As deposits soared at Old Court Savings & Loan Association last year, enticed by interest rates on savings accounts that were among the highest in the nation, the thrift's high-flying president, Jeffrey Levitt, went into the airline business.
With the help of loans from Old Court, Levitt and his partners bought a succession of ever-larger and fancier airplanes, according to officials familiar with an ongoing criminal investigation of insider deals and other practices at Old Court that led to a crisis in the Maryland savings and loan industry this spring.
Levitt and his associates often used the planes to fly to sites around the country to look at projects in which Old Court invested in Florida, Tennessee, New York and elsewhere, according to those familiar with Old Court investments.
Pilots and airplane brokers who dealt with Levitt and his principal partner in the airplane ventures, Ocean City developer Walter L. Otstot, said the men had even grander plans: They considered buying a commuter airline in Florida, operating a charter service to gambling casinos in Atlantic City, and flying jet helicopters to islands off the East Coast. None of those ideas came to pass.
Instead, the adventures of what might be called Air Levitt plunged to earth this spring, along with the rest of Old Court's financial empire, which is now in state conservatorship.
Before the fall, according to records at the Federal Aviation Administration and the Maryland Department of Assessment and Taxation, and interviews with persons involved in the transactions, Levitt and his associates spent about $2 million, nearly all of it Old Court money, on five airplanes.
In one instance, Old Court paid $10,000 a month to lease back one of the planes it had financed, according to an official who has seen the thrift's records.
Attorneys for Levitt and Otstot declined to comment about the airplanes.
An Old Court subsidiary also participated in a proposal to develop an industrial park at the Montgomery County Air Park in Gaithersburg. Old Court Joint Ventures holds a 49 percent interest in Airpark Limited Partnership, and Old Court Savings and Loan lent that partnership $2.3 million.
The prize of the airplane fleet, a French-made twin-engine Falcon jet, sits at Manassas Municipal Airport, deliberately disabled by an airport official who said he won't let the jet fly until he gets money owed to him.
The purchase of the Falcon 10 "was quite a move up," said Bob Newcomer, a pilot for an Ohio construction company who met Levitt and Otstot after his company sold an airplane to them last year.
The green-and-white Falcon 10 is an executive jet that can fly at a top speed of about 500 mph and as far as 1,900 miles without refueling. Its pressurized cabin seats seven passengers, in addition to a pilot and copilot.
A state official familiar with Old Court transactions said records show the Falcon was financed with a loan of $1,001,921 last Nov. 2 from Old Court to Two-J Airlines Inc., owned by Levitt and Baltimore lawyer Jerome Cardin, a stockholder in Old Court. Two-J changed its name to Jay Aviation, Inc., on April 22, listing Levitt as president and Cardin as resident agent.
"That plane was used a tremendous amount until the savings and loan crisis hit," said Belton Gardner, pointing to the Falcon 10 sitting on the runway next to Dulles Aviation's hangar at Manassas Municipal Airport in Virginia.
Since that time, the jet hasn't budged, and won't, said Gardner, president of Dulles Aviation, until his company is paid for fuel -- by one account $16,000 -- plus runway and hangar fees owed on the Falcon.
FAA records in Oklahoma City also show a notice of a lien against the Falcon filed by Garrett General Aviation Services Co., a Los Angeles firm that apparently is owed money for service and repairs.
Belton said he believes the Falcon is for sale, for about $1.2 million, because an Alexandria aircraft broker "is sending people out here to look at it.
"But it's not moving -- not until I'm paid," said Belton, who said he has removed parts from the plane so it can't be flown.
The first two planes in the fleet were Piper Navajos, eight-passenger twin-engine propeller planes with top speeds of about 160 mph that cost about $125,000-$150,000 each. By the end of last year, each of the Pipers had been traded in on Merlin IIIs, eight-passenger twin turboprops with pressurized cabins that have a top speed of about 180 mph and cost individually between $300,000 and $400,000.
"After Levitt traded in his Navajo on a Merlin, Otstot decided he wanted a Merlin, too," Newcomer said. "When Levitt bought the Falcon, we joked about how soon Otstot would have to have one of those, too."
One of the attractions of Levitt's Merlin was that it once was owned by a president of Mexico, according to a Texas aircraft broker who sold the plane to Levitt.
Pilot Newcomer's employer, Ruhlin Construction Co. of Akron, has a Bell jet helicopter, and after Otstot saw it, Newcomer said, "they Levitt and Otstot were considering getting one too. They said it would be neat and could be used to visit some islands . . . . They also were trying to get something going with the casinos in Atlantic City."
The look-alike Merlin IIIs are based at Salisbury Municipal Airport on Maryland's Eastern shore. One of them is for sale, and the other, when it is not being used by Old Court's conservator to check on out-of-state investments by the thrift institution, is chartered to the U.S. Army as a way of meeting expenses.
The plane that started it all, the Piper Navajo, has gone to its reward: It was sold last Nov. 13 for $199,500 to CMS East, a Pennsylvania-based corporation that manages cemeteries in six states.