Jeffrey A. Levitt, whose extravagant tastes and illegal deals eventually crippled one of Maryland's largest thrifts and triggered a crisis in the $9 billion state industry, pleaded guilty today to charges that he embezzled and misappropriated $14.7 million from the Old Court Savings & Loan Association.
Levitt, wearing a rumpled navy blue suit, took the witness stand in Baltimore Circuit Court for less than five minutes, telling Judge Edward J. Angeletti in a low voice that he was in the courtroom "to plead guilty to the 25 counts of breach of fiduciary responsibility and theft."
Angeletti, who set sentencing for July 2, told the former president of the Baltimore thrift that his guilty pleas were "the highest form of self-incrimination" and ordered the 44-year-old lawyer to make restitution to the state in the amount of $14,699,947.58. Levitt's attorney, William Hundley, said Levitt intends to make full restitution, but he did not say where Levitt would get the money.
Following Levitt's statement, Maryland Attorney General Stephen H. Sachs and his assistants spent two hours reading from a 75-page statement of charges that outlined Levitt's misuse of funds during the 2 1/2 years he was president of the thrift.
The document mentioned multiple instances of illegal insider loans, use of funds from Old Court or its subsidiaries to make expensive purchases for Levitt's family and friends and misrepresentation of land used as collateral for up to nine times the appraised value.
Levitt's "phony entries on settlement sheets, fraudulent invoices, exorbitant fees for no services rendered, profits stolen from the association and borrowers in a variety of ways, and rampant insider dealing became standard practice at Old Court," the statement said.
Sachs, at a news conference after the hearing, said that he will recommend a sentence of at least 25 years in prison for Levitt, "perhaps more if he refuses to make complete restitution."
"He treated Old Court Savings & Loan as a kind of private trough," Sachs said, "a trough that was replenished with funds of unsuspecting depositors."
According to the statement of charges, Levitt used money from an Old Court subsidiary in January 1985 to buy a $63,000 Rolls-Royce for Walter Otstot, an Ocean City developer with ties to Old Court; hundreds of thousands of dollars in jewelry, businesses and a Florida golf and country club.
State officials said that Levitt's guilty plea today does not affect a $200 million civil suit that the state has brought against Levitt and other directors and officers of Old Court.
Levitt, who has been serving an 18-month sentence since Jan. 30 for violating a judge's order in the civil case limiting his personal spending to $1,000 a week, followed the state's recitation on his copy of the document.
"In every conceivable sense," Sachs read from the statement of charges, "Levitt treated the association's money as if it were his own, lavishing himself, his family and his favorites with the fruits of repeated illegality."
From September 1982 until May 1985, according to the statement, Levitt or businesses in which he had an interest received salary and fees -- often for little or no work performed -- totaling $4,414,482.
One indication of the extent to which Levitt benefited from those transactions, the statement said, is his federal income tax returns for 1982 and 1984. In 1982, Levitt reported a gross income of $154,000; in 1984, Levitt reported a gross income of more than $5 million.
Levitt and Allan Pearlstein purchased a majority interest in Old Court in September 1982, the statement said, using money from First Progressive Savings and Loan Inc., another Baltimore thrift that Levitt had gained control of earlier in 1982.
"Having stolen the funds needed to acquire his interest in Old Court," according to the statement, "Levitt did not hesitate to repeat his crimes again and again to amass a huge personal fortune and satisfy his appetite for material possessions."
Reports of mismanagement at Old Court, which is now being liquidated, triggered a run on the thrift by depositors last year that led to the industry crisis. Levitt's involvement has embittered many depositors, a fact the court acknowledged by having everyone in the courtroom's standing-room-only crowd sign in with a deputy sheriff and wear a pale-green security pass.
None of Levitt's family members was present, even though state prosecutors said they believed Levitt decided to plead guilty to protect millions of dollars in assets in their names.
Among other purchases and investments made with money from Old Court, the statement read by the prosecutors said, were three thoroughbred racehorses, two Ocean City condominiums, a $200,000 apartment in New York City, a high-rise apartment in Baltimore for his mother, interest in a hydroelectric company in upstate New York and a golf and country club in Florida.
With these funds, the statement said, Levitt acquired interests in his name or in the names of family members in businesses such as dry cleaning shops, fur and storage companies, automobile dealerships, clothing stores and the company that owns the Baltimore Blast soccer team.
Levitt used Old Court money to buy more than $400,000 in jewelry from J. Brown Jewelers, to successfully bid on artwork at two internationally known auction houses, Sotheby's and Christie's, and to finance frequent gambling junkets to Atlantic City and a trip to the 1984 Olympics.
Even a charitable organization sponsored by Levitt, the Levitt-Pearlstein Foundation, made donations to needy persons and groups, using Old Court money, the statement said.
Less than two weeks ago, Levitt rejected a plea agreement with the state under which he would have pleaded guilty to the 25 charges, cooperated with state prosecutors in their criminal investigation of other persons associated with the thrift and made restitution to the state from personal and family assets.
In return, the state would have recommended that Levitt receive a prison sentence of 12 to 20 years, and he would have been eligible for parole in three to seven years.
Negotiations on the earlier plea agreement apparently broke down because of disagreements related to parallel talks on the civil suit. Levitt, according to sources familiar with the negotiations on the criminal and civil cases, wanted the two talks linked and wanted assurances that his wife would be allowed to keep the couple's Lutherville home and retain some of the assets she inherited from her parents, estimated to be worth several million dollars.
By pleading guilty without benefit of an agreement with the state, Levitt could be sentenced to up to 245 years in prison. If Angeletti goes along with the state's recommendation of at least 25 years, Levitt would be eligible for parole in six to eight years.
Levitt and his attorneys would not comment about why Levitt decided to plead guilty to the charges.
Under the plea agreement that Levitt rejected, Sachs said, the state could recover assets held by Levitt's wife Karol and their two sons.
With today's guilty pleas, only Levitt's assets are vulnerable, Sachs said, but they amount to only about $9 million.
Sachs said his office has been unable to estimate the extent of Karol Levitt's assets.
It was unclear from Hundley's statements today if Levitt is planning to use assets belonging to other family members to make the full restitution, or if using those funds would leave his family with other assets.
Sachs said that, based on Levitt's representation of his assets, he should be "wiped out" if he makes full restitution.
"There will be law enforcement people watching Mr. Levitt for a very long time," Sachs said. "If his representations are false, heaven help him."