United States v. Dunham
Former Old Court president, awaiting sentence in Baltimore, faces new fraud charges in NY.
American Banker June 20, 1986 | Fraust, Bart
NEW YORK -- A New York State grand jury has indicted Jeffrey A. Levitt, former president of the failed Old Court Savings and Loan Association in Baltimore, on charges on real estate securities fraud involving a Long Island, N.Y., condominium development.
The indictment, which resulted from an investigation by New York State Attorney General Robert Abrams, generally centers around the filing of allegedly false financial statements between December 1984 and February 1985 by Mr. Levitt in connection with the condominium development.
The Glen Cove project was financed initially by loans from Flushing Federal Savings & Loan Association, a Queens, N.Y., thrift that failed in April. According to prosecutors, the estimated $5 million in loans were later sold by Flushing to Old Court.
"Our investigation is continuing," said Bert Ryan, an assistant district attorney for Nassau County, N.Y. "And there is a real possibility that more indictments will occur, if not by our office, then by other agencies."
Mr. Levitt, 44, is now incarcerated in Maryland as he awaits sentencing on July 2 in connection with his guilty plea earlier this month to Maryland charges of theft or misappropriation of $14.7 million from Old Court.
The failure of the privately insured Old Court in May 1985 precipitated the Maryland thrift crisis and the collapse of the state's private deposit insurance fund. Old Court is now in receivership, and depositors generally are barred from withdrawing their funds.
Mr. Levitt is one of five defendants named in the 29-count New York State indictment, which was filed with the New York State Supreme Court.
The others name were John R. Quinn, 47, of Glenn Cove, N.Y.; Barry Marcus, 43, of New York City; Andrea Dunham, 46, of New York City; and Village Green Realty at Garvies Point Inc., a Maryland company now in receivership that was formed by the other defendants to build the $33.8 million condominium project in Glen Cove, N.Y.
Mr. Marcus and Ms. Dunham are partners in a New York City marketing firm.
All of the individuals named in the indictment have pleaded not guilty to the charges.
Another individual involved in the project, Alan August, 47, of Old Brooksville, N.Y., has pleaded guilty to charges of violating New York securities laws.
Attorneys for Mr. Levitt and Mr. Quinn did not return phone calls on Thursday.
Susan Kellman, attorney for Ms. Dunham, described her client's role as minuscule and said that even the prosecutors acknowledged that she had no way of knowing that false financial statements were filed.
Michael Santagello, attorney for Mr. Marcus, called the indictment against his client "a cheap shot that the attorney general should be embarrassed to try before an American court."
Mr. Levitt was charged with eight counts of real estate securities fraud and three counts of offering a false financial statement. Each count carries a maximum prison sentence of four years.
In the indictment, Mr. Levitt is accused of having falsely identified himself as a shareholder of Village Green, the sponsor of the condominium project, when in fact he had merely entered the project as an agent for Old Court.
In addition, the indictment charged that Mr. Levitt falsely stated that he had never been the subject of a professional disciplinary proceeding. Prosecutors said that Mr. Levitt's license to practice law in Maryland was suspended in the early 1980s.
Mr. Quinn, a Glen Cove real estate developer, was charged with 10 counts of real estate securities fraud, three counts of offering false financial statements, three counts of filing false financial statements, one count of scheming to defraud, and four counts of perjury. Each count of perjury carries a maximum seven-year prison sentence, with the remaining counts each carrying four-year maximum terms.
In particular, Mr. Quinn is accused of obtaining funds from Flushing, Citibank, and the Glen Cove Community Development Agency by distributing financial statements that contained false descriptions of his net worth. Citibank, according to prosecutors, agreed to provide financing to prospective tenants of the Glen Cove project.
Investigators looking into the collapse of Flushing have estimated that the thrift provided as much as $20 million in loans to either Mr. Quinn or entities associated with him.
Some of the loans are among the estimated $85 million in problem assets inherited by the Federal Savings and Loan Insurance Corp. when it engineered the assisted takeover of Flushing by the Long Island Savings Bank, Syosset, N.Y., last April.
Lending practices by Flushing and its former president, Carl Cardascia, are the subject of an ongoing investigation by the federal law-enforcement agencies.
Among the subjects of the probe are $8 million in loans granted in 1984 to a group led by Michael Hellerman, a convicted stock swindler turned government informant and witness.
Mr. Hellerman was given the new identity of Michael Rapp in 1972 after he provided testimony that led to the convictions of several major organized crime figures. Banking transactions involving Mr. Hellerman, his associates, and their companies are the targets of probes by law-enforcement agencies in New York, Miami, Orlando, Tampa, Los Angeles, Dever, and Oklahoma City.
Flushing has filed a civil suit against Mr. Hellerman, Mr. Cardascia, and others, charging that they conspired to defraud the thrift. The suit in part charges that the defendants violated the civil provisions of the Racheteer-Influenced and Corrupt Organizations Act of 1970.