services of a computer. The prosecutors, William D. Pease of the U.S. attorney's fraud division and Robert R. Chapman of the major crimes division, have declined to comment on the case.
The expanded probe includes an examination of Youth Pride Economic Enterprises Inc., a venture designed to provide jobs for disadvantaged youths; Pride Environmental Services Inc., a business venture that provided trash cans on city streets, and Sticks and Stones Inc., a company formed to deal in housing rehabilitation. All are defunct.
The subpoenas have also asked for information and bank records on Hazle Reid (H.R.) Crawford, the former HUD assistant secretary for housing who privately negotiated the sale of Clifton Terrace to P.I. Properties. Crawford has said he did nothing improper.
Treadwell, Booth and Lee have retained lawyers. Treadwell has hired R. Kenneth Mundy, who is regarded in legal circles as one of the finest trial lawyers and courtroom orators in the city. Booth is represented by William J. Borders Jr., who has represented, among others, former city councilman Douglas E. Moore, who was fined and placed on probation for biting a truck driver. Lee's lawyer is Thomas H. Queen, a former chief of the misdemeanor section of the U.S. attorney's office here.
Treadwell was executive director of all the organizations under investigation and continues in that capacity with Youth Pride Inc. She and Barry were among the founders of Youth Pride in 1967, when the Labor Department funded it in order to provide job training for disadvantaged young blacks.
Barry said that he left the board of directors of Youth Pride in January 1975; that he never had anything to do with P.I. Properites; that he severed all ties with other Youth Pride-related organizations by 1977.
Barry and Treadwell have claimed that Youth Pride has provided job training for at least 16,000 people.
Youth Pride has received about $21 million from the Labor Department, but federal auditors have repeatedly encountered difficulty accounting for the money. Over the last 12 years, auditors have found that key records were missing, that at least $275,000 in claimed expenses was questionable, and that records were in such disarray that some annual contracts could not be audited.
The Washington Post reported last week that the Labor Department inspector general, Marjorie Fine Knowles, barred a comprehensive investigation last June into Youth pride because such an investigation might be politically embarrassing to the mayor.
This charge was made in a sworn affidavit by Knowles' former acting chief of audits, Gerald W. Peterson. Knowles acknowledged vetoing the investigation into Youth Pride, which was recommended by Peterson and other subordinates, but said she did so not out of political considerations, but because there were enough Labor Department investigations or programs going on in this city. Barry says he knows nothing about the matter.
Several senators, including Thomas F. Engleton (D-Mo.), Charles H. Percy (R-Ill.) and Lawton M. Chiles Jr. (D-Fla.), have expressed concern about Peterson's charge. Staff aides to the senators took a statement from Peterson last week and are continuing to look into the matter.