Jeffrey Levitt: the books are closed

November 25, 1992

The purpose of a prison term is to punish, to rehabilitate and to deter others who might consider following the criminal's example. All of these objectives have been served in the case of Maryland vs. Jeffrey A. Levitt. The Maryland Parole Commission has decided to release him in a year, when he will have served about a quarter of his 30-year sentence. So be it.

Levitt was the central figure in the massive savings and loan scandal a decade ago. He admitted to stealing $14.6 million from the depositors of Old Court Savings and Loan, igniting the collapse of that $600 million institution and nearly destroying the entire industry in this state. He was the symbol of greed, free-wheeling disdain for elementary banking principles, flimsy state regulation and spectacular personal excess. But he was not alone.

By all accounts Levitt has been a model prisoner. He has used his superior intelligence, belatedly, to help others -- as president of the correctional system's prisoner advisory committee and as a teacher. After his release he will have to perform 2,000 hours of community service and to complete court-ordered restitution. Virtually all depositors in Old Court have recovered the money they deposited there, though many suffered while it was tied up for years, paying no interest. Although a comparative handful of large depositors are still awaiting partial recovery, Maryland taxpayers were the big losers. They will have shelled out about $165 million to reimburse savings and loan depositors, mostly from Old Court.

Levitt has been punished, serving more time than most white-collar criminals. Charles Keating, convicted of fraud in the largest thrift failure in history, was sentenced to 10 years. Levitt is not likely to sin again. All that remains of the public interest is that his example not be followed. Given the massive thievery in savings and loans elsewhere, it is perhaps too much to hope no one else will try again. But the Levitt case was an object lesson to the authorities as well as to savers who ignore the maxim that higher returns usually go hand in hand with greater risks. Regulation of financial institutions, by officials who have the tools to monitor increasingly sophisticated financial processes and who operate at arm's length from those they oversee, is the best protection for savers. The memory of Jeffrey Levitt should never leave their thoughts.

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