Billman revived failing S&L, defense lawyers say

February 08, 1994|By Marcia Myers | Marcia Myers,Sun Staff Writer

Lawyers for Tom J. Billman yesterday characterized him as a skilled executive who bought a sickly Maryland savings and loan in 1982 and steered it toward financial recovery -- only to be thwarted by the panic of the 1980s S&L scandals.

That defense was outlined as Mr. Billman's trial on federal fraud charges opened in Baltimore. The trial -- which is going forward more than four years after Mr. Billman was indicted -- had to wait for the defendant, who was extradited from France in December after several years as a fugitive.

Prosecutors yesterday told a starkly different story about Mr. Billman's role at Community Savings & Loan.

They said he bled the Bethesda thrift of more than $106 million to provide cash transfusions for his ailing real estate ventures. With Community on the verge of collapse, he wired $22 million to two Swiss bank accounts, money that was used to finance a lavish lifestyle in Europe when he fled the United States three years later, they said.

State bailout

The failure of Community has cost Maryland more than $80 million in bailout money to depositors, whose accounts were insured by the state.

"The screenplay of this case would be called 'Take the Money and Run,' said Assistant U.S. Attorney Joyce K. McDonald.

Mr. Billman, wearing a blue Oxford shirt and navy blue blazer, jotted notes and reviewed documents from the defense table, occasionally exchanging dark horn-rimmed bifocals for wire-rimmed pince-nez.

As the trial was about to begin, he flashed a broad smile and signaled a vigorous thumbs up to former Community president Clayton C. McCuistion, who was acquitted on similar charges in 1992. Mr. McCuistion took a front row seat in the courtroom yesterday, and was among several friends of Mr. Billman who showed up for the opening of the trial.

"I'm here to show support for the side I think should win," Mr. McCuistion said.

The trial is expected to last about two months.

Mr. Billman, 53, faces 18 counts of mail and wire fraud, and could be sentenced to 90 years in prison if convicted on all counts.

Defense lawyer John R. Fornaciari described Community as an operation on the road to failure when Mr. Billman purchased it in 1982. By the end of 1984, he said, "it was in the best financial shape it had ever been in."

He said the thrift benefited greatly from mortgage business generated by Equity Programs Investment Corp. That real estate syndicate, run by Mr. Billman, invested in housing ventures nationwide.

He described EPIC's operations as seasonal, with most income generated in the last half of the year.

Clean bill of health

Independent auditors gave Community a clean bill of health in March 1985, Mr. Fornaciari said. But that month, a savings and loan crisis in Ohio -- which, like Maryland, insured some thrift accounts -- threw a scare into Maryland's S&L system. A series of events, including the governor's decision to limit withdrawals, contributed to Community's collapse, he said.

It went into conservatorship that May.

"Community and EPIC never got to the last six months of 1985," Mr. Fornaciari said.

But prosecutors claim that Community was in shocking financial condition because depositors' money was being used to prop up EPIC's failing ventures.

Mr. Billman in February 1985 had authorized Community to pay millions of dollars to its parent company, EPIC Holdings Inc., prosecutors said, adding that the money was funneled into dividends for Mr. Billman and Mr. McCuistion.

At a meeting in April 1985, Community's vice president of finance identified one goal for the thrift: "to feed the EPIC machine," said Elaine Du--, a former Community vice president who testified yesterday. As executives scrambled to file applications for federal insurance on Community accounts, Ms. Du-- testified, she was asked to sign back-dated documents that would hide Mr. Billman's involvement in some transactions.

"I wasn't comfortable with that, so I didn't sign it," she said.

Scramble for cash

Community's financial position was so precarious that employees made frequent trips to other banks for money to keep accounts afloat, she said.

One withdrawal was so large that the bank refused to give Community employees the cash until they could be protected by an armored car, she said.

She also testified about questionable expenses billed to Community.

On one occasion, she refused to pay for expenses from a Powder Puff Derby airplane race in which Mr. Billman's secretary and a company director had participated.

"I said these were not Community expenses," she testified. Mr. Billman returned the bills with instructions to pay them anyway, she said.

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