Trinidad was only one of the neighborhoods struck by the epidemic of real estate fraud that hit Washington during the 1980s. The neighborhoods of Deanwood, Anacostia, Congress Heights and North Capitol Hill also were hit hard, according to federal investigators. Experts estimate that 2,000 small apartment buildings were swept in.

Washington was not the only city hit. Similar fraud occurred in Baltimore, Alexandria, Prince George's County, Chicago, Denver, Atlanta, Houston, Tulsa, Oklahoma City, Philadelphia, Seattle, South Florida, Indianapolis and Camden, N.J.

The fraudulent activity contributed to the $4.2 billion in losses incurred by the Federal Housing Administration insurance fund in 1988 alone.

The FHA program, created in 1934 to help house American families, has helped boost the nation's home ownership rate to one of the highest in the world. But if the losses continue at current levels, the financial survival of the program could be jeopardized.

This summer, the General Accounting Office and private consultants hired by the Department of Housing and Urban Development reported that the loan insurance program has been pushed to the brink of insolvency.

Washington was hit the hardest by fraud and abuse of the program, said Paul A. Adams, HUD's inspector general.

In addition to destabilizing neighborhoods such as Trinidad, undermining rent control, scattering longtime renters and leaving buildings abandoned, the fraud distorted property values and tax assessments in parts of the city.

The distortion of property values stemmed from the inflated appraisals generated by those who participated in the scheme to increase the size of the loan guarantee, increase profits and cover the fees and kickbacks they paid to other participants.

With time, the artificial appraisals set the standard for the going prices -- the market values -- in the affected neighborhoods, making them less attractive to legitimate investors or forcing innocent investors to overpay for them.

Because assessors base tax bills on market values, the process also is believed to have distorted the District's tax base, making it nearly impossible to establish accurate and fair tax bills.

"You as a consumer are probably paying too much as a result of the inflated values of those properties," Adams said.

The District's top residential assessment official said that some District tax bills may have been affected. "I'd have to say it's possible, yes, because of the way {assessments} are done," said Charles Horwitz, manager of the residential assessment division of the District's office of real property taxes. "If they can fool the people at FHA, they can fool anybody."

Despite the convictions and the ongoing seven-year investigation by the FBI, HUD and the Veterans Administration, some people knowledgeable about the fraud -- including at least two former participants -- believe it is still occurring in the District.

John R. "Jack" Spicer, who pleaded guilty in October to fraud and was sentenced to serve four months in a halfway house, said he believes similar fraudulent activity is underway in the District, particularly in light of the recent increase in the FHA loan limit to $124,850, up from $101,250.

"I know where it's not happening," Spicer said, smiling thinly and gesturing to himself. "But I think it's still happening."