Jeffrey A. Levitt, the embattled former president of Old Court Savings and Loan Association, lost two legal skirmishes in Maryland courts yesterday, including one aimed at overturning the $1,000-a-week personal spending allowance imposed on him and his wife two weeks ago.
The state Court of Appeals, Maryland's highest tribunal, refused to hear an appeal of the spending limit imposed on Levitt and his wife, Karol, by Baltimore Circuit Court Judge Joseph H.H. Kaplan.
The appeals court gave no explanation for rejecting the Levitts' request for a hearing on Kaplan's Sept. 18 order. Paul Mark Sandler, the couple's attorney, said he would continue to press the Levitts' appeal by asking for a ruling on the constitutionality of the spending limit.
Kaplan had imposed the weekly spending allowance on the Levitts at the request of the Maryland Deposit Insurance Fund (MDIF), the state conservator of Old Court that is attempting to manage the tangled financial affairs of the Baltimore-based thrift association. Old Court has been at the center of Maryland's savings and loan crisis for four months, and its former chief officers, including Jeffrey Levitt, are the targets of a federal-state criminal investigation.
In a separate action yesterday, Judge Kaplan ordered Levitt to relinquish to MDIF control of 360 acres in Florida that had been purchased with Old Court funds.
Attorneys for MDIF told Kaplan that the Old Jacksonville Land Co., a Levitt-owned entity, was given $3.5 million by an Old Court subsidiary in February for purchase of the land.
Old Jacksonville then immediately sold back the land to the same subsidiary for $4 million, and Levitt took a $500,000 profit in the sale, according to attorneys for MDIF.
Kaplan ordered Levitt to relinquish the Florida property by Monday. Sandler said he would ask a higher court to postpone Kaplan's order.
Kaplan's order came as state government officials and Chase Manhattan Corp. worked against an Oct. 31 deadline to complete a deal under which the giant New York bank company would purchase the troubled Merritt Commercial Savings and Loan Association of Baltimore.
After a meeting with Gov. Harry Hughes and other state officials yesterday, Senate President Melvin A. Steinberg described the Chase-Merritt deal as "imminent."
Other sources said several issues remain to be resolved between the state, the New York bank company and Merritt owner Gerald Klein. They include the disposition of a Baltimore office tower being constructed by Merritt, the precise amount of money the state would guarantee Chase for assuming the thrift's loan portfolio and exactly what price Klein would get from the sale of his association.
The Hughes administration was said by sources close to the negotiations to be wary of asking the General Assembly to approve any deal that would appear to enrich Klein and at the same time cost as much as $30 million in state insurance funds.
Chase's acquisition of Merritt is the key component of a package deal that would include the bank's purchase of two other, healthier thrifts, Chesapeake Savings and Loan of Annapolis and Friendship Savings and Loan of Bethesda. Those two mergers have already been announced, but the larger, more complicated acquisition of Merritt has been the subject of negotiations for weeks.
Some sources close to the negotiations said yesterday that time was beginning to be a factor for state officials because the Friendship and Chesapeake purchase agreements expire at the end of October unless approved by the legislature and federal regulators.
The Hughes administration, said one thrift industry source, "stands to blow this whole thing. There's a good chance Chase will walk. The potentiality exists for the whole thing to collapse."
But a spokesman for Chase said, "We feel we're making progress. It's a complicated series of negotiations. Our intent is to strike an agreement that is satisfactory to everybody. These things take time."
Also yesterday, MDIF spokesman Norm Silverstein said Vanguard Savings and Loan Association of Baltimore received full insurance coverage by the Federal Savings and Loan Insurance Corp.