The attorney for the court-appointed conservator of Old Court Savings and Loan Association is considering filing suit to freeze the personal assets of Old Court's principal owner or to place the institution in receivership, sources said yesterday.
Shale D. Stiller, a prominent Baltimore lawyer who is representing the conservator, the State of Maryland Deposit Insurance Fund, is expected to announce today what legal action he may take against the troubled thrift.
Stiller could not be reached for comment yesterday, but state government sources and knowledgeable members of Baltimore's legal community said he was considering several options, including filing a civil suit to freeze the personal assets of Jeffrey A. Levitt, the multimillionaire principal owner of Old Court, and asking a judge to place the financially troubled Baltimore thrift into receivership.
Baltimore Circuit Court Judge Joseph H.H. Kaplan, who has been supervising the conservatorship of Old Court since it was brought under state control May 13, said he granted Stiller the power to file such suits against Old Court several weeks ago. Kaplan added that he had been told that a civil suit by Stiller "was in the works."
Paul Mark Sandler, Levitt's attorney, described reports of an impending lawsuit as "news to me."
The internal management of Old Court, which reported assets of nearly $840 million this year, has been at the center of Maryland's savings and loan crisis since its earliest days. Published reports of questionable real estate deals and lending practices by Levitt and other Old Court officers helped touch off a run by customers at that and other thrifts around the state. Most Old Court depositors are barred from making withdrawals.
Maryland Attorney General Stephen H. Sachs is conducting a criminal investigation of Old Court.
With no criminal charge pending against Levitt, "It would be unusual for any conservator to try to seize or freeze assets," said a lawyer who represents a large Maryland thrift.
Another legal expert, who also asked not to be identified by name, said Stiller might argue in such a suit that Old Court depositors had been defrauded by officers of the thrift. "Stiller's only option at this point is to seize all of Levitt's assets -- bank accounts, home, furnishings, everything -- and place it all in a trust," this lawyer said.
The lawyer said placing Old Court into receivership would be a more drastic measure, tantamount to the thrift seeking protection under federal bankruptcy law.
If a Maryland judge ordered Old Court into receivership, Levitt and Allan Pearlstein, who each own roughly 40 percent of Old Court, and Jerome S. Cardin, who owns 18 percent, might lose their stock in the savings and loan, experts said. "A suit is important because it shows that somebody is trying to hold Old Court accountable for its practices," said one attorney who has discussed with state officials the possibility of legal action.
"The question is," he said, "what steps will be taken to recover every last penny of depositors' money?"