S&L files from '85 still yielding clues by the boxloads Researchers continue to track thrifts' cash

March 24, 1998|By Laura Sullivan | Laura Sullivan,SUN STAFF

G. Richard Gray runs his hand along a line of cardboard boxes rising 20 feet in a damp concrete warehouse in Linthicum. Every dozen boxes or so, he pauses to brush away the dust collecting on the sleeve of his pinstriped suit.

"This place is like a graveyard," he says, his voice echoing under the high ceilings. "Sure brings back memories. Memories of vagabonds."

Since 1985, Gray has holed up, sometimes for weeks at a time, in this resting place for the savings and loan crisis that brought down 102 thrifts and shook Maryland's financial community. He has sifted through 40,000 cubic feet of paperwork in the boxes -- part of a mound of documents so imposing that a judge has ordered two bonfires to burn off the excess.

And now, Gray and his partner, Carol Russell, are the last of a troop of 107 researchers assigned to help Maryland recover millions hidden or squandered when the thrifts failed. They've been at it so long that one of the key figures, former Old Court Savings and Loan CEO Jeffrey Levitt, has already been convicted and paroled from federal prison after serving seven years for stealing $14.6 million from depositors.

Still, on any given day, Gray and Russell can be found poking around the warehouse, obsessed, trying to swing a few more deals on properties the state acquired as the thrifts collapsed.

"All the glitz is gone, but we're not lonely," Gray says, smoothing back a few wisps of his red hair. "It's just more quiet than it used to be."

Gray and Russell have helped bring crooked bank executives to justice and salvaged millions most thought lost forever. Analysts predicted at first that the crisis would cost taxpayers $500 million; the actual bill has been about $125 million.

Yet state officials say it could take another year or two to finish up and turn the boxes over to the state's archives office.

Gray and Russell no longer receive a monthly retainer from the state but still bring in consulting fees as they close out the remaining deals on properties to be sold -- a 23-acre former landfill in Glen Cove, N.Y., is one of the last holdouts.

Before Gray joined the researchers under the Maryland Deposit Insurance Fund, he was a real estate lawyer at a Baltimore firm. His boss ducked into his office one afternoon, told him that the state had asked for help investigating Old Court, and that the project was his.

Never went back

Gray figured he would need at most a few months.

Gray and the other researchers set out to salvage every document they could about the thrift's properties and accounts. They uncovered fraud and theft, first by Old Court, later at five other lenders. Those discoveries prompted runs at 96 other S&Ls, which crumbled under the cash demands of worried depositors.

Three years after Gray got the Old Court assignment, his boss expressed concern that he'd been away from the practice for too long. So Gray stopped practicing law.

"This was absolutely a challenge," Gray says, recalling his decision to keep mining the mountain of paper. "It was extremely rewarding, taking from the rich to give back to the little depositors."

Over the next decade, while Gray married, had three kids and started a financial consulting firm, he kept working on the aftermath of the S&L crisis.

So did Russell, a bank executive 10 years ago when she was recruited for her expertise in commercial lending. She is now senior vice president of Gray's firm, Financial Conservator, Inc., and works mainly in the warehouse.

Novel reading

Over the years, most of their hours have been spent on folding chairs propped up to a card table near the warehouse doors, where the only natural light enters the building. The area is strewn with files and laptop computers.

To Gray and Russell, the boxes of documents read like adventure novels. Where others see receipts, ledgers and land portfolios, they see maps to missing money and S&L executives on the run.

Labels on the boxes pinpoint the protagonists of their adventures: "Videotapes of Levitt" or "Desk Files of Billman."

Tom J. Billman, the once-powerful executive director of Bethesda-based Community Savings and Loan, skipped bail in 1988 on theft and fraud charges. From the day he took off, Russell, Gray and other researchers tracked his paper trail.

They found some of the missing money stashed in bank accounts across Europe, and sold off his house and cars to recoup more of it. After they discovered a slip of paper suggesting he had put $2.5 million in a safe deposit box in Switzerland, Russell went to retrieve the cash and found herself walking through the streets of Geneva, bills stuffed into her briefcase.

In the years before Billman's arrest, strangers offered to track him down for a bounty. Once two men, dressed in trench coats and claiming to be former Navy Seals, said they knew where Billman was hiding and told Gray and Russell they could lure him onto a boat and snag him in a fishing net.

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