The Baltimore law firm of Venable, Baetjer & Howard has replaced the head of its tax department, who was mentioned prominently in a recent state report on the origins of Maryland's savings and loan crisis, firm spokesman Benjamin R. Civiletti said yesterday.
Civiletti, who heads the firm's Washington office, said tax department head Gerald M. Katz, 48, asked Monday to step down for reasons that Civiletti said were "partially related" to the Jan. 9 report by special counsel Wilbur D. Preston Jr. The move was announced yesterday and effective immediately.
Katz, who could not be reached for comment, will continue to practice law with the firm.
Preston's report was sharply critical of Venable's "simultaneous" representation of the Maryland Savings-Share Insurance Corp., one of the main bodies responsible for regulating that state's $9 billion thrift industry, and "habitual violators" of MSSIC rules.
Katz, a well-regarded tax specialist who headed the firm's tax department for seven years, did legal work for Old Court Savings & Loan of Baltimore, whose collapse triggered the thrift crisis, and Old Court owners Jeffrey Levitt and Allan Pearlstein at the same time the Venable firm was general counsel to MSSIC, according to the Preston report.
According to the report, Katz, a 1963 graduate of the Georgetown Law Center, made a $184,000 profit in a real estate venture with Levitt and Pearlstein that should have been reported to MSSIC. He also advised Levitt in another real estate transaction in which Old Court paid for two corporations later transferred to Levitt and others "with Old Court receiving nothing in return," the report said.
Referring to those deals, Civiletti said in an interview Saturday, "If they came up tomorrow, not one of those transactions would we be associated with . . . . Those are the things that, looking back, we don't want to do."
Civiletti said yesterday that a change in the leadership of the department had been in the works for several months. But, he said, the department head "has an enormous number of duties, as well as practicing law, and Gerry felt that he ought to step down so he'd be relieved of those department head duties, devote himself to the practice, and have time to devote to whatever other issues come up or whatever other information is sought from him or whatever other cooperation is sought from him in connection with the Preston report . . . . That seemed to make good sense to us, and we thought it was in the firm's interest and in his interest."
Civiletti said the new head of the tax department will be Bryson L. Cook, 37, who had been the administrative partner in charge of the department.