The lights burned late last Feb. 28 on the ninth floor of Building 4 at the Skyline office complex in the Baileys Crossroads area. Teams of lawyers, accountants and secretaries were quietly arranging a reorganization of Tom J. Billman's EPIC real estate empire. It was a time in his life, Billman had said, to get into something new.

When it was over, Billman had almost entirely extricated himself from the tangled enterprise he had built over 10 years. But he took with him more than $30 million worth of cash, business assets and prime real estate.

Just months after the 45-year-old Billman left, EPIC, which owned Community Savings & Loan Association, became caught up in the Maryland savings and loan crisis and came crashing down, leaving thousands of Community depositors without access to their money and raising the possibility that Maryland taxpayers may have to come up with millions of dollars to cover the thrift's losses.

More than 350 EPIC real estate partnerships defaulted on $1.4 billion in mortgages and went into bankruptcy, jeopardizing hundreds of creditors and thousands of investors.

Tom Billman's story is that of an entrepreneur who spun a complex web of businesses around a new and interesting home financing concept and then cashed in on millions of dollars of assets only months before the bubble burst.

What emerges from a variety of court papers, government documents, internal company records and interviews with many former and present EPIC employes, most of whom would speak only with the guarantee of anonymity, is the first detailed description of how Tom Billman apparently did it.

Billman declined to be interviewed for this article. But his longtime associate and now the largest shareholder in the remaining EPIC group, Clayton C. McCuistion, said that because Billman owned 80 percent of EPIC, he took nothing out that was not already his.

Besides, McCuistion said, Billman "left behind the most valuable thing we had," Community Savings and its Equity Programs Investment Corp. subsidiary, which set up and operated the real estate tax shelter partnerships. McCuistion emphasized that of the assets Billman got, "nothing came from Community."

McCuistion said that he and Billman did not know that EPIC was soon going to face difficulties. "It was not a premeditated milking of any kind," McCuistion said.

McCuistion said the future looked very bright last winter. The company had just completed 10 straight profitable years, and "we were expecting a $20 million profit year" before the breakup. Afterward, he said, he still foresaw a $12 million profit for 1985. As for now, he believes EPIC can still be a viable enterprise.

There is, however, dispute over the EPIC companies' financial health. Federal auditors, who examined the firms as part of Community Savings' application for federal deposit insurance, viewed many of EPIC's assets as less valuable than EPIC officials said they were. The auditors found, in fact, that immediately after Billman pulled out, EPIC had a book value of minus $13 million.

Real estate industry observers say that EPIC's partnerships were based on overly optimistic assumptions about future increases in house prices.

But whatever the reality of that situation, one thing is clear: The wealth that Billman derived from the EPIC companies is impressive. According to former and current EPIC officials, internal EPIC documents, court records and sources familiar with the company, among the $30 million-plus in assets he took from EPIC into his wholly owned holding company, known as Crysopt Corp., are:

*About $11 million in cash.

*Two oil and gas development and production companies, with a number of producing wells in several states.

*The area's oldest and largest title insurance company, District-Realty Title Insurance Corp., valued at between $7 million and $11 million.

*An 860-acre waterfront estate on Kent Island, Md., valued at more than $4 million.

In addition, Billman has continued to benefit from his relationship with the EPIC companies. He personally drew about $1.2 million in dividends and loans in July from EPIC Realty Services Inc., a property management company that he, McCuistion and an associate own independently.

And under an agreement between EPIC's holding company and Crysopt -- which stands for "opportunity in crisis," sources say -- Crysopt is to receive $300,000 a year over three years in administrative services, consulting fees, director's fees and fees for use of the name EPIC.

McCuistion said Billman's compensation during his years at EPIC was fair. He said Billman, in his first nine years at EPIC, had never taken a dividend from the company, and that an $11 million dividend, taken early this year and criticized by federal auditors in a report this summer, represented "an accumulation of a 10-year effort."

One current top EPIC insider said that "there's no question people's perception at this point is he got out before it collapsed." He added, however, that people should not assume that Billman knew what was about to happen. "It's unfair to say Tom stripped out all the valuable assets," he said.

Billman has not been charged with any illegality, nor have any of his associates or any of the EPIC companies. Indeed, McCuistion said that Maryland savings and loan regulators, through EPIC's monthly financial reports, knew about the money Billman was getting. The EPIC group of companies was privately owned -- 80 percent by Billman, 20 percent by McCuistion. An owner has considerable latitude in disposing of assets, particularly when a company is healthy.

A crucial question for the state and for EPIC creditors is whether EPIC was healthy when Billman took out the money and other assets. If the company was healthy -- and McCuistion and other EPIC officials say it was -- then there was nothing improper about the events surrounding Billman's departure.

But if EPIC was not healthy, creditors and the state may have grounds to sue, according to attorneys familiar with the situation. Creditors could argue that money was removed that ought to have been made available to cover debts, these attorneys said. And they noted that owners of a savings and loan are subject to additional rules and have a fiduciary duty to depositors.

"There is concern about executive compensation" at EPIC, a source in the state government said. "Obviously, this is going to be looked into."

The state has hired the Washington law firm of Arnold & Porter to try to sort out the situation. In addition, sources said, state officials are exploring legal options that they believe may be open to them to seek some of the assets that are now Billman's.

A spokesman for Gov. Harry Hughes declined to comment on EPIC and Community specifically but noted that "the governor has said all civil and criminal avenues will be pursued to be sure executives responsible for problems at the S&Ls will be held accountable." Model House Purchases

The EPIC money machine was founded on a simple concept. Home builders needed model houses to show to prospective buyers. But the model, because it could not be sold until a subdivision was complete, tied up the builder's money.

EPIC set up limited partnerships that would buy the models and lease them back to the builders for the period they needed them as show houses. The limited partners got tax benefits, and the builders got cash for the models a lot sooner.

Because the builders were anxious to sell the houses, they would pay a fee to EPIC for each house purchase it arranged.

The system appeared to be working for everyone, and in the early 1980s, EPIC expanded beyond models into regular new houses, which the EPIC partnerships rented out, expecting ultimately to sell them at a profit.

The acquisitions grew faster and faster, reaching a peak late last year when EPIC partnerships acquired $500 million worth of houses, increasing their holdings 50 percent to $1.5 billion.

At every juncture, EPIC companies performed services for the partnerships and for one another, and collected fees. There were companies called EPIC Mortgage Inc., EPIC Mortgage Servicing Inc., EPIC Securities Inc., EPIC Realty Services Inc., EPIC Residential Network Inc., ERSI Insurance Ltd. and many others.

There were fees for buying houses and for selling them, fees for originating mortgages and for servicing them, fees for organizing the partnerships and for closing them out, fees for insurance, fees for audits, and on and on.

For example, Equity Programs collected $50 per house per month for managing the 20,000 houses owned by the partnerships, according to a study by the accounting firm of Touche Ross & Co. Equity Programs contracted with EPIC Realty Services Inc. to do the managing and paid it $35 per house per month. With 20,000 houses, this arrangement would have yielded these two companies $12 million a year between them in management fees.

As it grew, the EPIC structure became increasingly complex. Holding companies were added on top of holding companies. Some subsidiaries were spun off as independent entities, though still owned by Billman and McCuistion. In most cases, Billman owned 80 percent and McCuistion 20 percent.

In 1983, in a very complicated deal, EPIC's parent company, EPIC Holdings Ltd., acquired Bethesda-based Community Savings. Community gave EPIC access to large amounts of credit and allowed it to expand dramatically.

Organizational charts of EPIC came to resemble electrical circuit diagrams, and money moved rapidly from point to point. But ultimately the profits moved up the corporate chain into the parent company, EPIC Holdings Ltd.

Financial statements of EPIC Holdings show, for example, that its subsidiaries paid it "fees . . . for management services" of $854,023 in 1983 and $2.1 million in 1984.

The statements show Community Savings paying dividends of more than $7.1 million in 1984 and $8 million early this past February upward to the holding company.

Profits accumulated in EPIC Holdings, owned 80 percent by Billman and 20 percent by McCuistion.

McCuistion said that when profit goals were reached, large bonuses were awarded, frequently totaling 100 to 150 percent of an executive's salary.

Billman and McCuistion received "a big chunk each year," one former middle manager recalled recently, referring to a range of cash payments in the form of fees, salaries and bonuses.

Billman and McCuistion borrowed substantial sums from EPIC. A March 1983 letter from McCuistion to Maryland officials concerning the Community merger with EPIC stated that EPIC had made outstanding loans to him and Billman of $465,338.

Other ranking EPIC executives were well paid. Their salaries and fringe benefits, particularly expense accounts, were generous, often totaling six figures, the former employes said. Prune and Plum

Some top employes used cars leased from still other EPIC affiliates. Most of the EPIC company offices here and around the country were outfitted from top to bottom with fixtures and equipment leased from two companies owned at first by EPIC Holdings and later by Community Savings: Plum Leasing Corp. and Prune Leasing Ltd.

By all accounts, the offices were beautifully appointed and equipped with the latest high-tech gear rented from Prune and Plum. Community Savings General Counsel James B. Deerin Jr., testifying in a civil suit involving EPIC, said that the Prune and Plum leases were "arm's length" and "fair market," and that Maryland regulators had not objected.

Plum, according to records filed in Delaware, where it is incorporated, had gross assets of nearly $1.5 million at the end of last year.

Prune, according to an internal inventory this year, owned items worth $6.9 million, based on purchase prices, and rented virtually all of them to EPIC companies for a total of $338,000 a month.

The Prune inventory shows that it rented to EPIC companies eight Mercedes-Benz automobiles, worth a total of $319,000, and a $21,000 Cadillac El Dorado.

The Prune inventory said it rented to EPIC companies large numbers of chairs, tables, lamps, computers, copying machines, teller machines, telephone systems, car phones, and other items. The list shows that it rented to EPIC such things as five Persian rugs worth $22,000 and a $600 "corner commode." EMSI Goes to Court

One EPIC-affiliated company that did not rent anything was EPIC Mortgage Servicing Inc. EMSI, in fact, did not have any chairs, stationery or even a pencil.

EMSI was the central issue in a suit that William J. Harnett, a minority shareholder in an EPIC subsidiary, filed in federal court in Alexandria against Billman and McCuistion. According to evidence in the trial in September, Billman and McCuistion gave themselves and another insider hefty bonuses from EMSI for what apparently was little work, but they were tough on Harnett, an outside investor.

Harnett invested $5,000 in EPIC in 1975. By 1983, he was the only outside investor left -- the company originally had a few outsiders -- and was disagreeing with Billman and McCuistion regularly. The two told Harnett that if he would agree to the EPIC-Community merger and other provisions, he would obtain a stake in EPIC's booming mortgage servicing business.

Mortgage servicing involves collecting mortgage payments, taxes and other payments -- in this case on the EPIC partnerships' growing number of homes -- and routing the funds to the appropriate recipient. Another EPIC subsidiary, EPIC Mortgage Inc., had been performing its own servicing for years.

Two years ago, Billman and McCuistion offered Harnett a share of a new company, EMSI, which they said they were spinning off from EPIC Mortgage Inc. Harnett and Billman disagree over what Harnett was told about the deal, but in a decision handed down in Harnett's case last month, federal Judge Albert V. Bryan Jr. accepted Harnett's version -- that he was promised that the new company would perform EPIC's future mortgage servicing.

Harnett agreed to the deal in part, he testified, because of Billman's promises that EMSI would have use of EPIC Mortgage Inc.'s employes and powerful computers. But Harnett testified that more than a year later, he found that EMSI's business had not grown since its creation in March 1983, and that EPIC Mortgage Inc., in which he had no interest, was performing the new mortgage servicing.

According to his testimony, he found that without his knowledge, EMSI had agreed to a side contract to have EPIC Mortgage perform even the limited work that had been assigned to EMSI when the new company was created. "EMSI never actually serviced a mortgage," the judge found.

The judge said that Billman and McCuistion were "guilty of making fraudulent representations" to Harnett when they set up EMSI, and he ordered them to pay Harnett $103,000. Billman and McQuistion disputed the allegations, and are expected to appeal.

Billman drew an EMSI salary of $400 a week, and McCuistion $100 a week, according to a deposition in the case by Crysopt vice president Barbara A. McKinney. She added that they received year-end bonuses from EMSI of $25,000 each in 1983, and $20,000 each in 1984, and that she received a $10,000 bonus each of those two years. EMSI paid a management fee of $10,000 a month to Billman and McCuistion's EPIC Holdings, McKinney said.

Asked what Billman and McCuistion did for EMSI, McKinney said they performed "overall basic planning strategy for the company." The Big Reorganization

Spinoffs and reorganizations were a way of life at the EPIC companies, former employes remember. But the granddaddy of them all was the one that took place the night of Feb. 28.

"It was a division of assets . . . chopping the company into two pieces," McCuistion said. He added that the companies Billman removed from EPIC consisted of two companies of value -- Cavalier Oil and District-Realty Title -- "and a bunch of diddly stuff."

McCuistion said that several times since 1978 Billman had expressed interest in selling the company, but that McCuistion talked him out of it. Billman had been saying he wanted to get into something new. "He wanted to have more time to himself," McCuistion said.

McCuistion added that he and Billman had some differences about where the company ought to be headed. For example, McCuistion said he hoped to transform Community into a national savings and loan, something Billman was not interested in doing.

And Billman had promised the other executives equity, and he wanted to deliver on that promise.

Some former EPIC officials saw other motives. One cited people inside EPIC saying, "Tom's cashing out. He's taking all the money out he can."

Whatever the motives, by all accounts the maneuver was very complex, and perhaps only Billman understood it. McCuistion said that the agreement filled two "gigantic thick" volumes. McCuistion said in a deposition in the Harnett case that he was "not sure of all the details specifically."

Another current top EPIC official who now owns part of Epicenter said, "It's not an easy transition to understand. I'm not sure I understand it."

One former employe who read a summary of the breakup agreement said it was "incredibly complex."

It started with the creation of a holding company, Epicenter, which was added atop EPIC Holdings.

Then, through a complex exchange, McCuistion got 40 percent of Epicenter, and Billman got a block of companies that had belonged to EPIC Holdings (see chart).

The remaining 60 percent of Epicenter went into a stock option plan allowing other top EPIC executives to buy in.

McCuistion summed up Billman's message to the senior executives as: "You guys can have the future. I'll take the present."

The remaining top EPIC officials appeared to be content with the new arrangement. Internal EPIC documents show that by late July, 12 of them had joined McCuistion in Epicenter by exercising options to acquire its shares.

"For a lot of us, this was going to be our future retirement," said one.

McCuistion and several of these executives described the transaction as a leveraged buyout, meaning, they said, that they bought their Epicenter stock by using the stock as collateral for a loan. Indirect Control Was Kept

According to McCuistion and others, the buyout money came from a $5.75 million loan from Merrill Natural Resources, one of the oil companies Billman took into Crysopt.

McCuistion said the loan balance is now down to between $3.5 million and $4.2 million. Because the loan is secured by the Epicenter stock, in the event of a default Billman could again take control of that parent company, McCuistion said.

Former EPIC officials say that, at least in the first months after the reorganization, Billman retained indirect control of Epicenter. "If it came down to a vote, he would have been able to maintain control," said one.

Some ex-EPIC officials said it was in character for Billman to retain some control, because, they said, he tended to dominate EPIC's senior executives.

"The attitude was, 'Whatever you say, Tom, is wonderful,' " said another former official. In particular, McCuistion was "almost mesmerized by Billman" and became "visibly subservient, very demure" in Billman's presence, he said. "I've never seen anything like it."

McCuistion said he is not mesmerized by Billman, but "Tom's a very forceful and strong individual."

Billman remained on the scene at EPIC's offices at the Skyline complex. He said in a June 6 deposition in the Harnett case that he continued as an officer and director of Epicenter and a number of the subsidiaries. An internal company document dated July 31 described him as "chairman of the board emeritus" of Epicenter. The document listed no active chairman.

Billman's deposition said he retained check-signing authority for several EPIC companies, and sources said he frequently attended important EPIC Holdings meetings.

But by midsummer, sources said, Billman had resigned most of his EPIC posts.

Federal auditors who examined Community this summer concluded that a major problem in its application for federal insurance was the "indirect control" Billman exercised over it. These audits provide a detailed accounting of the extent of Billman's compensation from the EPIC empire.

During the state's efforts to have Community placed in conservatorship, Frederick L. Dewberry, Maryland's secretary of licensing and regulation, told a Montgomery County court that the auditors objected to Community's many transactions "with Crysopt or other companies owned by Billman."

A source familiar with the situation said that the audit concluded that Billman removed much of the value from Epicenter. The audit added that the company that remained had a book value of minus $13 million just after he left.

The audit further gave a breakdown of the more than $12 million in payments to Billman or his wholly owned companies from Community and the other EPIC companies in 1984 and the first four months of 1985. These included:

*$11.2 million in dividends from Epicenter, apparently his share of the $15.1 million in dividends paid by Community to its parent company in 1984 and in February 1985.

*$770,000 in salary from Epic Holdings.

*$360,000 in bonuses from Community.

*$105,000 in fees from Community subsidiaries for use of the EPIC name.

*$115,000 from Community subsidiaries for director's fees.

*$90,000 in bonuses from EPIC Financial Services Inc.

*$40,000 in salary and bonuses from Cavalier Oil.

These were payments that came from entities within Epicenter. In addition, the audit found payments from affiliated companies: $30,000 in salary from Continental Appraisal Group, a real estate appraisal firm; $75,000 in distributions from a partnership known as Panda; $49,000 in bonuses from EPIC Realty Services Inc. (ERSI) and $59,000 in salary from ERSI. Payments Kept Coming

The payments did not end after Billman severed his direct interests in EPIC.

In addition to the assets that he took with him when he left his former company, the audit showed that Billman had an agreement that Epicenter would continue to make a variety of payments to him, most of them to last for three years, sources said.

According to an internal EPIC Holdings document and a source familiar with the company, Crysopt had an agreement with Epicenter in February that it would receive consulting fees amounting to $450,000 over three years.

A source said that Crysopt acquired the use of the EPIC trademark from Epicenter for a total of $120,000. The source and the internal EPIC Holdings document said that Crysopt has agreed to rent use of the name back to EPIC for $120,000 a year.

Epicenter also agreed to pay:

*$300,000 into a legal defense fund for Billman in the event of a lawsuit in connection with the reorganization.

*And up to $150,000 for administrative services, for supplies, secretarial help and the like for Crysopt.

Billman's overall compensation during the past 18 months was the climax to the decade-long buildup of a business empire that has allowed him to live well in recent years.

In 1982, he bought a 10-room, $830,000 house on two acres at 7717 Georgetown Pike in McLean. The house, which features a swimming pool, a sauna, a dance floor downstairs (complete with jukebox), and a whirlpool bath in the bedroom, possesses a certain institutional grandeur that led some EPIC employes who have been there to dub it "the Public Library."

Billman himself, or through his companies, since Feb. 28 has bought a 70-foot Hatteras motor yacht, estimated by yacht brokers to be worth between $1 million and $1.2 million, and a 34-foot Scarab III speedboat, which one yacht broker termed "a 60-to-70 mph boat." The $80,000 boat once belonged to a leasing company that was part of EPIC. One former EPIC employe recalled Billman boasting that he could cross the Chesapeake Bay in five minutes in that boat.

A Billman company acquired from EPIC a twin-engine turboprop plane as partial repayment of a loan made by another Billman company during the breakup. The plane, a 1972 Swearingen SA 226T, seats about eight and was estimated by experts to be worth about $380,000.

Associates said that Billman has particularly enjoyed trips to the Eastern Shore property. On a partially wooded promontory of Kent Island known as Batts Neck, it has more than a mile of waterfront.

According to visitors, the 860-acre property features a large lodge with ornate woodwork, a boathouse and a dock, plus several other buildings. It offers fishing, boating and goose and duck hunting. New Corporate Network

In Crysopt, Billman appears to have the makings of another business empire. Organizational charts suggest that Billman plans to use District-Realty Title, described by Crysopt vice president McKinney as "the primary operating company" of the Crysopt family, to move into a range of real estate-related businesses.

District-Realty representatives have said they want it to become a nationwide title insurance firm. When he left Epicenter, Billman had an agreement -- now apparently moot because of EPIC's problems -- that EPIC would do all its title search business through District-Realty for five years, a source said.

But District-Realty, one of the area's oldest and largest title insurance firms, will have to overcome the lingering effects of EPIC's well-publicized difficulties, as well as a setback suffered when one of its major clients, Battlefield Builders, collapsed this year.

District-Realty was hit with $5 million in claims when Battlefield left subdivisions unfinished and subcontractors unpaid. A source familiar with District-Realty's operations said Billman has settled most of the claims. But the company was hurt by Battlefield's problems, and Maryland insurance regulators are known to be watching it carefully.

Other businesses under Crysopt include Cavalier Oil, an oil development company active in the area of Billman's home town of Woodsfield, Ohio. Its total assets in February 1984 were $874,000, according to papers filed in Delaware, where it is incorporated.

Another Crysopt company, Merrill Natural Resources, has oil and gas wells in several states. EPIC Holdings, through a subsidiary, bought it in 1983 for $10 million, sources said.

Batts Neck Corp. -- and its six subsidiaries, First Batts Neck, Second Batts Neck, and on through Sixth Batts Neck -- own the Kent Island estate.

Documents filed with the state of Maryland show that at the end of last year, Batts Neck's assets included land and buildings valued at more than $3.7 million, furniture and fixtures valued at $188,000, farm improvements of $126,000, house improvements of $258,000, $40,000 worth of equipment, and $1.5 million in accounts receivable from Crysopt.

Among the debts of Batts Neck are $4.3 million to Community and a $210,000 bank overdraft. Batts Neck posted a loss of $575,000 between Feb. 1 and Dec. 31, 1984.

In addition to Batts Neck, there is Batts Wing, which, according to EPIC Holdings documents, owns a Piper J-3C airplane. Company Claims Bias

McCuistion and other top EPIC officials have complained that federal auditors were biased against EPIC. They argue that the government auditors disapproved of the nature of EPIC's basic business, tax shelters.

Those auditors concluded that crucial items listed by EPIC as assets -- thus making it a profitable enterprise -- were in reality almost worthless. For example, the auditors "wrote down," or judged to be not so valuable, the more than $50 million that the EPIC companies lent to EPIC partnerships over the years, sources said.

The auditors said that the partnerships were headed for financial trouble and that EPIC was unlikely to be repaid, and they listed the loans as worth little -- thereby greatly reducing EPIC Holdings' value, sources said.

EPIC officials strongly disputed that conclusion. McCuistion said that EPIC's profits were highly seasonal, that the company usually operated at a loss during the first part of the year and that it customarily turned profitable later. Thus, the auditor's conclusion that the company had a negative book value in February was misleading, he said.

He further complained that the auditors never gave company officials a chance to respond. He said he has never seen a copy of the report.

McCuistion said that the auditors, when examining his and Billman's compensation, chose a time period of more than a year, thus including bonuses from two years, which allowed them to cite unfairly large dollar amounts.

McCuistion said that the auditors used EPIC officials as "whipping boys" as an example to the savings and loan industry. The Holdings Dwindle

Meanwhile, EPIC Holdings and Epicenter, EPIC's top holding companies, are left with dwindling cash and employes.

They occupy suites in the same Baileys Crossroads office complex in which Maryland officials are working to save Community. But the court order allowing state conservatorship is not broad enough to allow Maryland officials to investigate the operations of the companies above Community on the corporate tree.

An EPIC Holdings financial statement said that as of June 30, 1985, it had an operating loss of $942,000 for the year, and that its subsidiaries had lost $11.6 million in the same period.

"Epicenter doesn't do anything," said one ex-EPIC employe. "It just sits there."

A number of senior EPIC officials are still working for the holding companies on salaries or with consulting contracts, sources said. At the same time, most of them have expressed nervousness about the current situation and are consulting private attorneys about it.

But most of them are not angry at Billman for leaving them, several said. One, laid off from EPIC recently, said he is unhappy about his circumstances but added, "I have no feeling that Tom has anything to do with that."

Some outsiders have been harsher in their judgments.

Under cross-examination during his suit last month, Harnett exploded after a series of questions about why he had not accepted previous offers from Billman to buy out his stock in EPIC.

"I know these men have taken tens of millions of dollars out of these companies," Harnett yelled. CAPTION: Pictures 1 through 5, Tom Billman as he appeared in an employe publication;Clayton C. McCuistion;two aerial views of the 860-acre Kent Island estate valued at $4 million that Tom J. Billman transferred from EPIC to his new company; Another Billman property is a 10-room house on two acres on Georgetown Pike in McLean; Chart, Dividing the Epic Companies. The Washington Post