A city judge imposed a $1,000-a-week personal spending allowance today on Jeffrey A. Levitt, the wealthy part-owner and former president of Old Court Savings and Loan who recently billed the troubled thrift association for nearly $2,500 in private expenses, including limousine and car telephone services.
The written decree by Circuit Court Judge Joseph H.H. Kaplan applies to Levitt and his wife, Karol. Paul Mark Sandler, the couple's attorney, said the Levitts need $4,000 a week to meet basic expenses and filed a motion today to appeal Kaplan's order.
"The issue is not whether they can live on $100 a week or $1,000 a week," Sandler told reporters after a 90-minute court hearing. "The issue is whether they can be told they can't spend the money they've earned."
In limiting the Levitts' spending to $1,000 a week, with exemptions for legal fees and their two sons' education expenses, Kaplan granted a request from attorneys for the Maryland Deposit Insurance Fund (MDIF), the state agency that is the conservator for Old Court and two other ailing Maryland savings associations.
Reports of mismanagement at Old Court and an announcement that its top officers were the targets of a criminal investigation touched off a run on deposits there and at many other privately insured thrifts last May. Auditors for MDIF, which is trying to sort out the tangled financial affairs at Old Court, said recently that the association is $175 million in debt.
Shale D. Stiller, MDIF's attorney, urged Kaplan today to impose the spending cap on the Levitts as a way of helping MDIF block the transfer of any Old Court assets.
Old Court's 50,000 depositors, who have been unable to withdraw any money since May, "are certainly at status quo," Stiller said. "It's only fair that all of the people involved in this case be at status quo."
Stiller later conceded it will be difficult to enforce the spending allowance, but said he intends to notify the nation's "200 biggest banks" about Kaplan's order to ensure that if they have any Levitt deposits, they will not allow withdrawals over the judge's limits.
To support his request for a spending cap, Stiller presented evidence showing that the Levitts own more than $1 million in fine art, jewelry and silver, including works by Henri Matisse and Pablo Picasso, as well as one $65,000 necklace of 850 diamonds and South Sea pearls.
The items were included on a list of about 200 art objects and jewelry items that was provided under court subpoena by the J.B. Schaftel Co., a Baltimore insurance firm. The company recently notified the Levitts that it will terminate their theft insurance coverage next month because "recent news releases regarding your wealth, as well as recent large purchases of silver and jewelry" made them an unacceptable risk.
Kaplan should impose the spending limit, Stiller said, because it would "be obscene to allow them the Levitts to continue these buying habits."
In addition, Stiller disclosed a letter from Sandler's office requesting that Old Court pay Jeffrey Levitt's creditors "in a timely fashion" for nearly $2,500 in expenses, some of which were incurred after Old Court was forced into conservatorship.
The letter from Sandler's law firm included several invoices, dated Aug. 18, for nearly $625 worth of service and calls on two car telephones in the name of Old Court Savings and Loan. "Incredibly, Mr. Levitt had the gall to submit this bill after" Old Court went into conservatorship, said Stiller, who has refused to pay the bills.
Other bills included one to Levitt for $303 for charges made in May and June at the Merchant's Club of Baltimore -- after Old Court went into conservatorship -- and a $190 bill at the Pimlico Restaurant in Pikesville that was dated June 14.
Stiller also presented a sworn statement that Levitt submitted to the office of the New York state attorney general last April on which Levitt checked "no" when asked whether he had ever received "any disciplinary action by any court."
On Nov. 2, 1979, the Maryland Court of Appeals suspended Levitt from practicing law for one year for lying to Kaplan in a separate case involving a housing violation.
Sandler argued vehemently in court today against the imposition of the $1,000-per-week limit, saying the cap violated the Levitts' right to due process under law.
He said the order unfairly penalizes the Levitts for citing the constitutional protection against self-incrimination when they were asked by the state recently to give an accounting of their spending habits.
Kaplan told Sandler that he would consider amending his order if the Levitts would provide a complete accounting of their expenses, which Sandler said total $12,000 a month.