Two former Community Savings and Loan officials were acquitted yesterday of charges they defrauded depositors of millions of dollars to prop up a mortgage company and line their own pockets.
After a four-month trial in U.S. District Court in Baltimore, Chief Judge Walter E. Black Jr. returned the innocent verdicts for Clayton C. McCuistion, 49, the thrift's former president, and Barbara A. McKinney, 41, a former Community director and one-time vice president and legal counsel of its defunct holding company.
They had been charged, along with the Crysopt Corp., the holding company, with conspiracy, wire fraud and mail fraud.
Community collapsed in 1985. Prosecutors allege that its former chairman, Tom J. Billman, 52, masterminded a conspiracy to defraud depositors, but they have been unable to bring him to trial because he has disappeared.
Mr. Billman, who was Ms. McKinney's boyfriend, is believed to have fled the country with at least $22 million of depositors' money.
Judge Black ruled yesterday that Assistant U.S. Attorneys Barbara S. Sale and Virginia B. Evans did not prove Mr. McCuistion, Ms. McKinney and the Crysopt company had conspired to defraud customers.
"The evidence presented in the case may reasonably permit the court to reach a conclusion that the actions of these defendants were intended to accomplish certain business purposes," the judge said.
Mr. Billman and Mr. McCuistion owned Equity Programs Investment Corp. (EPIC), a real estate syndicate that invested in housing ventures nationwide, when they bought Community in October 1982.
The savings and loan served the Maryland suburbs of Washington and had offices in Bowie, Rockville, Greenbelt and Columbia.
In 1984, Community officials used the savings and loan's money to fund the operations of EPIC, its mortgage company and related partnerships.
Prosecutors had charged that Community officials conspired to divert $106 million of their depositors' money to maintain EPIC after its mortgage partnerships began to falter, and illegally kept $28 million for themselves.
A Montgomery County Circuit Court entered a $112 million judgment against Community and its officials in 1988.
Mr. Billman fled the country after that ruling.
He was believed to have been living in Europe, drawing on the $22 million deposited in a Swiss bank account.
Two years ago, federal authorities offered a $200,000 reward for him. The search for him is still on, said U.S. Attorney Richard D. Bennett.
The prosecutor expressed disappointment with the judge's ruling yesterday.
"Clearly, Tom Billman was the lead defendant in this case, and I'm afraid that his flight from prosecution has made our jobs even more difficult," Mr. Bennett said.
Anthony R. Gallagher, the assistant federal public defender for Ms. McKinney, said his client's decisions regarding loans to EPIC were business judgments that were not criminal violations.
"Our argument all along was that these people made business decisions over a number of years," Mr. Gallagher said. "It's unfortunate, if not tragic, that these business decisions did not come to fruition for many people."
Yesterday's verdict marked the second time in four years that savings and loan officials have been acquitted in Baltimore's federal court.
Former owners of the collapsed Merritt Commercial Savings and Loan Association were found innocent of conspiracy, racketeering and fraud charges after a 15-week trial that ended in February 1988.
But federal prosecutors did win their case in another thrift scandal in recent years. Former First Maryland S&L president Julian S. Seidel was convicted in 1989 of conspiracy and fraud violations that caused investors in the thrift to lose $118 million. He is serving a 12-year sentence.