Billman convicted of S&L fraud

April 02, 1994|By Marcia Myers | Marcia Myers,Sun Staff Writer

Financier Tom J. Billman, who had led authorities on a four-year, international chase, was convicted yesterday of fraud for plundering more than $100 million from the now-defunct Community Savings and Loan in Bethesda.

After a two-month trial and almost six hours of closing arguments, U.S. District Judge J. Frederick Motz said the evidence was conclusive that Billman had drained Community of millions of dollars to prop up his failing real estate companies and had pocketed substantial sums for himself.

The judge's decision ends a case that was interrupted in late 1988 when Billman fled the United States while under federal investigation. Authorities pursued Billman as he traveled the world using a variety of aliases and fake passports. Long before leaving, he had wired $22 million to Swiss bank accounts.

He was arrested in March 1993 by Paris police while posing as a champagne entrepreneur named John Rink and carrying a phony British passport.

Prosecutors said yesterday that they were not certain what sentence they would recommend when Billman is sentenced May 25. Technically, he could face 55 years in prison, but he is likely to get closer to 15 years.

Billman showed little reaction as the judge issued the decision.

"We're thrilled," said Assistant U.S. Attorney Barbara Sale, who had worked on the case for years. "It's gratifying to see justice done after all this time."

Billman's legal troubles could continue. The failure of Community has cost the Maryland Deposit Insurance Fund $80 million, and Patrick McCracken, fund director of MDIF, said yesterday that the agency intends to pursue collection of the money.

The decision in the criminal case came 10 years to the day after Billman's scheme to defraud Community's depositors began, prosecutors say. Billman fled the country after he was ordered in a Montgomery County civil judgment to pay more than $100 million to MDIF, which had insured Community's accounts.

Prosecutors had likened Community to an automated teller machine that Billman turned to whenever he needed cash.

He bought Community in 1982. By mid-1984, with his real estate companies desperate for cash, he began tapping the S&L for money. In a few months, more than $20 million -- half of Community's net worth -- had been advanced to his Equity Programs Investment Corp.

The money did little to rescue EPIC. By early 1985 the company was in critical financial condition.

But even as a partner was explaining to disgruntled EPIC investors that the company was unable to repay them, Mr. Billman was lining his pockets with millions of dollars in EPIC dividends, all advanced by Community as part of an elaborate EPIC restructuring.

His own net worth went from $3 million in 1982 to $29 million two years later.

Defense lawyers said EPIC could have recovered its financial health by the end of 1985 and that loans issued by Community eventually would have been repaid. But the panic of the savings and loan crisis got in the way.

Mr. Billman's lawyer, John R. Fornaciari, said yesterday during closing arguments that his client might have been guilty of business failure or errors in judgment but that those do not constitute fraud.

The huge cash transfusions from Community to EPIC ended after the sudden and dramatic collapse of Ohio's state-insured savings and loans led to closer scrutiny by examiners of S&Ls everywhere. Withdrawals of state-insured accounts in Maryland were frozen.

"When the depositors' money stopped, EPIC could no longer function, and the companies folded," said Assistant U.S. Attorney Joyce McDonald.

Mr. Billman had already begun to wire millions of dollars to Switzerland as the state moved to lock up Community's accounts. A few weeks later, he applied for a passport using a false name.

"These are not the actions of an innocent man with a clear conscience. These are the actions of a crook," Ms. Sale said.

Billman spent much of his first year as a fugitive relaxing on Spain's Costa del Sol, but Judge Motz pointed to the solitary and dreary existence Billman later led as a fugitive.

"One can't help wonder but, absent some guilty knowledge, would someone subject themselves to that kind of life?" he said.

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