Federal prosecutors abruptly shifted their far-ranging investigation of Youth Pride Inc. from one grand jury to another last summer after learning that a grand juror had leaked information about some of the highly secret proceedings, according to knowledgeable sources.
The discovery that the security of the grand jury had been breached occurred nine months after federal officials began investigating allegations that Mary Treadwell and two other officials of P. I. Properties Inc., a real estate spinoff of Youth Pride, stole, diverted and misappropriated at least $600,000 from the federal government and low-income tenants at the Clifton Terrace Apartments in Northwest Washington.
Because of the apparent violation of grand jury secrecy, materials had to be submitted to a second and later a third grand jury, delaying action on the highly publicized 15-month-old case.
Assistant U.S. Attorney William D. Pease, who has supervised the Pride investigation, directed a reporter to U.S. Attorney Charles F. C. Ruff for comment on the grand jury matter.
Ruff said last week that the ultimate disposition of the case would not be affected by the change in grand juries. And delays in the investigation were minimal, he said, such as prosecutors being required to tediously read to the new grand jurors testimony already heard by the first grand jury.
Discovery of the leak followed complaints that some witnesses who had appeared before the grand jury later were confronted and intimidated about their supposedly secret testimony, the sources said.
Prosecutors withdrew the case from the original grand jury as soon as the leak was confirmed. Although prosecutors are known to have felt that the integrity of the first grand jury had been threatened by the information leak, it was not clear late last week whether the U.S. attorney's office took any action in connection with the violation other than to move the case.
Grand jury secrecy, pledged in an oath taken by each grand juror and rarely violated, is considered crucial during the course of any investigation to avoid tampering with witnesses, falsification of evidence or prejudicing the rights of persons not charged with crimes. Disclosure of grand jury secrets is punishable by contempt-of-court citation.
One of the most publicized grand jury leaks here in recent years occurred in 1973 when columnist Jack Anderson published verbatim accounts of testimony made before the Watergate grand jury. No one was punished in connection with those leaks.
After discovering the leak in the original Pride grand jury, prosecutors late last summer turned the case over to a second grand jury that had just completed its work in connection with two Abscam bribery cases.
The Pride investigation was switched from that panel to a third after prosecutors realized that the Abscam grand jury's term would expire on Feb. 1 of this year -- before the complex and voluminous Pride investigation could be completed.
The Pride case is now before a third grand jury, whose normal 18-month term ends in February 1982.
Ruff refused to comment when asked if there was an internal problem with the first grand jury, except to acknowledge that the decision to take the case away from the first grand jury was unrelated to any question about expiration of that grand jury's term.
The apparent leak is one of several problems that have beset investigators who for months have been secluded in two rooms at the federal courthouse that are bulging with more than 40 steel cabinets and dozens of storage boxes stuffed with information related to the Pride investigation.
The prosecutor's office is embroiled in a secret legal battle with a former attorney for Treadwell over a subpoena issued to a New York accountant commissioned by one of treadwell's former lawyers to prepare personal tax returns for Treadwell.
According to one source, Seymour Glanzer, who began representing Treadwell shortly after the federal investigation began, commissioned accountant Jerome I. Silverman to prepare the tax returns for Treadwell. Federal prosecutors now want Silverman to appear before the Pride grand jury and bring with him the records he compiled.
David Addis, an attorney in Glanzer's law firm (Dickstein, Shapiro & Morin) and the lawyer for the accountant, has asked a federal judge to quash the subpoena on grounds that the accountant's work should be protected by lawyer-client privileges. Sources said Glanzer contends that Silverman's work was part of Glanzer's representation of Treadwell and is therefore exempt from disclosure.
The government has asked the court to compel Silverman to comply with the subpoena.
The government filed a sealed request for compliance with the subpoena. In court papers available to the public, prosecutors said that the request contained "statements of fact which indicate one clear area of criminal liability on the part of a target of the investigation. . . . "
Prosecutors declined to publicly identify the target, saying they were concerned about news reports that might follow if the exact details were made public.
The government contends that the tax work was between Treadwell and the accountant and therefore is not protected from disclosure. Courts have ruled that while the work product between lawyer and client is shielded, the work product between accountant and client generally is not.
Prosecutors are known to consider enforcement of the subpoena important to the investigation of Treadwell because of the potential depth of information the accountant's work could provide.
The issue is now before Chief Judge William B. Bryant.
Treadwell, reached at the Pride offices at 16th and U streets NW, declined to discuss either the apparent leaks or the subpoena of the accountant.
The investigation of P.I. Properties Inc. was begun in the aftermath of reports in The Washington Post regarding the actions of Treadwell and two associates -- Robert E. Lee Jr., P.I. Properties' former general manager and Joan M. Booth, Treadwell's sister, who acted as project manager at Clifton Terrace.
Treadwell has denied any wrongdoing, Lee has declined to discuss specifics with reporters and Booth has declined to be interviewed.
Treadwell did say in a telephone interview this week that the investigation has "obviously been harmful to Youth Pride Inc."
In December 1979 the U.S. Department of Labor, which had funneled millions of dollars into Youth Pride since 1967, ordered the District government to suspend all funding to that organization pending the outcome of federal audits.
A federal offical said this week that as of Sept. 30, no federal money has gone to the organization, with the exception of some funds previously approved to provide job training for youths from mixed-income backgrounds.
Numerous Youth Pride accounts and activities have been examined. But the criminal investigation is understood to focus on P.I. Properties, which owned and operated the long-neglected 285-unit apartment complex at 14th and Clifton streets NW from April 1974 to August 1978.
As of last May, 50 persons had been interviewed by FBI agents and prosecutors and at least 200 grand jury subpoenas had been issued in connection with the Pride investigation.
Investigators have collected thousands of pages of records -- including paper work from a network of hundreds of bank accounts -- subpoenaed in connection with the Pride investigation.
Detailed flow charts are taped to the walls of the rooms in which the investigators are working, the product of a grueling effort by federal agents to follow the trail of money and decision-making. One flow chart, said to be more than 200 feet long, details personalities and transactions at P.I. Properties from January 1974 through the end of 1978.