Ex-Owner of Maryland S&L; Gets 30 Years, Fine

The former owner of a savings and loan that collapsed, prompting a crisis in Maryland’s privately insured thrift industry, signed over all of his property to the state on Wednesday and was sentenced to 30 years in prison for stealing $14.7 million from two Maryland thrifts.

Even though Jeffrey A. Levitt said he now knows that he did wrong and takes full responsibility for his actions, he insisted to the end that he didn’t think at the time that he was engaging in criminal activities.

“Nobody questioned it, and I never thought of it as criminality,” he told state Circuit Judge Edward Angeletti moments before the sentence was imposed.

Angeletti fined Levitt $12,000 in addition to the jail term. Under Maryland law, Levitt could be eligible for parole after serving 7 1/2 years, one-quarter of his term.

Angeletti said he will consider reducing the sentence if Levitt returns all of the money he stole from Old Court Savings & Loan and a smaller institution, First Progressive Savings & Loan, that Levitt merged into Old Court.

Levitt, 44, used money he stole from First Progressive to buy Old Court, and then built Old Court into one of Maryland’s largest privately insured thrifts.

Levitt admitted May 27, when he pleaded guilty to 25 counts of theft and misappropriation of funds, that he had siphoned off millions of dollars from Old Court through questionable real estate deals and payment of huge fees that he had not earned.

Turned Over Property, Money

Old Court collapsed in May, 1985, touching off a crisis in the privately insured thrift industry that state officials are still working to resolve.

Levitt began the two-hour hearing on Wednesday by signing a document turning over all of his money and property, except his Lutherville home, to the state. His wife, Karol, will be allowed to keep the house if she pays the state half of the appraised value.

William Hundley, Levitt’s lawyer, said the property is worth more than the $14.7 million that Levitt was ordered to repay, but state Atty. Gen. Stephen H. Sachs said he wasn’t prepared to accept that valuation.

Sachs said state officials believe that the property and money could be worth $10 million.

He asked Angeletti to impose a 35-year sentence with the understanding that it would be reduced to 25 years if full restitution is made. The judge said he might consider reducing the sentence if he is informed that Levitt has made complete restitution, but he wouldn’t commit himself to any particular reduction.

In a related story, the former president of ESM Government Securities, whose collapse led to a savings and loan crisis in Ohio, was convicted Wednesday of conspiracy and 16 counts of mail fraud.

Nicholas B. Wallace’s face turned ashen as the court clerk pronounced him guilty on one conspiracy charge and 16 of 33 mail fraud counts. Jurors cleared the ex-president on seven wire fraud counts. The same federal court jury acquitted another former executive of the Fort Lauderdale, Fla., firm on all counts.

Stanley Wolfe, who oversaw movement of securities at ESM and was cleared on all counts, said he felt “like a thousand-ton weight was just lifted from my shoulders.”

Free on Bond

U.S. District Judge Jose Gonzalez said Wallace could remain free on bond pending sentencing at an undetermined date.

Had he been convicted on all 41 counts, Wallace could have been sentenced up to 205 years in prison and $50,000 in fines.

When the Securities and Exchange Commission closed ESM in March, 1985, the company owed 69 creditors, including 16 municipalities around the nation, some $315 million.

In Ohio, ESM’s collapse led to a run on savings and loans, including financier Marvin Warner’s Home State Savings Assn., which lost $143.9 million because of its investments with ESM.