In Baltimore County, where the mixture of business and politics is a volatile brew that has brought down a number of public figures, real estate developer and attorney Jerome S. Cardin has long excelled in both without being tarnished.
Since May, however, when allegations surfaced about improprieties at the Old Court Savings and Loan Association of Baltimore, the 59-year-old lawyer has emerged as a key defendant in a civil suit brought by the state contending that Old Court principals engaged in what "may have constituted the largest financial fraud in the history of Maryland."
The former principal owner of Old Court, Cardin retained 18 percent interest when most of the stock was sold to Jeffrey Levitt and Allan Pearlstein in 1982. His law firm, Cardin and Cardin, served as Old Court's counsel before and after Cardin sold his majority interest.
Cardin and his attorney declined to comment on any matters for this story.
Cardin, whose family had operated Old Court as a conservative thrift for more than 20 years before he joined forces with Levitt, is enmeshed in a financial and legal tangle likely to last for years. The savings and loan is under state conservatorship, Cardin and his law firm are among 26 defendants in the $200 million civil suit brought by the state, and Old Court's activities are the focus of a joint criminal investigation by the state attorney general and U.S. attorney.
In Baltimore's close-knit Jewish community, Cardin's troubles are being watched with a mixture of disbelief, embarrassment and anger. As an elder in one of the city's most prominent political and mercantile families, Cardin has long enjoyed a reputation as a careful, astute businessman who made millions through shrewd real estate investments. Along the way, he has cultivated politicians and donated money generously to a variety of charitable causes.
As the Old Court story began to unfold in May, with its allegations of risky loans, insider deals and exorbitant fees to directors and owners, people who had known and respected Cardin for years defended him. Cardin was viewed in some quarters as an unwitting accomplice of Levitt, who was the driving force behind the savings and loan's spectacular growth.
"I have to assume Jerry didn't know about any improper dealings . . . because he's a bright businessman who knows there are things you can't do," said one veteran of Baltimore County politics who asked not to be identified.
Morton J. Macks, a Baltimore County developer who has been a business partner of Cardin's, described him as a person of "utmost integrity."
Court papers and interviews with persons familiar with the thrift's operations shed light on Cardin's role at Old Court:
* Attorneys representing the state conservator of Old Court, in a $200 million civil suit filed July 31 against the owners and directors of the association, allege that Cardin and his law firm received more than $1.3 million in "unearned, unconscionable and excessive" fees over a 21-month period that ended in May. Those fees, according to the suit, came from Old Court and four of its subsidiaries. Cardin and the other defendants have not yet responded to the suit.
The court complaint contends that Cardin was part of a "troika" that "dominated" Old Court and that included Levitt and Pearlstein. Also, with two of his sons, Cardin was a partner "in many of the affiliates of Old Court," the suit alleges.
* Cardin's law firm was paid a $9,000-per-month retainer for more than two years from an Old Court-related entity, Charles Street Title Co., according to two persons who were intimately involved with some Old Court operations. Those fees are not mentioned in the civil suit.
A retainer arrangement often involves a flat fee regardless of how much work later needs to be done. As it turned out, the Cardin firm's work for Charles Street consisted of occasional real estate settlement duties and answering legal questions about twice a week. Charles Street Title, which handled most of Old Court's real estate settlements, is wholly owned by Levitt.
* The settlement sheet last fall on a $6.5 million Old Court loan to two Eastern Shore developers for a housing project on Kent Island showed a $100,000 fee for a real estate consulting firm formed last September by Cardin and his sons Sanford and Steven.
That developer, Paul Linn, said in an interview that neither he nor his partner, T.C. Collinson, expected the $100,000 fee, and that they are currently disputing it with Chevy Chase Savings and Loan, which is managing Old Court's portfolio for the state.
Linn said that they had not heard of the firm, Cargol Consultants Inc., until they saw the fee on the settlement sheet. As far as the two developers knew, Cargol did no work on the loan for them.
Linn said the $100,000 fee was deducted from the loan proceeds he and his partner received. He doesn't know whether the fee was paid to Cargol.
* Levitt told one ranking employe of the Old Court empire that he and Cardin regularly met for breakfast at the Pikesville Hilton to discuss the business of Old Court, which in just three years was transformed from a thrift with $140 million in assets to the state's second largest savings and loan with more than $800 million in assets.
There are few, if any, Baltimore families with a richer political tradition than the descendants of a Polish immigrant named Harris Kardonsky, who settled there at the turn of the century. Kardonsky changed his name to Cardin and established a soda water company that was the foundation of the family's business interests. His sons set a political course that has continued to this day.
Two of those sons, Jerome Cardin's uncles Meyer and Maurice, served in the Maryland House of Delegates. Meyer Cardin was appointed to the city's Supreme Bench, the forerunner of the Circuit Court. Meyer Cardin's son, Benjamin L. Cardin -- Jerome Cardin's first cousin -- became in 1979 the youngest speaker of the House of Delegates.
Moving from the family's northwest Baltimore base to Pikesville in Baltimore County, Jerome Cardin took a somewhat different path. Except for serving as the president of a national law fraternity and one term as a Baltimore County magistrate in the 1960s, he has maintained a largely private profile, concentrating on his law practice, his diverse business interests and his fund raising for and backing of county politicians.
"He's been a force in the county for some time," said a Baltimore County political veteran. "He really organized the Jewish wards in his district."
Cardin not only worked with the old-line political powers such as Dale Anderson, a former county executive who was convicted of political corruption, he also successfully bridged the gap to the modern political era after election by district diluted their power. And in the contributions he raised, he has crossed party lines, supporting Republican U.S. Sen. Charles McC. Mathias Jr., for example.
In the summer of 1979, two officials of President Carter's reelection campaign organization traveled to Baltimore for a dinner meeting with Cardin to ask him to set up a local fund-raiser for the president.
Negotiations continued by phone for several weeks. The Carter officials recalled that Cardin asked them to set up a meeting with Veterans Administration officials to discuss the sale of computerized psychological testing equipment from a company called Psych Systems in which he was a major investor.
"It never became a stated quid pro quo," said one official who asked not to be identified. The officials said they ended negotiations because they felt uncomfortable discussing the fund raising and the proposed meeting at the same time.
Cardin prospered as a developer over the years. He built housing developments in Anne Arundel and Baltimore counties, and 20 years ago he invested in large tracts in Owings Mills that are adjacent to what will soon become the northern terminus of the Baltimore subway system and a new expressway.
"He's a smart, tough businessman, a tough customer," observed one Baltimore lawyer who has known Cardin for 25 years. "He's always been the kind of guy who is looking for everything he's entitled to, but I never heard anyone say he took advantage of them."
Until the Old Court troubles, the closest Cardin came to legal difficulties was an investigation by the state prosecutor into the leasing of a Baltimore office building to the state. The prosecutor investigated an allegation, never substantiated, that Cardin received a six-figure fee as a middleman, according to sources close to the investigation. The probe was dropped.
Following the best traditions of his family and his faith, Cardin has been a major benefactor of good causes, applying his prodigious fund-raising skills on behalf of numerous charities from the Boy Scouts to the Retinitis Pigmentosa Foundation, of which he has been national chairman for 14 years.
"The bottom line is that he has been an outstanding leader in our charities over the years," said Stephen Solender, president of Associated Jewish Charities.
Cardin has restricted his political activities in recent years, but he emerged last winter as a major fund-raiser for his cousin, House Speaker Cardin, an association that was abruptly terminated when Old Court's troubles began. Benjamin Cardin, a 1986 gubernatorial hopeful, said he has not discussed the issue with his cousin but that he senses that Jerome Cardin . . . thinks it would be best if he didn't do anything more."
On the surface, Jerome Cardin and Jeffrey Levitt appear to be cut from the same cloth. Both, said a former associate, "wear their wealth heavy." Each owned a Rolls-Royce; Cardin's had a chauffeur. Each lives in an expensive house in an exclusive Baltimore County neighborhood.
Cardin's spacious law office, complete with French provincial living and dining room sets and Oriental tapestries, "makes the Oval Office look like a broom closet," said one Washington lawyer.
But personal style aside, Cardin and Levitt are a generation apart in age and reputation. Cardin is viewed as a settled, meticulous businessman, while Levitt is seen as more of a freewheeler who began his business career as a slumlord.
Cardin joined forces with Levitt in 1982 when, caught like other savings and loan executives in an interest rate squeeze, he responded to pressures from the Maryland Savings-Share Insurance Corp. to seek new capital and sold a majority interest to Levitt and Pearlstein.
Since that association began, Cardin invested in some enterprises that appeared to deviate from his normally sedate style of investment. He and Levitt, for example, each bought a 25 percent interest in a dealership that sold stylish, limited production cars, including a Lamborghini model that retails for $113,000 and can travel close to 200 miles per hour.
Also, he was a limited partner in two of Old Court's Florida real estate deals in which the thrift and its subsidiaries loaned sums in excess of the appraised values, the state's civil suit contends. State regulators did not approve the loans as required by state law, according to the suit.
Cardin and Levitt formed a corporation that purchased an executive jet. The jet was financed by Old Court and used frequently by the two men, including a trip to Las Vegas by Cardin to attend a boxing match, said one high-ranking Old Court employe. And Cardin "brought through the door" Old Court's multimillion-dollar investment in Poinciana Park, a planned $2 billion housing development in Florida, the employe said.
In the face of all the publicity about Old Court and the $200 million lawsuit in which Cardin is the defendent, many of those who know Cardin stand by him.
Said one lawyer who has known Cardin for many years: "He likes to make money. He's driven by it. But I've never known him to do anything improper."