Curtis Graham Perkins seemed perfectly cast for the Horatio Alger role in his rags-to-riches rise from insurance salesman to chief executive of Eastern Indemnity Co., the Rockville-based insurance firm he founded in 1979.

The 43-year-old Danville, Va., native has the grace of a Southern gentleman and dark, good looks, his friends and business associates said. After working for years with his wife in a mom-and-pop insurance agency, Perkins set up a company that flourished quickly, selling construction surety bonds, a form of insurance to cover expenses when contractors and subcontractors fail to perform work as promised. Eastern sold these bonds primarily to minority contractors and other small firms that often were looked on as poor risks by major insurers.

Perkins began sporting the trappings of success, according to those who knew him. He wore gold Rolex watches and drove a $70,000 Rolls-Royce. He bragged to a friend about his $1,500 suits and was rarely seen without a huge, fiery Macanudo, a hand-made Jamaican cigar that sells for $5.

But in December 1984, his story took a bizarre and sudden twist. Maryland insurance regulators obtained a court order 13 days before Christmas authorizing them to seize Eastern Indemnity because of alleged financial irregularities.

Shortly after regulators padlocked Eastern's doors, state Insurance Commissioner Edward H. Muhl won another court order declaring the company insolvent, a move that temporarily halted dozens of construction projects and left hundreds of builders without insurance in 28 states where Eastern operated. And Muhl announced last week in a legislative hearing that after an investigation is completed he plans to bring a civil suit to recover the company's assets. The attorney general's office has also launched a criminal investigation.

In the wake of the company's collapse, Eastern's creditors, which include some of Maryland's largest banks and thrift institutions, have filed more than 60 lawsuits to recover money on which, creditors allege, Eastern is in default. Investigators, who allege that Perkins and several associates fraudulently took millions of dollars from the firm, have been unable to find him.

Construction companies stung by the insolvency have filed almost $40 million in claims against Eastern, primarily for losses suffered when their projects were shut down. The Maryland Insurance Guaranty Association, a state-chartered agency run by a board of insurance executives that was set up to regulate the industry and pay claims against insolvent companies,is liable to cover the first $8 million of claims that must be paid.

In Annapolis, the company's collapse has raised troubling questions about MIGA's ability to regulate the insurance industry effectively, and some legislators during hearings on the industry last week drew disturbing parallels between Eastern's demise and the thrift crisis touched off last May by management problems at Baltimore's Old Court Savings & Loan.

Other lawmakers, including several who held the hearing last week, have been troubled by the ties to Eastern of two former state insurance commissioners, Edward J. Birrane Jr. and Francis B. Burch Sr., a former state attorney general. Both of the men's connections to Eastern occurred after they left state government.

Each was hired to perform legal work for the company, and Birrane served on Eastern's board of directors while Burch was a stockholder. In response, Birrane said that because of his experience, his law practice involves doing work for insurance companies and that he resigned from the board after becoming concerned about the management.

Burch dismissed the criticism, calling it "inappropriate." He said, "If you say that anybody who is a [lawyer] can't represent any client after they leave state office, how would we make a living?"

Said state Sen. Howard Denis (R-Montgomery): "This whole revolving door syndrome is appalling. There is such a connection between the industry and the insurance department, I don't think we can take at face value anything we hear."

State regulators say they moved quickly to seize the company once they learned of its condition, and they insist that the industry is essentially sound.

"Everybody is obviously hypersensitive about regulators, [but] we're very confident things are going real well in Maryland," said Thomas Barbera, deputy insurance commissioner.

"If we were smarter, brighter, quicker, we might have caught it sooner, but it was spotted," he said.

Within days of the 1984 court order declaring Eastern insolvent, Perkins left his $925,000 mansion in Potomac. Since then a coterie of banks, savings and loans and state investigators have not been able to locate Perkins to question him about the collapse of the company, which had premiums totaling $10 million.

According to papers filed in a Florida suit against Eastern, Perkins turned up in Naples, Fla., where he was seen with Michelle M. Cantle, 38. Cantle was an Eastern secretary whom Perkins promoted to vice president, according to Charles G. Perkins, an adopted son who lives in Houston.

The state alleges in court papers that Cantle fraudulently obtained more than $250,000 in salary and expenses as an Eastern executive because her work there served "no valued business purpose."

Perkins filed for bankruptcy in Miami last year and then disappeared. One of his major creditors, First Maryland Savings and Loan of Silver Spring, has said in court papers that it believes he may have moved to West Germany.

His and Cantle's disappearance stunned a close circle of associates that had grown to include bank presidents, developers and a confidant of District Mayor Marion Barry.

"To me, it has been a year of sorrow," said Peter A. Santucci, a prominent Washington psychiatrist, Eastern Indemnity stockholder and friend of Perkins.

Last spring, Maryland investigators, who are still trying to sort out the tangled web of business dealings that led to the company's demise, alleged in court papers that Perkins and others fraudulently took more than $3.5 million from Eastern.

Investigators alleged in court papers that Perkins misspent thousands of dollars in company funds on fancy cars, antiques, expensive office furniture, a luxury yacht and a twin-engine airplane. Some of the funds were used to pay for Perkins' Potomac house and a $400,000 vacation home on exclusive Marco Island in Florida, according to the court papers.

Based on an examination of court records and interviews with more than a dozen associates, friends and family members, the portrait of Perkins that emerges is that of a hard-working family man who became obsessed with wealth and power.

"For the past several years, he had developed a sort of a playboy image. He was trying to cultivate it," said Charles Perkins. "I found it a little bit odd."

Added Elizabeth Perkins, 21, an adopted daughter living in Dallas, "I remember him as a relatively decent father and decent husband. In the last three to four years he completely changed. He pretty much gave up his family for a jet set life style."

Perkins, according to family members, grew up in rural Danville, a town of 46,000 about 250 miles south of Washington. He graduated from Virginia Polytechnic Institute in Blacksburg with a degree in mathematics and taught for a time at the school.

He met his future wife, Frances, the mother of Elizabeth and Charles, while both worked as insurance agents for Liberty Mutual Insurance Co.

After they were married, the couple opened an insurance agency in Roanoke. "It was a small agency; one office with a desk in it," said Charles Perkins. "For quite some time we certainly were not well off."

By the 1970s, the family had moved to Montgomery County, Md., where Perkins and his wife founded Perkins & Associates, an insurance brokerage that catered to commercial clients.

Charles and Elizabeth Perkins remember those years as ones in which the family seemed to prosper. Elizabeth was sent to Holton Arms, an exclusive girls' school, while Charles finished his last three years of high school at Bullis Prep, another exclusive private school.

The family lived at various times in Bethesda, Potomac, Northwest Washington, the Watergate and Potomac, said Elizabeth Perkins. The life style was comfortable but not lavish, she said. But the marriage broke up around 1979 and the Perkinses were divorced, according to Elizabeth and Charles Perkins.

Curtis Perkins' financial interests grew. He invested in a Bethesda restaurant and a Rockville car dealership and dabbled in real estate development, according to business associates.

"He lived a wealthy life from the day he first walked into my office and I bought insurance from him," said William H. Metcalfe, owner of Metcalfe & Sons Heating and Air Conditioning and a stockholder in Eastern.

"He smoked probably the best cigars you could buy and bragged a couple times about how he paid $1,500 for a suit. He would invite his clients to the Gas Light Club and treat us to dinner once or twice a year. He'd buy everything," he said.

In 1978, Perkins presented a proposal to get state approval for Eastern to then-state Insurance Commissioner Birrane. "I found it to be sound. I think it is almost a stoke of genius," Birrane said.

"In the late '70s it became very well known that minority contractors were to get a slice of the pie because of growing government requirements for minority contracting , but were placed in a Catch-22 because the law required bonding and they couldn't get bonding from the big companies," he said.

"The increased premium and risk management theory put forward [by Perkins] outlined how this could be overcome," he said.

Essentially, Perkins proposed a company that would offer the required performance bonds to high-risk firms at up to five times the going rate for premiums. The extra money would be used to finance a sophisticated risk management department made up of engineers and construction experts who would closely monitor the companies and provide them with expertise, he said.

"The theory was that Eastern would become a kind of nursery. The hope was that after a few years, the big companies would accept them , and of course, the companies got a track record. It was a very, very sound idea," he said.

The company opened its doors in 1980, backed by 15 investors and a board of directors that included a dozen prominent Washington area business figures.

Chief among them was Theodore R. Hagans II, a wealthy developer who was a close friend and early supporter of Marion Barry and served as chairman of Barry's first mayoral inauguration.

Hagans, 58, a major Eastern Indemnity stockholder, and his son, Theodore R. Hagans III, 32, were killed in the April 1984 crash of a twin-engine airplane that the elder Hagans had been piloting on a trip to Florida.

Several Eastern board members said the $180,000 Piper Aerostar in which the Hagans crashed had been leased to Eastern without their knowledge by a firm known as G&J Leasing Co. The company, which was forced into involuntary bankruptcy in February 1985 by creditors, was owned by Perkins, Cantle and Neil E. Lies, another Eastern executive, court papers state. Lies could not be reached for comment.

Maryland investigators alleged in court papers filed in the Florida bankruptcy case that G&J Leasing was used by Perkins as a major conduit to siphon off $710,000 in Eastern's assets illegally.

In addition, Maryland officials have alleged in court papers that Perkins set up three other firms, purportedly to provide management services, which actually were used to siphon off at least $2 million in Eastern's assets.

According to court papers filed by Maryland officials in the Florida case, Eastern paid a $90,000 salary to Perkins' daughter Elizabeth, even though she was attending school full time. Elizabeth Perkins, who is not a party of any suits against Eastern, denied in an interview receiving the money, although she did work during vacations for Eastern as an assistant to her father.

Even Perkins' huge Potomac mansion was purchased by G&J leasing in 1983, after a development company in which Perkins held an interest had defaulted on the house's $350,000 construction loan, forcing the house's sale at auction. The house was leased to Eastern, according to court papers.

In the year leading up to Eastern's collapse, Perkins, Cantle and Lies borrowed more than $1 million to purchase two Rolls-Royces, a Mercedes-Benz and other luxury automobiles through the leasing company, creditors said in court papers. The loans were made by First Maryland Savings and Loan, which is now in state conservatorship after being caught up in the state's savings and loan crisis.

One of the First Maryland loans for more than $300,000 was made less than a month before state regulators closed Eastern. Lawyers for the S&L declined to discuss the transactions.

During the same time, Perkins, Cantle and Lies signed for large loans on Eastern accounts with at least four banks, according to court papers. All of the loans are in default, and in most cases few if any payments were made on them, according to papers filed by the banks.

In November 1983, for example, Perkins negotiated a $5 million line of credit and a separate $1 million loan with First American Bank of Baltimore, the bank said in court papers. Perkins borrowed more than $250,000 from Suburban Bank to buy another Rolls-Royce and more than $100,000 in furniture, that bank said in court documents.

The line of credit was fully used, board members said, and was supposed to have been used to expand Eastern's surplus so it could underwrite more bonds. State officials say much of the surplus is unaccounted for.

So far, state regulators have been able to collect less than $1 million in company assets, said Paul Grimm, an attorney representing Eastern's receiver.

Board members said in interviews they knew little about the company's financial dealings even though they attended monthly meetings. They said Perkins kept them in the dark about financial matters and was vague in his response to questions.

Birrane and others note, however, that in late 1983 state insurance examiners gave the company a clean bill of health. Muhl said at the hearings last week that his office was presented with false and misleading information.

John D. Ringle, an Eastern board member, said he was asked at board meetings to sign financial statements without discussing them. "I felt very uncomfortable," he said.

Added stockholder Metcalfe: "When Perkins sat down at the board meeting he knew what he wanted and he had enough people on his side of the table . . . to get what he wanted."

Charles and Elizabeth Perkins said their adopted father was generally good-natured but could be abrupt or autocratic and sometimes displayed a sharp temper.

One telling display of that personality facet occurred at a board meeting in which Perkins asked members to authorize Eastern's purchase of his Potomac mansion.

"The executive committee and the board said no," said Metcalfe, who later sold his Eastern stock to Perkins. "He blew up and said 'I control this damn company and I'll do what I please.' From then on it was Katie bar the door."

Had they known, board members such as Birrane, Ringle and Metcalfe said, the board would not have allowed the company to lease Rolls-Royces or an airplane, nor would they have allowed company funds to be used for Perkins' houses.

The eight-bedroom Potomac house "was really very excessive," said Charles Perkins, who lived there for a short time and then returned for a Christmas visit two years later in 1984.

Perkins, according to his son and associates, built servants quarters in the house, installed a $6,000 security system and added an indoor swimming pool, complete with a gym, tanning bed and air conditioning.

He surrounded the property with a six-foot stone wall, added a four-car garage and a huge portico, and built a castle turret on one corner of the Tudor-style house. The improvements cost $300,000, board members said.

"His homes were good for House Beautiful, with Oriental rugs, French-style furniture and artwork," said Perkins' friend Peter Santucci.

Despite its seeming success, Eastern Indemnity suffered losses in all three years before the state takeover, according to Best's Insurance Reports, an industry publication.

Charles Perkins, who worked as an insurance underwriter in the firm's Houston office, said it became evident that the company was having problems in early 1984, because of the growing number of complaints his office received about the way claims were not being paid by the home office.

"That was probably one of the first indications there was something wrong," he said.

Deputy Insurance Commissioner Barbera said similar complaints ultimately triggered the state examination that led to the seizure of the company in December 1984.

When regulators took over, receivership lawyer Grimm said, they found corporate files in "total disarray."

"It's a lot like archeological work. You're trying to find out what artifacts are left in the ruins. Boxes and boxes of stuff were randomly shuffled."

According to a court suit filed in Collier County, Fla., by First Maryland Savings and Loan, Perkins was alleged to have left there and lived for a time under an assumed name.

The suit, which sought to lay claim to his assets, alleged that Perkins, Cantle and a company secretary deposited hundreds of thousands of dollars in Florida bank accounts under fictitious names or, in one case, in the name of Cantle's 14-year-old daughter.

In a court action filed in Montgomery Circuit Court, lawyers for First Maryland said they suspect that Perkins has moved to West Germany. Others speculate that he went to Australia, Cantle's native country.

"I wish we knew where he was," said Grimm. "There are a lot of creditors who wish they knew as well." CAPTION: Picture, The $925,000 Potomac mansion Perkins left shortly after the 1984 court order declaring Eastern Indemnity insolvent. The Washington Post