When America's most-wanted savings and loan criminal fled the country two years ago, he left behind more than 20,000 irate S&L depositors in Maryland and a team of federal prosecutors with egg on their collective face. Since then, Tom Billman has been living high, if nervously - and nobody's come near him yet

SOAKING UP THE SUN ON THE BOW OF HIS YACHT OFF THE MEDITERRANEAN ISLAND OF Majorca, his Danish mistress at his side, George Lady presented the perfect picture of early retirement. With his billed cap pulled low over his eyes, he sipped gin mixed with vodka, listening to the music of Roy Orbison playing over one of the yacht's three stereo systems. Below deck, in a safe behind the headboard of his bed, he had as much as $60,000 in Swiss francs and Spanish pesetas; much more money was salted away elsewhere. His stateroom closet was crammed with custom-tailored $1,000 suits, though he rarely wore anything but shorts and sports shirts. He'd hired a crew to cater to his every need and he passed his days indolently, redesigning the bridge of his yacht, cruising the coasts of Spain, Gibraltar and North Africa with new-found friends, immersing himself in spy novels. To break the occasional tedium of sun and sea, he jetted off -- always first-class -- to London, Geneva or Paris for stays at Europe's most elegant hotels.

Lady seemed a likable and generous sort. Forty-nine years old, with a barrel chest and full beard, he became a familiar presence on Spain's Costa del Sol, where he maintained a posh apartment and a second yacht -- though he had no use for either. He was seen as a shy and modest man -- some said secretive. He kept no pictures of family, and only hinted at their existence. When asked where in the States he was from, he would laugh and say "all over." He was always interested in others, but never at ease speaking of himself. It was an endearing trait in someone so successful. To many, Lady's life looked like one endless holiday.

It was picture perfect, but for this: Everything about him was a lie.

The wealth he enjoyed -- more than $20 million -- was part of a vast sum he had looted from his own failed savings and loan, according to a federal indictment. The name "George Lady" he had pilfered from a friend. Behind him, in the United States, he had left a wife and three children, more than 20,000 irate S&L depositors in Maryland and a team of federal prosecutors with egg on their collective face. Meet Tom J. Billman, wanted for mail fraud, wire fraud, conspiracy, racketeering and obtaining a fraudulent passport.

Not so long ago, Tom Billman was one of Washington's most prominent businessmen, chairman of the board of Bethesda-based Community Savings & Loan and head of a financial empire that had syndicated more than 350 real estate partnerships owning 20,000 houses nationwide. At his disposal were a private plane, a fleet of speedboats, a sumptuous home in McLean, an 860-acre country estate on the Eastern Shore, a Mercedes, a BMW, a Cadillac and other accouterments of wealth and position. Today, the face that looked out from so many annual reports in the early 1980s looks out from 20,000 wanted posters in post offices across the land. The chairman of the board is now a fugitive with a $200,000 bounty on his balding head. If caught and convicted, he faces up to 115 years in prison.

TOM BILLMAN'S FINANCIAL CHICANERY SURFACED IN 1985 -- long before the savings and loan industry became a national scandal -- when the collapse of his S&L helped trigger a financial scare that rocked Maryland's business and political world. But alone among those accused of plundering S&Ls, Tom Billman had the foresight to salt away a huge amount of money and disappear before investigators could nail him.

Explaining Billman's alleged crime is no easy task. Even seasoned investigators accustomed to complex fraud cases were staggered by the tangled galaxy of corporations Billman had created. Recalls Dennis Sweeney, Maryland deputy attorney general: "It took teams of people from Coopers & Lybrand, from the Securities and Exchange Commission, from the IRS and from everybody else to find out exactly what this guy did." What is clear is that Billman had a certain genius for making money, and a certain inability to recognize when enough was enough.

In the mid-'70s he founded Equity Programs Investment Corp. -- called EPIC -- which syndicated real estate partnerships to wealthy clients, many of whom were looking for tax shelters. In 1982 he arranged to buy Community Savings & Loan through a holding company, and later made the S&L the parent company of EPIC. But by 1984 EPIC was disintegrating. To succeed, it depended on ever-increasing values in real estate. But selling houses in a falling market -- particularly in Texas, where Billman had substantial holdings -- was difficult, and income was not keeping up with mortgage payments. To shore up his crumbling enterprises -- and to enrich himself -- Billman siphoned off $106 million belonging to the depositors of Community, according to the federal indictment. Millions of dollars were funneled into Swiss bank accounts, prosecutors said. Ultimately EPIC partnerships defaulted on $1.4 billion in mortgages, and Billman's S&L collapsed.

As his empire was unraveling, Billman told friends and family that he had never intended to hurt anyone, that the market had simply soured and things had gotten away from him. Mark Moorstein, a former EPIC vice president, finds that hard to swallow. "The destruction of EPIC was absolutely inevitable. It was a pyramid, and it was pyramiding way out of control. It was just a matter of time before it went down the tubes," he says. "We were trying to sew straw into gold."

But even in the face of impending disaster, Billman seemed in control. "He had a tendency to make everybody believe that he had a solution," Moorstein says. "It was sort of a Wizard of Oz approach. He was going to take care of everybody. There was a way out; he always had found a way out."

By 1984, however, Billman was concentrating on a way out for himself and a few close associates. Moorstein told Billman how his grandfather had lost his business. He recalls Billman answering: "That's not going to happen to me. All these corporations I'm setting up are lifeboats, and what we're going to do is, if EPIC sinks, we're just going to jump right into these other lifeboats and off we go."

In September 1985, Billman's Community Savings & Loan was placed in conservatorship by Maryland banking officials. Two months later, Billman made a small but crucial investment in his own future. Knowing that his college roommate George M. Lady, a Temple University economics professor, did not have a passport, he acquired a copy of Lady's birth certificate, available from public records in the District, where he was born. He also got a Virginia driver's license in Lady's name. With these as proof of identity, he entered the Washington passport office at 1425 K St. NW on November 20, 1985 -- two months after the S&L went into conservatorship -- and was issued a passport in the name of George M. Lady. He also consulted an attorney about extradition matters -- determining which countries had treaties with the United States and which did not, according to federal prosecutors. For the next three years he held the passport in reserve.

Meanwhile, as investors and depositors fretted over their savings, and regulators tried to stem a panic, Billman continued to live like royalty. Three times a year he summoned his personal clothier, Seetharama Sastry, to his McLean home to enhance his formidable wardrobe. On the afternoon of November 6, 1986 -- more than a year after the S&L's collapse -- Billman bought 40 pairs of slacks, four navy blazers, three cashmere blazers and two suits, Sastry said. The bill: $13,374. But the most unusual request he made of Sastry came later. Billman asked him to remove all the "TJB" monograms from the left cuffs of three dozen tailor-made dress shirts. Billman's explanation: "Classy people don't wear monogrammed shirts."

In October 1988, following a lengthy trial, the Maryland Deposit Insurance Fund obtained a $112 million civil judgment against Billman in connection with the collapse of Community. The jury verdict followed presentation of evidence that Billman had engineered improper, unsecured loans, along with numerous insider deals and lavish salaries for himself and his codefendants. Seeing Billman in attendance during the four-month trial in Montgomery County had lulled federal prosecutors into a false sense of security. They decided to wait to bring a criminal case until the civil matter was concluded, not seeing any risk that Billman would disappear. Says Maryland's U.S. attorney, Breckinridge L. Willcox: "In hindsight, we were much too cavalier in our approach toward indicting him because, frankly, we had no reason to think he would sever his roots and burn his bridges." Authorities still do not know exactly when Billman fled the country. Their best guess is sometime in December 1988 -- a year before a federal grand jury in Baltimore handed up a 22-count indictment, accusing him and his associates of defrauding S&L depositors of more than $106 million.

The task of finding Billman has fallen to U.S. Postal Inspector David Cyr, a profoundly patient and soft-spoken man raised in Grand Isle, Maine. For him, Billman has become an obsession that fills dozens of file cabinets and spills over into his dreams. "It's funny how you feel like you know someone when you're in pursuit," says Cyr. "There's a kind of intimacy builds up, but it's only one way. You think you're thinking like him."

Billman's elusiveness has given Cyr a kind of perverse respect for his quarry. "This may come back to haunt me," he says. "But I guess we'd like to believe that he's very smart and clever, because if we don't, if we're dealing with a buffoon, then what does that say about us? He's made mistakes and he's been smart enough to catch his mistakes and correct them, or at least take evasive action."

Cyr and his team of investigators, who have jurisdiction over cases of mail and wire fraud, have enlisted the aid of the U.S. Marshals Service, the State Department, Interpol, New Scotland Yard and law enforcement agencies in Austria, Switzerland, Morocco, Belgium, Greece, Spain, France and Gibraltar. They have tracked Billman along a twisting trail marked by former mistresses, abandoned yachts, five-star hotels, offshore corporations and envelopes stuffed with cash. But Billman has always kept three steps ahead, masterfully exploiting bank secrecy laws and relying on the limits of U.S. police powers abroad. He has seemed at times to flaunt his advantage, taunting his pursuers with false trails and dead ends. But federal prosecutors don't take kindly to being made fools of, and they are determined to make an object lesson of Billman. Vows Willcox: "Someday, somewhere, we will catch up with him." IF THE SEARCH FOR BILLMAN, THE FUGITIVE, BEGINS IN Europe, the search for Billman, the man, begins in Woodsfield, Ohio. A depressed town of about 3,000 not far from the Ohio River, it is where Tommy Joe Billman was born on June 7, 1940. His father, Charlie, drilled water and gas wells for a living. His mother, Laura, worked as an assistant cook in the school cafeteria until forced to give it up because of a weak heart.

Except for an occasional hand of euchre and a more-than-occasional drink, Charlie Billman was a private man, not given to displays of emotion, and very slow to part with his hard-earned cash. Charlie's father had died when he was 2 years old, and by age 11 he had dropped out of school to take his place in the oil fields. It was a harsh lesson, one he impressed upon his elder son, Harlan, and his younger son, Tommy. "He threatened to kill you if you didn't finish high school," recalls Harlan, 61, who now digs wells in the town.

There were few diversions in Woodsfield, and fewer opportunities. The young could look forward to a shift at the aluminum mill or the coal mine. The entire town has five traffic lights. The streets are Main, Church and Court. With its towering maples and walnuts, its Victorian houses and relaxed pace, Woodsfield could serve as a Hollywood set for the prototypical American small town. The Billman family lived on a two-lane road at the edge of town. Cows pastured out back. Water came from a well.

Tom's brother was 12 years his senior and away in the service much of the time Tom was growing up. Charlie Billman appeared to favor Harlan, making little effort to conceal the fact, according to Tom's childhood friends. "His dad was pretty tough on him," Tom's friend Bill Sims recalls. "Charlie always thought that Harlan was the only boy he had. He always told Tom that he wouldn't amount to a damn, because Tom never wanted to do anything serious and he never wanted to do any physical work. He {Charlie} said that in front of us . . . I think Tom had something to prove and he did prove it." Harlan says he was unaware of any favoritism. He said that his father was proud of "T.J.," as he calls him, though Charlie may not have shown it.

Tom was never a serious discipline problem, but he flirted with the forbidden. It showed in his choice of friends, particularly his closest friend, Burris Christman. "I was the wildest, craziest son of a bitch they had in the school," laughs Christman, who today auctions repossessed cars for a Virginia bank. "Tom didn't have that wild streak." But something about Christman's daring attracted Billman.

Mention Tom Billman's name to one former Woodsfield school official and the image is clear: "He would get by without following the regulations whenever he thought he could -- nothing serious, you understand. He could outmaneuver ordinary students and teachers -- nothing bad, still the tendency was there." His first cousin and childhood friend, Richard Yoho, put it another way: "He always took those extra chances." Yoho recalls Billman's father telling him not to go into the woods and swing on the grapevines. Not long afterward, Yoho came across Billman swinging out over the ravine, holding on to a vine.

And Billman had a seductive influence over others. "Tommy had the ability to be a salesman and the ability to tell you what you wanted to hear to sell what he wanted to sell," says Yoho. On one occasion, as children, Yoho and Billman were riding a sled as the afternoon slipped into dusk. Yoho started for home because his father had told him to be back by 5. Billman, not wanting to be left alone, called him back and told him he had just seen his father and that his father said he could stay out until 6. Returning home at 6, Yoho was thrashed for disobeying.

Billman was one of 44 students in the Woodsfield High School class of 1958 and vice president of his class. Among his classmates he is remembered, when at all, as a mediocre basketball player, a kid with a stunning vocabulary and a young man who disdained physical labor and sweat. That was peculiar in Woodsfield, where a decent wage could not be had without a willingness to roll up your sleeves. Inside the classroom no one doubted his abilities, but at the end of four years he graduated with a lackluster 2.8 grade-point average. He had gotten an A in geometry and C's in English. While the other boys worked summer jobs, Billman seemed to enjoy endless leisure. He made no secret of the fact that Woodsfield was his first, not his last, stop.

It is hard to say how much the memories in Woodsfield have been revised in the wake of Tom Billman's notoriety, but his friends recall him as a dreamer and a schemer. Says Yoho, "Tom had big goals and big dreams and he was kind of above us other kids. After he graduated he said, 'Cousin, I'm going to go away and someday I'll be the richest guy in the world. That's my dream, to have money, money everywhere.' You know how kids are. We didn't pay a lot of attention to it."

Bill Sims remembers another aspect of his friend's behavior. "He could con you out of things," says Sims. "That was one thing even in grade school he was good at. He was a con artist when he was young."

Billman was never widely popular, but among his clique of friends he inspired deep affection and loyalty. Says Sims: "He was a good-hearted person. He would do anything for you."

Billman left Woodsfield in 1958, the year he graduated and the year his father died. His first job was as a fingerprint clerk with the FBI in Washington. From there he went on to construction work and drove a cab part time to support himself while earning a business degree at George Washington University.

Even years later, after he had amassed a sizable fortune, he maintained close ties to his home town. "He never forgot where he came from," says Wayne Cline. "He could walk down these streets and farmers who never went past the second grade could relate to him." In 1985, his kingdom already in ruins, Billman returned for a high school reunion. Most of those in his class knew nothing of his astounding rise or his precipitous fall. To them he was just Tommy Billman.

Some months ago, boyhood friend Burris Christman received a call at the Virginia bank where he works. It was from Billman, the fugitive. "He just said, 'Hey, how you doin', buddy?' I said, 'Where the {expletive} are you?' He didn't answer. I asked again. He said, 'Well, let me put it this way, Chris, I'm not in the United States.' I said, 'Okay, big boy,' and that was the last time I heard from him. Evidently he just wanted somebody to talk to." LITTLE IS KNOWN OF BILLMAN'S initial travel as a fugitive, except that one of his first stops was Geneva -- presumably in connection with his Swiss bank accounts. From February 2 to 7, 1989, Billman visited Paris, staying in a $1,500-a-night suite at the elegant Plaza Athenee hotel, according to hotel personnel. Paris may have been the last place he used his real name.

In March or April 1989, Tom Billman arrived in Estepona, an idyllic seaside town on Spain's Costa del Sol. He introduced himself as George M. Lady, an American businessman. Most people knew him as George, but a few expatriates jokingly called him "Jorge," the Spanish equivalent. Just what kind of business he was in, Billman never said. One Estepona resident, Pearl Slaney, an Irish expatriate, remembers several futile attempts to learn more about him. "The first time I met him I said, 'Where in America are you from?' He just said, 'All over.' If you tried to get him in conversation he would switch to something else," she recalls. "He was secretive -- something of a loner."

Shortly after arriving, Billman artfully established his George Lady persona when he hosted a lavish cocktail party aboard the Gloriana Dee, the 44-foot motorized yacht he had just purchased for $318,000. Among those invited were Pearl Slaney and her husband, Bill, a retired British businessman who had met Billman -- known to him as George Lady -- only briefly once before. An acquaintance of Slaney's who took an interest in everyone's affairs remarked that he had not been aware Slaney was a friend of George Lady's. "Oh yes," joked Slaney, dismissing the matter. Later that evening, the man approached Billman and Slaney, asking how long they had known each other. "Oh, it must be how long? Ten years?" chuckled Billman. Slaney nodded his assent. That casual remark cloaked the newly arrived Billman in credibility. "The word spread that someone had known him prior to his coming to Spain," recalls Slaney. "It's very clever when you think about it." Months later, after Billman fled, the remark reached the local police, and Slaney found himself suspected of being a Billman accomplice. It took him hours to extricate himself from a police inquiry.

Billman rented a luxury flat in the Bahia de Estepona, a one-bedroom apartment with marble floors. But he spent little time there. The Gloriana Dee was to become his home and his floating office. He hired a 42-year-old British skipper, Paul Manning, and his wife, Pat, as crew.

Billman also purchased a 45-foot yawl, a sleek two-masted vessel with a gold stripe along its waterline. The price: $102,000. The vessel had satellite navigational aids, teak trim and two spacious cabins. Its name was the Altair, and its elegant profile graced a popular postcard sold to tourists. But Billman had little interest in the Altair. According to Paul Manning, he only took the boat out once -- for a half-hour trip to test its seaworthiness.

Throughout his time on Spain's Costa del Sol, Billman was never short of cash. Pat Manning recalls that in a safe, hidden behind the headboard of his bed in the master bedroom, Billman kept up to $60,000 worth of British sterling, Swiss francs or Spanish pesetas in manila envelopes. Next to the cash was a leather billfold stuffed with documents and a passport in the name of George Lady, which Pat Manning routinely presented to harbor authorities on Billman's behalf. Billman also had access to money in Swiss banks and accounts at the Bank Indosuez in nearby Gibraltar for yacht expenses.

Not content with the Gloriana Dee as it was, Billman put in a satellite navigational system and other improvements, $80,000 worth in all. He also installed a $1,600 stereo system on the flying bridge to supplement the stereos already in the salon and his own master bedroom. The sounds of country and western and '60s rock-and-roll tapes often filled the boat. Among his favorites: Roy Orbison, Patsy Cline and Jim Reeves. "He missed America," recalls Paul Manning. Listening to the tapes, Billman sometimes sank into a silent melancholy.

Still, there was little in Billman's demeanor that hinted at remorse. Aboard the Gloriana Dee, he entertained new-found friends, drinking a mix of gin and vodka, or Beck's beer with a dash of tomato juice. He ate most meals in town, though he liked a steak now and again on board the boat. The meat was to be blood red. At breakfast he took his eggs runny -- "a minute and a half" -- recalls Pat Manning. Billman had T-shirts made with the name of the yacht emblazoned across the front. These he wore himself and gave to the Mannings and regular guests. He often sat at the bow of his vessel chatting with Manning -- "Captain Paul," he called him -- or taking over the wheel. His usual dress was shorts, sneakers and dark sunglasses. The huge C-shaped scar on his right knee -- the one described in wanted posters -- was in plain view. "He was terribly relaxed," says Pat Manning.

But to the Mannings, there were increasing hints that something was amiss. Their employer rarely spoke of his family, referring only elliptically to his daughters and son. He often retreated to his cabin for long periods, drawing the door closed behind him. The Mannings would hear Billman's stereo and they knew not to disturb him. Billman was also racked by back and neck pains. In his bathroom were drawers full of ointments and painkillers for his back and antacids for his frequent bouts with dyspepsia. He joined a local health club but was unable to exercise. On the top deck, he attempted to do stretches on an outspread towel. He took a molded back rest with him when he moved from chair to chair and tried several electric devices intended to relieve his back discomfort, which at times was so severe that he had to be helped off the boat. He frequently saw a local chiropractor.

There were other signs too that Billman's fugitive lifestyle was taking its toll. Despite his fortune, his flight to avoid prison had made him a prisoner of another sort. He was isolated -- he speaks no foreign languages -- and unable to trust anyone. Ever on guard not to reveal his true identity, he had to conceal even the strain of his dissembling. Back home, he had left his family under the emotional and legal cloud of a federal investigation and his disappearance. He had been close to his son, Charlie, named for Billman's father, but last year he missed Charlie's graduation from the University of Virginia.

One of the few people Billman kept in touch with was Barbara McKinney, a former EPIC executive who had been his mistress and was indicted along with him. His telephone conversations with her were secretly recorded by postal inspectors. At times Billman sounded defiant, at times disdainful, of prosecutors, dismissing them as "idiots." Increasingly he spoke of wanting to withdraw into himself. "The world has changed so much in the last six or eight months, you can't believe it," he told McKinney. "I just want a big zipper, a big black hole . . . zip it up tight."

By May 1989, only six months after leaving the United States, he seemed weary of the chase. "The whole thing just scares the {expletive} out of me," he said. He told her he would soon stop using the telephone altogether. McKinney ex- pressed concern for him. "Hey, I worry about me too," he said. "I've been drinking too much and eating terribly." His dreams, he said, were "incredibly weird." Said Billman: "Every sound at night that I hear I wake up and have just an instant of sheer terror, until I identify the sound . . . I know that's insane. I mean, it's not a rational act because if something's going to occur, certainly waking up and being afraid is not going to help it. On the other hand, I can't run the guy who's in there . . . He won't listen to me."

Billman, a man who thrived on being in control, sounded at times as if he had stepped into a Dantean nightmare where the damned are devoured by their own appetites. He had his money, his yachts and a mistress, but life seemed joyless. "What do I care? I can't get really excited about a lot of things," he told McKinney. "Basically I'm excited about the sunshine and the sunlight and staying in it."

But by day the charade continued. Habituated to corporate life, accustomed to engineering complex financial transactions, Billman could not restrain himself from planning the few things still under his control -- the reconfiguration of the yacht's instrumentation panel or a regimen of back exercises. On graph paper, with columns for days and weeks and months, he meticulously plotted the passage of time. "He was always writing things down," says Pat Manning. "He was always planning."

Frequently, he would leave Estepona for weeks at a time, crisscrossing the Continent. Upon his return, the Mannings would ask him about his trip, but they soon learned not to press him. "It was always 'Europe,' " recalls Pat Manning. "It was always very vague." From ticket stubs and casual references, the Mannings learned Billman was a frequent visitor to London, flying Gibraltar Air, always first class. Pearl Slaney remembers telling Billman something of her native Ireland. " 'Oh,' " he blurted out, " 'I was in Dublin last week.' " But he dodged subsequent questions about the trip.

U.S postal inspectors, New Scotland Yard and authorities throughout Europe have pieced together some of Billman's travels, a mix of business and pleasure. Between April 24 and October 10 of 1989 he visited London at least six times. Each time he stayed at the Carlton Tower, a five-star hotel in Knightsbridge near Harrods department store, where rooms go for about $540 a night. One visit to the hotel, on May 17, was recorded as a "day use" only. Billman's longest stay was a week beginning June 7th -- his 49th birthday.

As a fugitive, Billman still conducted some business, contacting former associates in Europe, transferring funds and directing the last vestiges of his operations. On March 23, 1989, Billman telephoned Michael Dee, a real estate investor on the isle of Jersey. He directed Dee to transfer funds to Barbara McKinney. Dee could only reach Billman by leav- ing messages on a London answering machine.

Each time McKinney picked up her wiretapped telephone, a reel-to-reel tape recorder began turning in the Fairfax County office of David Cyr. Investigators collected about 150 tapes, intercepting five conversations with Billman. Each time he called from a public telephone, not from his yacht. In the background could be heard the sound of clinking glasses and the periodic ring of tokens being fed into the telephone. Their language was often cryptic. In one such conversation, on May 18, 1989, Billman informed McKinney that he had transferred $500,000 into a Detroit bank account for her. (The money was subsequently seized by federal authorities.)

Billman: It's my understanding that the eagle has flown and landed on your end. Is that correct?

McKinney: Oh, ah, I've not been told.

Billman: Well, that's, ah, it's, ah, it should be done, so -- ah, normal tomorrow.

McKinney: Well, that's ah . . . that's wonderful. I, I think I understand, the word "normal."

The encoded conversation then melted into lover's talk. "I miss you a lot," Billman told McKinney. "I'm glad, 'cause I miss you," she answered. "I've been hugging that bear so much."

Billman took frequent excursions on the Gloriana Dee to neighboring ports, sometimes hosting lavish parties on board. On July 30, 1989, Billman and crew took the Gloriana Dee to Gibraltar -- "Gib" as the local ex-pats call it. There, Billman visited a law firm, Isola and Isola, which had set up two offshore corporations -- Glenshee Ltd., which owned the yacht Altair, and Quisto Investments Ltd., which owned the Gloriana Dee. With checks drawn on a Swiss bank, accounts were opened in both corporations' names at the Bank Indosuez. As with his myriad corporations in the United States, it is unclear how many other such entities he had, or what their purposes or assets were. "He never discussed his business," says Paul Manning.

After four days in Gibraltar, Billman wanted to take the yacht across the Strait of Gibraltar to Casablanca in Morocco, but Manning persuaded him to go instead to Tangier, which was closer. There, for three days, Billman, the Mannings and three guests partied and relaxed. Billman hired a cab and instructed the driver, named Abdul, to be on call around the clock as they explored the city. One afternoon Billman returned from a shopping spree, his arms filled with fezzes and djellabas -- the traditional Moroccan hats and flowing gowns -- for everyone. That evening Billman and the others dressed in Moroccan garb and partied on the boat. The next day he posed for a picture on the dock at Tangier, his arm draped over the shoulder of a local gendarme who was inspecting papers. "Take one of me," Billman playfully called to Paul Manning. A copy of that picture would torment his pursuers.

On August 6, 1989, Billman left Tangier, directing Manning to take the yacht to Puerto Sherry, where they arrived about 10 p.m. at a restaurant that seemed intent upon closing. No sooner had the group ordered than the waiters began stacking chairs and turning up the volume on the television set. Billman was incensed. He ordered the waiter to turn it down. The waiter did, but moments later turned the volume up again. Billman's face flushed. He swiveled his chair around and glared. "If you don't turn that television down, it's going straight through that window," he warned. No one at the table doubted he meant it. The waiter promptly turned the television off.

The yacht returned to Gibraltar, where Billman informed Manning he was getting off. He directed Manning to take the yacht on to Palma, Majorca, where he would rendezvous with them in late September. For the next two weeks, Billman apparently visited his Danish mistress in Copenhagen. Hotel records show that from September 9 to 23, 1989, a George Lady stayed at Copenhagen's most luxurious hotel, the D'Angleterre. His $900-a-day deluxe suite was furnished in 19th-century mahogany and looked out over King's Square. The total bill came to nearly $18,000. When he returned in late September, he brought a gift for Bill Slaney. Slaney recalls the Danish wrapping paper. Inside was a solid brass ship's bell. "Give that a good ring and I'll hear you," Billman told Slaney, casting a mischievous eye in the direction of the distant Moroccan shore. IN THE SUMMER OF 1989 FEDERAL investigators learned that Billman's wife, Clare, who had never been implicated in any wrongdoing, was planning a trip to Belgium. Clare Billman still lived in the family's elegant home on Old Georgetown Pike in McLean, and investigators decided to shadow her, hoping she might lead them to her fugitive husband or at least to some of the funds he had transferred overseas. U.S. authorities made plans to secretly accompany her -- "baby-sit" her -- on the flight so that they could ID her for New Scotland Yard's personnel waiting at London's Heathrow Airport, and later for the financial fraud team in Brussels. Scotland Yard would shadow her in Heathrow lest she give Cyr the slip or deviate from her Brussels itinerary. Cyr arranged with an airline supervisor at Dulles International Airport for a seat close enough to observe Clare, but not too close. Spotting her in a waiting area, Cyr telephoned Brussels and alerted agents to watch for a woman wearing a black top with white polka dots.

At 5:55 p.m. on August 25, 1989, when Pan Am Flight 106 lifted off, Cyr was sitting eight rows behind Clare Bill- man. From London, they flew on to Brussels. There, Belgian authorities, alerted by Interpol, put her under surveillance. Outside the Brussels town house where she stayed, Belgian authorities arranged to have teams of cars parked at each end of the block. Later a "stationary observation post" was set up in an apartment across the street. Anyone entering or exiting the town house was photographed by a tripod-mounted camera with telephoto lens and by a videocamera with a nightscope.

Five minutes after Clare Billman entered the town house, a bald-headed figure matching her husband's description appeared outside and called up to a window. Belgian authorities were not even sure who the man was calling to, but they told Cyr the words were something close to How are you, darling? I've missed you -- in English. Brussels authorities radioed Cyr, who was rushed through the city streets, sirens blaring, blue lights flashing. Surveillance photos of the man were expressed to federal prosecutors in Baltimore. They quickly determined it was not Billman, only someone who looked vaguely like him.

When Clare Billman went sightseeing the next day in Brugge, Belgian authorities were on her train and following by car. When she rode a horse-drawn carriage, Belgian authorities were following in a carriage, communicating via radio, photographing her every move.

Some days later, she was observed entering the Brussels Hilton and emerging with a large shopping bag bearing the name of a Parisian shop, Faubourg Louise. Cyr and his team decided not to stop her but to alert customs officials to intercept her when she arrived at JFK Airport. (JFK's customs officials never got that message, and Clare Billman passed with a polite nod.) On the commuter flight from JFK to Dulles aboard Pan Am 4955, Cyr sat immediately in front of her. "I could hear her talking to her seatmate about her husband and the savings and loan thing," recalls Cyr. "I was sitting there, with my ear right up against the seat making believe I was sleeping. But the engines were so noisy that I could pick up only a fragment here and there." Cyr says he still wonders what was in the shopping bag, but now believes Clare Billman's trip was entirely innocent.

When Clare Billman tries to talk about her fugitive husband, she must fight back the tears. "You're opening some doors that I'm trying to close," she says. She says she knew at one point that she was being tailed in Europe and even took a picture of the surveillance car. "It's frightening, absolutely frightening," she says. "We stay to ourselves -- that way, we know who we can trust. Otherwise, it's wicked out there." She is reluctant to speak on the phone. "Do you realize my phones are all tapped, so anything I say to you is also being said to whoever these little green men are?" (U.S. authorities say her phones are not tapped. The only time her conversations were recorded was when she dialed Barbara McKinney's line.) The door that Clare Billman seeks to close on the past will remain open a while longer, however; authorities are still trying to seize the McLean home. The travels of their son, Charles, also have been a subject of investigation. His picture was hanging beside his father's in a Spanish police station, according to one Estepona resident, and the U.S. Customs Service has scrutinized so-called "lane checks" of returning Americans lining up at Customs for any evidence that Charles may have visited his fugitive father. Those checks have come back negative. OVER THE MONTHS IN ESTEPONA, BILL- man and the Mannings appeared to be close friends, though he never confided his secret in them. Then, early in October, Billman's mood changed. "It was sad really, that day," remembers Pat Manning. "I thought something was wrong. I said to Paul, 'George is going to leave us.' "

The next day -- October 7 or 8, 1989 -- Billman announced he would be returning to the United States for business. Billman told the couple he was giving them power of attorney over the yachts. "He said, 'If you don't hear from me, sell the boat, take out what you're owed, put the rest in the bank account -- and if anything happens to me, look after the kids,' " recalls Paul Manning. "He said, 'I'm like an Exocet missile -- I'll find you, so you won't get away with the money.' " Pat Manning says Billman's eyes moistened as he said goodbye. "He put his arm around me and gave me a kiss on the cheek. I could see he was upset. And then he shook hands with Paul and said, 'I'll see you in the spring.' "

There was still the matter of signing the power of attorney papers. Billman arranged to meet Niamh Whelan, an employee of a Gibraltar law firm at the Gibraltar airport shortly before his flight for London. (Registration records show a "George Lady" stayed in London's Carlton Tower the nights of October 9 and 10.) At the airport, over gin and tonics, Billman signed the power of attorney -- in the name George M. Lady -- and chatted with Whelan. "He talked about going to Norway and getting a log cabin there for the winter," she recalled. It was one of many false trails he left behind. Then Billman departed, sticking Whelan with the bar tab. Several months later Whelan received a call from him saying he had misplaced the Mannings' telephone number. Whelan asked where he was calling from. He paused for a moment and then said, "Thailand."

In November, the Mannings received a call from Billman. He telephoned them in England, where they were visiting Pat's family. "How you doin', Pat?" he asked. "You thought I wouldn't find you." The conversation was brief and cheerful. They heard from him once more, in Estepona, in early December. "He asked did I fancy taking the boats to Turkey?" says Paul, who agreed to make arrangements. Billman promised to call again in January. He did not.

The Mannings set about preparing the Gloriana Dee for the winter and repairing some storm damage. They said they put $35,000 of their own money into the boat, assuming Billman would repay them. But the United States has effectively frozen many of Billman's assets.The Gloriana Dee now sits in dry dock in Soto Grande, awaiting sale. The Altair has been impounded in Palma.

U.S. Postal Inspector Cyr will not discuss how authorities discovered in the fall of 1989 that Billman was using the George Lady alias or how they came upon Estepona. But from the Mannings and others familiar with the investigation, this much is known: Billman wrote an American Express traveler's check, signing it "Tom Billman," not "George Lady." The check went to someone who had known Billman before he was a fugitive. Apparently Billman thought there would be nothing to link the check to his alias or his whereabouts. He was wrong. According to one knowledgeable source, postal inspectors saw the check and subpoenaed American Express to find out what became of the other traveler's checks in that numerical series. That led them to his alias and ultimately to Estepona.

As eager as Cyr was to pursue the lead immediately, his police powers ended at the U.S. shore, and he knew that any U.S. investigation conducted overseas was a matter of extreme political sensitivity. So Cyr asked Stan Bielinski, then the State Department's security officer at the Madrid embassy, to do the initial field investigation and to try to persuade Spanish officials to allow Cyr and others to temporarily work in Spain. Cyr apparently was also fearful of prematurely alerting Billman to the fact that authorities knew his alias. Months passed as the investigation in Spain continued and the diplomatic groundwork was prepared.

It was not until May 1990 that investigators arrived in Estepona -- half a year after Billman had cleared out. They began to sift through Billman's possessions for clues. Left behind on the yacht were Billman's clothes, a briefcase and papers with indecipherable scribblings. On the dresser in his bedroom they found a business card:

George M. Lady

Bahia de Estepona no. 67

Estepona (Malaga) Spain

tel. (952) 80-4-80

In the bookcase were a variety of books, among them Companies and Taxes in Lichtenstein, a German dictionary and various spy novels. The book Billman was reading just before he disappeared was Frederick Forsyth's The Negotiator -- the same book, as it happens, that Cyr and another investigator had taken to Spain. "The difference between Tom Billman and us is that we buy paperbacks, and he buys hardcovers," mused Cyr. Billman apparently never finished the book. The marker was midway through the volume, much of whose action takes place in London and the Costa del Sol, mirroring Billman's own travels.

In his wardrobe were several pairs of new socks, stickers still attached. They had been purchased on sale at Eddie Bauer for $2.99. But the most puzzling discovery was to be made in the bedroom closet. There, investigators found, sewn inside a sport coat, a large embroidered label: "SAS Custom Apparel, 5219, Tom J. Billman." Billman had specifically asked the Fairfax store not to include personalized labels about a year after getting the Lady passport. Investigators wonder whether leaving the label in his coat was simply a glaring oversight, a taunt intended for those in pursuit or evidence of some subliminal wish to be found.

Cyr and his team are troubled by Billman's apparently sudden departure from Estepona. They wonder whether someone stateside may have tipped Billman off that investigators were on to him. IN THEIR HUNT FOR TOM BILLMAN, investigators have sometimes found themselves pursuing phantoms. Last August, a federal prisoner named Joey in a Midwestern penitentiary told law enforcement officials he knew Billman's whereabouts. Joey, who was jailed for interstate transportation of stolen property, had some tantalizing information that he was willing to exchange for a good word to the Bureau of Prisons -- and for the $200,000 reward on Billman. Joey claimed that Billman was living in a villa outside Tangier with a contact of his, a fugitive former member of Italy's terrorist Red Brigade. That seemed plausible, given Billman's interest in Morocco, which has no extradition treaty with the United States. Joey initially proposed having Billman kidnapped, authorities said. "Please, no kidnapping," Cyr advised.

Joey came up with an alternative plan. He suggested luring Billman out of hiding -- using a particular woman as bait. Cyr describes her this way: "Someone who worked for casinos and catered to the high rollers and kept them at tables longer -- very good-looking, she knew how to get along with the high rollers, keep them happy." A federal prosecutor put it more bluntly: "a hooker." The woman lived in Las Vegas and Los Angeles. Cyr recalls she telephoned to tell him she was on her way to Morocco. He briefed her on Billman, his idiosyncracies, his scars. Then she reportedly left for orocco.

Some time later, another woman called federal investigators. She had a foreign accent, and was reportedly going to insinuate herself into Billman's life. Word came back that Billman was using the alias "Michael Mann" or "Michael Davidson" and was protected by two Israeli bodyguards. Authorities were also told that the first woman's "loyalties were shifting." She was less inclined to cooperate. "That made sense," said U.S. Attorney Willcox. "If you know Billman, he likes to shower his women with furs and jewels." Investigators, who finally lost touch with both women, arranged through the State Department for the Moroccan authorities to be ready to close in.

U.S. authorities were then told that Billman had been tipped off by a corrupt Moroccan policeman. Billman, panicking, supposedly had his bodyguard buy a Range Rover and made a break for it. U.S. authorities were given the color of the car and the license tags. Then came word that the Range Rover had been spotted in front of a five-star hotel in Marrakech. Moroccan authorities closed in. They found no sign of Billman or the Range Rover. Joey's confederates claimed that Billman "slipped through the net into the desert," says Willcox.

Joey insists he had no reason to lie and that his information was accurate. "The government blew it," he says. But when it was over, U.S. authorities reached the opposite conclusion. "It was bogus," says U.S. Marshal Allen Trujillo. Joey, he says, "was a good con man."

The Tangier tip is not the only one that has sent law enforcement officers scurrying. Last April 9, a woman in Gunriver, Ore., called the U.S. Marshals Service and swore she saw Billman dining at the Sun River Lodge. Two U.S. marshals were dispatched to interview waiters and management. No sign of Billman. A young girl in Spain was convinced she met Billman in a spa. A former employee of Billman called the Marshals Service two months ago swearing she saw him in Old Town Alexandria. Investigators are now working on a tip that Billman is in the Caribbean.

The only person who may know how to reach Tom Billman is Phillippe Neyroud, a courteous attorney in Geneva. Neyroud, who came to public notice as an attorney for Iran-contra figure Albert Hakim, is believed by U.S. authorities to represent Billman. But Neyroud coyly avoids any confirmation. "If I were representing Mr. Billman, I guess it would be as an attor- ney to a client," he says, "and therefore I would not be able to speak about the matter."

"Can I give you two telephone numbers and ask that Mr. Billman call me?" asks a reporter.

"Okay," says Neyroud, repeating the numbers. "If this gentleman calls me -- I don't know whether he will -- but if he calls me, I will pass that message to him."

ACROSS THE HALL FROM CYR'S OFFICE in suburban Merrifield sits his partner, Postal Inspector Randy Willetts. On the wall is a massive map of the world, with a tiny red pin stuck in the Mediterranean, somewhere between Spain and Morocco. That pin represents the last sighting of Tom Billman. Mid-Atlantic on the map is a picture of a gloating Tom Billman -- satyr-like -- looking down upon Willetts at his desk.

Willetts jokingly removes the red pin marking Billman's last known whereabouts and wishfully transports it across the Atlantic to Washington. If that day ever comes, Cyr says, he knows just what he would say to Billman. "I'd say, 'Welcome home. Glad to see you, Tom.' " Willetts is prepared with another message: "I'd say, 'You're under arrest.' "

But that's just wishful thinking: At this writing, Tom Billman continues to torment those who have invested so much time, public money and professional stature in capturing him. The Billman case is like a fish bone in the throat of U.S. Attorney Willcox, whose tenure as federal prosecutor is about to end and whose quest for a job in the private sector is about to begin. His re'sume', replete with courtroom victories, contains no mention of the Billman case. To Willcox, Billman represents far more than an embarrassing blemish on his career. "It's his passion in life," says Sweeney, the Maryland deputy attorney general. Says Willcox: "There are no heroes in the Tom Billman story. He was able to hoodwink the state regulators because the state regulation system was totally ineffectual and inefficient. He was able to browbeat lawyers and accountants into blessing his moves, and he was able to keep not just one step but 10 steps ahead of investigators because our system is premised upon a healthy dose of good faith. And if you have a businessman or a bank owner who chooses not to operate in good faith, then likely he's going to have a huge head start -- as Tom Billman did."

The advantage is likely to remain with Billman. It takes a month or more of investigative work and delicate diplomatic maneuvering to get the Swiss to tell authorities of bank transfers. Laments Willcox: "Tom Billman could make 10 wire transfers in a day. It would take us 10 months to trace the money that he moved in that one day."

Cyr is out of leads, but not quite out of hope. For months, he kept $500 cash with his passport, ready to leave at a moment's notice. A few weeks ago he gave the cash to another inspector, convinced he would not be needing it soon. "We're really waiting for a break," says Cyr. On his office door is a cutout of Billman's face, and on his bulletin board, yet another photo of Billman. Behind him are locked drawers filled with documents, recordings from wiretaps and files related to real and imagined sightings of Billman. In his desk drawer are diaries chronicling the chase. In Baltimore are more than 50 file drawers on the Billman case.

Ironically, Cyr notes, Billman's most brilliant act of deceit -- obtaining a false passport a full three years before he used it -- may well be his undoing. On the one hand, the longer Billman stays overseas, the weaker becomes the complex fraud case stemming from the S&L scandal; memories fade, and prosecutorial passions slacken. But the obtaining of a fraudulent passport is an easy crime to prove, and the evidence is preserved forever. And once the indictment is handed up -- as it was on January 25, 1990 -- there is no statute of limitations. Ted Gup is an investigative reporter in the Washington bureau of Time magazine.