Former Old Court Savings & Loan Association president Jeffrey A. Levitt was sentenced to 18 months in jail and fined $150,000 today for what a judge called "flagrant, intentional and willful" violations of court orders issued last summer limiting his spending.
Levitt's wife Karol, who was also found guilty of contempt of court, was sentenced to spend 15 weekends in jail and fined $50,000. They are scheduled to report to jail Jan. 17.
Paul Mark Sandler, their attorney, would not comment on whether they will appeal.
Attorneys for the Maryland Deposit Insurance Fund, the court-appointed receiver for Old Court, argued at today's hearing that the Levitts continued to spend lavishly months after being ordered to curb their spending to $1,000 a week, withdrawing large amounts of cash and tens of thousands of dollars for country club memberships, department store purchases, jewelry, business investments and other items.
"Let us examine one day in the life of Jeffrey Levitt," said MDIF attorney Shale Stiller, reading from a list of 22 checks written by Levitt on Oct. 28. They totaled about $5,500, and included a payment of $1,836 to American Express for his two college-age sons, $390 to Chestnut Ridge Country Club, $434 to Diner's Club, $126 to Bamberger's department store and $182 to Flowers and Fancies.
In imposing the sentences, Baltimore Circuit Court Judge Joseph H.H. Kaplan angrily scoffed at Levitt's contention that he did not fully understand the court orders and thought they applied only to personal spending, not business expenses.
"There's no way in the world that you couldn't know every time you cashed a check or withdrew cash . . . that you were violating that order," said Kaplan. "It makes a mockery of the whole system."
The couple sat side by side at the defense table during the two-hour hearing and clasped hands tightly just before the sentence was read. Levitt, who appeared nervous throughout, winced as Kaplan ordered him to serve 18 months in jail. His wife, visibly upset, twisted a tissue and stared blankly through reddened eyes.
They left the crowded courtroom without comment.
Last Friday, Levitt was indicted on charges of stealing $14.6 million from Old Court and another thrift institution. Kaplan said today that the $2 million bail he posted in that case will also suffice as bail for the 10-day period before the Levitts are required to begin serving their sentences for contempt of court.
Levitt will be turned over to the state Department of Corrections and his wife is to serve her term in the Baltimore City Jail on the contempt charges.
The contempt charges accused the couple of withdrawing $211,000 in funds from various checking accounts without court permission since Aug. 5. At that time Kaplan prohibited them from withdrawing any of their assets beyond those needed for ordinary living and business expenses. A second order, issued by Kaplan Sept. 18, limited their joint withdrawals to $1,000 a week.
The orders were issued in connection with the state's $200 million civil suit against Levitt, his wife and other Old Court officers, who are accused in court papers of using depositors' accounts as their "personal slush fund." A run at the Baltimore thrift in May sparked the crisis in the state's savings and loan industry. The accounts of about 50,000 depositors are still frozen at the thrift, which is now in receivership, and Kaplan issued the orders to protect assets the state is seeking to recover.
Most of the checks were drawn on Levitt accounts at Yorkridge-Calvert Savings and Loan of Baltimore. None of the funds came from Old Court.
At today's hearing, Levitt argued that some of the items cited by MDIF lawyers were regular monthly bills and others were business expenses that he mistakenly believed he was permitted to make, including two checks in October for more than $25,000 issued to Levitt Family Partnership, an entity that he said in turn made payments on some of his outstanding loans at Old Court.
Acknowledging that "this may sound bizarre to the court," Levitt said that "some way in our minds we believed the $1,000 a week was for personal living expenses, and business expenses were over and above that." He said he may have gotten that impression from newspaper reports.
"I should have understood it better," he told Kaplan. "It's a sorry time for my wife and myself."
In addition to business expenses, Levitt said some of the checks were payments for items or services purchased before Kaplan's orders went into effect.
Levitt said his wife gave cashier's checks for $6,000 to each of their sons on Sept. 17 because they needed it for college tuition.
Stiller seized on that point, telling the court that each of the sons, aged 19 and 21, has more than $300,000 in stock brokerage accounts in New York. He attacked Karol Levitt's frequent withdrawals of large sums in cash or cashier's checks, including $34,000 drawn from a Pennsylvania bank, as an indicator of "stealth, a criminal mind . . . of evil intent."
Defense lawyer Paul Mark Sandler, pleading for leniency for Karol Levitt, told Kaplan that the Levitts have a "traditional marriage" in which Jeffrey Levitt is "the dominant partner." Karol Levitt, he said, signed whatever documents her husband asked her to.
Stiller told the court that the Levitts' withdrawal records, acquired independently by MDIF through financial institutions, reveal only a portion of the Levitts' spending since last summer, he said.
"We haven't gotten the whole story," said the usually staid Stiller impassionedly. "They're still hiding, they're hiding, they're hiding!"
Even without the court orders, he said, "If they were decent people they would not have engaged in that kind of spending when they know there are thousands of depositors out there." He was cut off as Kaplan sustained an objection by Sandler.
Sandler repeatedly urged Kaplan to weigh the contempt sentence without regard to "public outcry" about frozen deposits at Old Court.
He argued that the Levitts were "living in a fishbowl" and were "not comfortable" with the public scrutiny that would have been necessary to get court approval for additional spending.
In passing sentence, Kaplan said he found Karol Levitt, who remained silent during the proceedings, "a willing partner . . . . You are less culpable than he, but culpable nevertheless."
Addressing Jeffrey Levitt, he said, "The thing I cannot get out of my mind is that you, as a lawyer Mr. Levitt, come in and say to this court that despite the clear language of the order -- because of what you read in the newspapers -- that you thought you could spend more than $1,000 a week jointly if it were for business purposes . . . .
"The violations of the orders are flagrant, intentional and willful.