Billman's assets to aid state

May 27, 1994|By Scott Higham | Scott Higham,Sun Staff Writer

Maryland's taxpayers are the big winners after the discovery of millions of dollars in secret overseas accounts controlled by convicted financier Tom J. Billman, state regulators said yesterday.

Some depositors who lost money from his failed thrift, Community Savings and Loan, also received small payments from the state.

Billman, awaiting sentencing for his role in Community's collapse, orchestrated a complicated scheme from his jail cell to conceal millions of dollars stolen from the Bethesda-based thrift, federal prosecutors say.

But investigators discovered some of the money in Switzerland and negotiated a series of transfers to bring the money back to Maryland. Since then, $11.2 million has been deposited in a state fund to help taxpayers cover the bill generated by the savings and loan scandal -- at one time estimated to cost Maryland taxpayers $500 million.

Projected losses now stand at $150 million from thrifts whose deposits were state-insured.

"This is an important development in continuing to reduce the cost of the savings and loan crisis to Maryland's taxpayers," Gov. William Donald Schaefer said in a prepared statement.

Among the places the $11.2 million will be spent: education and law enforcement.

The recovery of the money -- and the possibility that more could be squirreled away in Billman's accounts -- also was good news for some of those who entrusted their deposits to Community.

Last month, the state paid $166,000 to 26 depositors and two unsecured creditors.

The discovery of millions of dollars in Switzerland was a stunning victory for state regulators, who have been trying to whittle down the cost of the savings and loan crisis ever since Community collapsed in 1985.

Billman, Community's chairman, fled to Europe. Federal prosecutors say he stashed $22 million in European bank accounts and lived as a fugitive until his arrest last year outside his apartment in Paris.

Billman has been behind bars ever since. But that didn't stop him from hiding money from state regulators and other creditors, prosecutors said Wednesday. As Billman was preparing for sentencing on his April fraud conviction, he tried to transfer millions of dollars to law firms, his father-in-law and the IRS, prosecutors said.

Prosecutors also disclosed that Maryland regulators -- following the money trail in Europe -- had negotiated a deal with Swiss lawyers who controlled millions of dollars deposited by Billman. In exchange for the state's promise not to sue, the lawyers agreed to transfer $13.5 million to Maryland.

Armed with a $112 million court judgment against Billman, the state was permitted to seize Billman's bank accounts and sell his assets.

"It was first come, first served," said Patrick M. McCracken, a director of the Maryland Deposit Insurance Fund.

The money was wired to Baltimore through Switzerland and New York. After paying legal fees and transfer costs, the state wound up with $11.2 million.

Late last month, that money was deposited in the state's general fund.

"It reduces the bottom-line cost to the taxpayers," said Page Boinest, a spokeswoman for the governor. "It will be used to pay for education, public safety -- anything the state spends money on."

The discovery, coupled with cash from the sales of assets, also enabled the state to pay some depositors who lost money when Community collapsed. Of the $341 million deposited at Community, $6.7 million has not been covered by insurance payments. Accounts totaling more than $100,000 were not insured.

The state is still searching for more money -- and even jewels -- that Billman may have stashed.

"We're not going to rest until we recover as much as we can," Mr. McCracken said. "After the empire he built, he doesn't look that smart now."

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