Maryland officials moved over the weekend to solidify their control of Community Savings & Loan and the related EPIC companies, changing locks in the firms' Falls Church headquarters and seizing control of the computer system.
A state official also said that the top officers of Community -- Clayton C. McCuistion, James B. Deerin Jr. and Leonard Meltz -- had been asked to resign and would do so today.
None of the three, nor the new state officials at Community, Bruce McPherson and W. B. Russell Jr., could be reached for comment.
The state official, who asked not to be identified, said the moves stemmed from the state's concern that someone would try to remove important files from Community. Although he said no one has done that so far, he said, "Possession is nine tenths of the law, and we'd rather be in possession."
Community and Equity Programs Investment Corp. (EPIC) are the centerpieces of a vast real estate syndication empire that has been tottering since disclosure that it was delinquent on payments on $1.4 billion of mortgages and mortgage-backed securities. Equity Programs set up more than 350 limited partnerships that invested in houses as tax shelters. Most of the EPIC partnerships appear to have filed for bankruptcy, although some EPIC houses continue to operate outside the protection of the bankruptcy court, sources have said.
The state's latest actions came as it reached an agreement with trustees for EPIC creditors to an interim plan for operating key affiliates of EPIC while they continue to search for an overall solution to the problems of the failed real estate investment group.
The agreement is designed to allow the EPIC companies enough cash to maintain and collect rent on at least 15,000 EPIC properties now in bankruptcy. At the same time, the arrangement is meant to keep the remaining revenue under control of the courts until its rightful recipient can be determined. Officials said they plan to submit the agreement this week to the bankruptcy judge overseeing the proceedings for approval.
Lawyers close to the case portrayed yesterday's agreement as an attempt by all sides to put aside potential differences temporarily to buy time for a working out of EPIC's problems.
In the proposed order, the Maryland Deposit Insurance Fund and the trustees representing the mortgage-backed security holders indicate disagreement over who has the better claim on the rental income. But they agreed that until the further determination of the court, some of those funds can be spent for a variety of purposes to maintain the EPIC homes. These monies were frozen by a bankruptcy court order on Sept. 10.
According to the list of priorities drawn up by the order, the money will go first to pay the expenses of the company that manages the EPIC properties, and then to pay for the insurance or bond premiums for coverage of the properties. Any money not spent for these or certain other administrative tasks would be put in escrow until the courts can decide who should get it.
"Both sides have made a very major effort to reach an accommodation on the short-term issues in order to give them breathing space to meet and discuss long-term issues," said Daniel Lewis, a lawyer helping Maryland in its conservatorship of Community and EPIC.