Second of two articles

Police used to call Mayfair Mansions "Little Beirut." People who lived in the bald rows of apartments in far Northeast Washington knew one law amid the lawlessness: Drug dealers ruled.

Then one day in 1988, an unarmed Nation of Islam volunteer patrolling the complex karate-kicked a shotgun out of a drug dealer's hands. Almost overnight, the dealers disappeared. Front stoops crowded with kids. Grandmothers ventured out for evening walks. Mayfair Mansions was suddenly considered safe.

Then-D.C. Mayor Sharon Pratt Kelly, then-U.S. Housing Secretary Jack Kemp, even then-first lady Barbara Bush praised the intimidating, bow-tied volunteers. Where sermons, slogans, programs and police had failed, the Nation guards had not.

Nation leader Louis Farrakhan accepted credit for the guards' success. "Today our unity to solve a problem has shown us you don't need guns, you need wills and determination to end the scourge of drugs in our community," Farrakhan said in a 1988 speech at Mayfair Mansions.

Building on their record, the Nation guards eventually formed a corporation, one of four security firms linked to the Nation and its leaders that sprang up across the country. For a while, none of the Nation's business ventures offered a better chance of commercial success or garnered more favorable publicity for Farrakhan's message of black empowerment. In four years, the security firms won an estimated $20 million in public contracts in 10 cities, including the District and Baltimore.

But like other Nation-related businesses, the image that Farrakhan built of the security companies as models of black-owned enterprise is at odds with a record of debt, management difficulties and frayed client relationships that the companies have accumulated in several cities, public records and interviews show.

The Nation and its officials who are involved in the security companies declined to comment. Last year, some of the officials appeared at congressional hearings and defended the companies, saying they were popular with public housing residents and had lowered crime.

Last year, the largest, NOI Security Agency Inc., headquartered in the District with offices in California, Pennsylvania and Illinois, filed for protection under Chapter 11 of the Federal Bankruptcy Code. Unable to pay its creditors, it failed to contribute to its workers' unemployment compensation fund and, according to its filing, owes the Internal Revenue Service more than $600,000 in payroll taxes dating to 1992.

While creditors went unpaid, the company made charitable donations to mosques, leased a Mercedes Benz, ordered flowers and bought airline tickets, bankruptcy records show.

In Baltimore, a Nation-backed company, also called NOI Security Agency, fired hundreds of guards last year after the U.S. Department of Housing and Urban Development terminated its contract with the city housing authority, citing bidding irregularities. Security workers in the District, Chicago and Baltimore have filed complaints over unpaid wages with federal and local labor agencies. And public housing residents in Chicago and the District have alleged in lawsuits that they were brutalized by NOI guards.

Among tenants, the companies have a mixed record. In interviews conducted by HUD across the country last February, many tenants praised them for improving safety and treating residents with respect. "It's wonderful," said one Chicago tenant surveyed. "Before security came, drug dealers were there. Couldn't go outside without being held up. Since they've been there everyone is a lot safer."

Others raised concerns about the guards' style and effectiveness, newly released records obtained under the Freedom of Information Act show.

Common themes emerged among the complaints, both in HUD's survey and in tenant interviews conducted by The Washington Post. Some residents saw the guards as too expensive, their supervisors too interested in driving Jaguars or BMWs. They also reported that guards socialized with women in security booths. And they complained that guards paid with public money were proselytizing for Farrakhan, pestering residents to stop eating pork, go to the mosque or buy subscriptions to the Final Call, the Nation's newspaper.

Over time, residents said, these problems left housing complexes vulnerable. Young men, from the truly dangerous to the merely brazen, grew unafraid of the guards, leaving residents more exposed to crime. "The young boys take over the elevators for hours smoking dope," one Chicago resident told HUD.

Pittsburgh terminated NOI contracts with two publicly assisted housing complexes last year, according to interviews with managers at the buildings. HUD's survey found that 52 percent of the Pittsburgh residents interviewed liked the guards, but those who didn't saw serious problems. "During the summer of 1994 one of the guards hit my son {7 years old}," one tenant said. "They are more concerned about converting people than security," complained another.

Eugene Jacquet, a 26-year resident of Clifton Terrace in the District and president of its tenant association, said guards who worked at the complex until the company was terminated in 1993 "wanted to be social workers, preachers, teachers, anything but security. When we hired a security company, we wanted a security company."

"The persona that they put off at first -- that they are invincible, foreboding -- it fades," Norma Johnson, a Clifton Terrace resident said. "The kids, they see they are mortal men." The Dopebusters'

The Nation's first security experiment began in the District in 1988. When Mayfair Mansions sought help for rampant drug dealing in the public housing complex, about 25 volunteers from Muhammad's Mosque #4 began patrolling it. The guards called themselves the Fruit of Islam -- the Nation's name for male members. By the time Farrakhan visited Mayfair Mansions in November 1988, the guards had been christened the "Dopebusters" for their success cleaning up drugs and violence. The company incorporated soon after Farrakhan's visit, hiring almost entirely Nation of Islam believers. Other companies followed -- New Life Self Development in Chicago, the X-Men Security Agency in New York and NOI Security Agency in Baltimore. Eventually, the District company opened California and Pennsylvania offices.

Though there were four separate companies with Nation ties, in their bids for public housing contracts some of them used the experiences of other Nation companies as proof they were qualified for the jobs.

During testimony before the House Banking general oversight and investigations subcommittee in March of last year, under questioning about whether they were linked, corporate officials said they were separate.

After the Mayfair Mansions success, local housing authorities began awarding emergency, no-bid contracts to NOI in the District, and across the country, eventually totaling about $20 million worth of federally backed deals.

Yet their suggested links to Farrakhan outraged national Jewish organizations. They contended that the guards were violating federal contract regulations by proselytizing to residents and suggested the companies were practicing hiring discrimination by using only Nation believers as guards. Company officials insisted that Farrakhan played no role in the firms' management, yet in advertising, the managers of the District-based company emphasized its connections to the minister. "Having secured Minister Louis Farrakhan at various national and international venues for over a decade, with audience capacity ranging from 10,000 to 60,000, crowd control and the proper handling of people are the hallmark of our firm," wrote NOI President and Chief Executive Officer Abdul Sharrieff Muhammad in an undated promotional letter.

Records show the District and Chicago security companies were headed by Nation leaders who were among Farrakhan's closest aides. The Chicago company's chief executive was his son-in-law, Leonard Farrakhan Muhammad, the Nation's chief of staff.

The marketing worked. By 1990, NOI brochures said the companies employed 300 guards at 30 sites in seven cities. Complications Begin

The money rolled in, but with it came complications.

In Baltimore, former guards said that internal friction developed when the companies began hiring non-Muslims in response to criticism from Jewish groups. Though the firms were short on professional administrators, bookkeeping was handled only by Muslims, the former guards said. The payroll was constantly mishandled, according to the guards, who earned about $6 per hour. Some Baltimore guards filed federal wage and hour complaints alleging that they were not paid overtime for weeks of work entailing as much as 80 hours.

"There were a lot of bad faults with the company," said Dewayne Cameron, a non-Muslim former guard. "One time they had a meeting for the guards, talking about certain changes, talked about getting more pay, but it didn't happen."

Between November 1992 and May 1994, NOI patrolled Baltimore low-income housing without a contract, working under a noncompetitive purchase requisition and earning $1.5 million. In late 1993, the city sought bids for the contract and NOI won, although it was not the lowest bidder. Wells Fargo Guard Services Inc. had submitted a bid $1.1 million lower.

When Wells Fargo challenged the award, housing officials said other criteria had been used to evaluate bids. They said NOI's record established that it had lowered crime at troubled projects. Letters from Mayfair Mansion and Paradise Manor were included in the bid.

Wells Fargo sued the Baltimore Housing Authority in 1994 and filed a protest with HUD, saying procurement regulations were violated.

HUD audited and found that NOI guards had no special training and that the authority was "placing its residents at risk by allowing guards to work prior to being certified." Among the 173 guards whose backgrounds were checked, 29 had been convicted of felonies, according to the report. Working Conditions

Questions also surfaced about the company's finances. NOI reported to HUD that it paid its Baltimore guards $11 an hour, while Wells Fargo paid $8.23 per hour. But former NOI guards disputed that claim, saying their hourly pay never reached $11.

Some residents thought NOI's treatment of its workers was unfair, especially in light of the luxury cars driven by some company supervisors. "The managers drove BMWs," said Tisa Wilson, site manager at the District's New Amsterdam apartments in the 1300 block of Fairmont Street NW. "Those people had money. The big time people had the money. Not the guards. We had a couple living here, and they couldn't pay their rent."

"{The guards} often weren't paid," Norma Johnson recalled, describing Clifton Terrace. She said that guards were expected to sell the Final Call on the job and that "if they didn't sell their quota of newspapers, it came out of their pay."

At Paradise Manor, residents could hear guards exercising on the playgrounds in the morning, grilled in military fashion by their supervisors. If they didn't sell a certain number of Final Call subscriptions, they were ordered to do 200 extra sit-ups.

Guards in the District, Chicago and Baltimore filed state and federal labor complaints for unpaid wages in 1994 and 1995. And they were not the only ones complaining. As early as 1992, the NOI company in the District began having trouble paying its bills and fell behind on workers' compensation payments. By June 1993, the IRS had filed a $188,765 tax lien against the company. Last year, the IRS said NOI owed it $300,941.

The IRS began pursuing the company, filing notices of its intent to seize NOI's bank accounts. In May, the company filed for voluntary reorganization under Chapter 11 of the Federal Bankruptcy Code. It owed 56 creditors $777,108. Six mosques were owed $6,625 in charitable pledges.

El Dorado Travel Service was owed $4,654, mostly for air fare back and forth to Chicago. Owner Edward Quick said he cut off business with the company because of unpaid bills. "I'm a small business. I need every nickel, every penny I get," he said.

Dennis Early, the assistant U.S. trustee assigned to the bankruptcy case, said that NOI agreed to make payments to the IRS after it filed for bankruptcy but has instead accumulated an additional $130,000 in IRS indebtedness. NOI also fell behind on filing monthly operating and financial statements to the court, as well as a company reorganization plan. The trustee has asked the judge to convert the case to Chapter 7 bankruptcy, which would permit a liquidation of assets to pay debts. A hearing is scheduled for Wednesday.

When NOI filed some of its financial reports, they showed uneven cash flow. Last year its July revenues were $138,000; in September they peaked at $358,207. There were 248 employees in March, 184 in May.

Along with financial problems, the companies also encountered troubles with the young toughs who ruled some housing complexes. The guards' appearance -- close-cropped hair, suits and ties, stern stance -- was intimidating for only so long.

"The guards had no jurisdiction off the property," said Deborah Jane Lindeman, a neighborhood commissioner near Potomac Gardens. "The dealers just moved across the street. The guards had no power to arrest. The drug dealers would almost be standing there -- nah, nah, nah, nah."

Then, one night last spring, "there was an all-out riot," Lindeman said. "Smashing cars." An NOI guard was stabbed. Three guards were beaten. Brutality lawsuits also began surfacing against the guard companies.

In a Chicago case filed last year, an African American nutrition store employee said he was assaulted and questioned for two hours by Nation guards for alleged shoplifting at a Walgreen's drug store. When police arrived, they learned that he had a receipt and the store clerk hadn't decoded his bottle of 7-Up. An arbitration panel awarded Jerome Daniels $3,500 in damages against Walgreen's. New Life, whose offices at 2021 S. Wabash were locked on the four occasions sheriff's deputies tried to serve notice of the suit, was never served, and under Illinois law, was not included in the judgment.

In the District, Clarence and Malinda Green, parents of Perez Green, filed two lawsuits last year against NOI Security Agency Inc. and its guards Shepard Morgan and Kevin Braxton. The family, who live in Parkside Terrace Apartments in the 3700 block of Ninth Street SE, said the guards choked their 15-year-old son, leaving him unconscious and vomiting, while he was waiting for a school bus at 7:30 a.m. Clarence Green declined to comment. NOI denied the allegations. NOI tried to file its own brutality lawsuit against D.C. Metropolitan Police officers who responded to an incident at Paradise at Parkside that led to the assault conviction of one of its guards, Severlin Singleton. But the lawsuit was dropped last October.

Singleton was a 23-year-old guard who was arrested at Paradise at Parkside in 1993 for kicking an officer's head during a disturbance that brought police helicopters, beatings and mayhem. Singleton was convicted and sentenced to 30 days and three years probation.

His family blames the security guard firm for improperly training him. The son of a Boston judge, Singleton joined the Nation when he was a junior at Howard University, said his father, also named Severlin Singleton.

"This kid was a blue blood of the black community," said Singleton's attorney Fred Sullivan. "He was a tall, good looking kid. Everybody's perfect son. He didn't know the streets."

"I blame it on the Nation," Sullivan said. "They really had no training. That's what got him into trouble." Loss of Contracts

Eight security contracts at public or federally assisted housing projects in six cities expired or were terminated within the last year. A contract with a federally subsidized housing project in Brooklyn still stands. In the District, contracts remain in effect at Paradise at Parkside, Mayfair Mansions and Parkside Terrace, three publicly assisted but privately owned projects. They have been terminated at Potomac Gardens, Clifton Terrace and the New Amsterdam because of price and safety concerns.

At Paradise at Parkside, NOI guards now work a midnight-to-morning shift manning a video surveillance room. During the day, security is handled through a special community policing project, based on a Japanese model called Koban, that assigns police officers living at Paradise at Parkside to foot patrols and to lead a variety of empowering programs.

"This was an open air drug market back in 1987," said Alonzo Patterson, who grew up at Paradise at Parkside, and now works for the Koban program. "The $20 million in investment that turned Paradise and Mayfair around couldn't have happened without the security provided by the Nation of Islam. They provided what the Metropolitan Police Department couldn't do. They did it in two months." CAPTION: Nation of Islam members stand guard outside Northwest Washington's Clifton Terrace apartments in 1992. CAPTION: A guard and Anne Miller discuss her son Terrell's report card at Washington's Paradise Manor in 1988. CAPTION: Nation of Islam members fight with a gun-wielding man at Washington's Mayfair Mansions in 1988. CAPTION: Louis Farrakhan speaks to residents at Mayfair Mansions in 1990, two years after guards began patrolling there.