A Maryland judge today offered Jeffrey A. Levitt, former Old Court Savings and Loan president, several weeks to find a way to reduce losses at the troubled thrift, saying he wanted to give Levitt a chance to show he is not "the villain" in the thrift collapse.
Levitt "has a sincere interest in getting depositors their money as quickly as possible," said Baltimore Circuit Court Judge Joseph H.H. Kaplan, who ordered the savings and loan into receivership Friday. "He feels very crushed by the whole thing. He has been painted -- whether rightly or wrongly -- as the villain. He wants to show that he's not.
"I'm willing to give him that opportunity."
Levitt is accused in a $200 million civil suit of fraudulently obtaining money and property from the thrift over a two-year period.
Levitt's attempt to refinance two large properties, in which Old Court has an interest of at least $50 million, might enable the state government to make the virtually defunct thrift "a viable banking institution" that could be sold to a financially solvent bank or savings and loan, Kaplan said.
The judge said Levitt's extensive knowledge of past Old Court transactions could be crucial to reducing the thrift's potential $175 milllion loss.
"It may be a real opportunity to bring this thing to a semi-happy conclusion," Kaplan said after the closed meeting with Levitt, his attorney and attorneys for Old Court depositors and the Maryland Deposit Insurance Fund (MDIF), the state agency now controlling the thrift.
Today's decision by Kaplan represents a dramatic departure from the strategy the state has used in dealing with Levitt, a colorful figure who in the last six months has come to symbolize the excesses of Maryland's savings and loan industry.
Reports of mismanagement of Old Court plunged the state's $9 billion industry into chaos in May. Depositors of two associations, as well as Old Court, have no access to their funds.
Since the crisis began, state officials have spurned Levitt, accusing him in the civil suit of masterminding perhaps "the largest financial fraud" in Maryland history. Levitt, one of several former Old Court officers named in the suit, has invoked his Fifth Amendment right against self-incrimination in refusing to give pretrial depositions in the case.
Levitt has cited the constitutional right largely because of a continuing state-federal investigation into any criminal wrongdoing at the thrift, according to his attorney.
The 90-minute meeting between Kaplan and Levitt in the judge's ornate 19th century courtroom here brought together two men who have become household names in Maryland's savings and loan crisis. Their last exchange occurred in 1979, when Levitt lied to Kaplan during an appeal of a city housing violation. Kaplan's testimony to the Maryland Attorney Grievance Committee about the incident contributed to Levitt's suspension from legal practice later that year.
This morning, Paul Mark Sandler, Levitt's attorney, greeted Kaplan in the judge's outer office by saying, "Do you know Mr. Levitt?"
"Sure do," the judge replied.
After his meeting with Levitt, Kaplan told reporters he was "willing to give Levitt every opportunity" to aid the orderly liquidation of Old Court's extensive real estate holdings.
Levitt was "very cooperative and has come up with some reasonable ideas," said Kaplan. The judge also indicated that Levitt's role might be expanded if the former Old Court owner succeeds in a "good-faith" effort to help the state obtain a maximum return from the refinancing of the properties.
Shale D. Stiller, the attorney for MDIF who attended the meeting, brushed past reporters afterward, saying he would not comment.
MDIF Director Melville S. Brown said he would welcome Levitt's assistance "if it happens. We're still suing him, so nothing's changed there. If he can help, fine."
H. Robert Erwin Jr., attorney for a large depositors group, said, "To the extent Levitt's efforts can be helpful to the receivership, we would encourage it. To the extent he can provide information, that's good, that's helpful."