THE CON: While at the helm of a major savings and loan company, Tom Billman stole millions to make risky loans and fatten up his Swiss bank account. His fraud played a huge role in Maryland’s multimillion dollar savings & loan crisis of the mid-1980s.
THE DAMAGE: Depositors to Community Savings & Loan lost $28 million, or about $48 million today.
THE OUTCOME: Community Savings & Loan depositors lost $28 million, while the company defaulted on $1.4 billion in mortgages. Captured in Paris after a four-year manhunt, Billman was ordered to pay $25 million in restitution and sentenced to 40 years in prison.
To avoid certain arrest, Tom Billman went on the lam. For four years, he sailed yachts around the world and lived off the millions he had stashed in a Swiss bank account while 27,000 depositors reeled from shock at the collapse of the savings and loan he ran (and looted).
When he took over Community Savings & Loan in 1982, Billman didn’t hesitate to change the system. His first move: fold his own company into the S&L. Created in the late 1970s, Equity Programs Investment Corp. – or EPIC – catered to wealthy people looking for a tax shelter; they formed limited partnerships with EPIC to buy single-family homes (especially model homes), and rented them back to the builders. Once a home was built, EPIC sold it for a profit.
By the early 1980s, EPIC had purchased 20,000 homes across the country. But when housing prices dropped, the picture changed. Instead of turning huge profits, EPIC struggled to make mortgage payments. Billman found a solution in deposits to Community Savings & Loan; over the course of three years, he took $106 million from the S&L and put it into EPIC.
Though unaware of the fraud, depositors to the S&L began to feel anxious about the larger crisis sweeping through Maryland in 1985. Panicky depositors at dozens of savings and loans across the state rushed to withdraw their funds that spring. The state launched an inquiry into the industry and moved fast to take over Community Savings & Loan. When the dust cleared, the damage from Maryland’s S&L crisis totaled $370 million – a price paid for the lax regulation that allowed Billman and other executives to make risky loans and take hefty bonuses. Beyond the pain felt from the collapse of the S&L, Billman’s fraud caused EPIC to default on $1.4 billion in mortgages.
After a lengthy trial, a civil jury awarded the Maryland Deposit Insurance Fund a judgment of $112 million. Indictments were handed out a few months later to Billman and two others – but it was too late. Billman was gone. For several years, he had been preparing for his fraud’s inevitable collapse, squirreling away $22 million in a Swiss bank account and borrowing his college roommate’s name to acquire a phony passport.
The Justice Department launched an exhaustive search for Billman, who they knew was somewhere in Europe. Hoping for a tip, authorities placed a “wanted” ad in the International Herald Tribune that offered $200,000 for information on his whereabouts. In a nod to Billman’s penchant for boating, and his back problems, authorities also placed the wanted ad in yachting and chiropractic magazines.
But it wasn’t a tip from a person who spotted the jet-setting fugitive that led to his capture. Instead authorities wiretapped the phone line of one of his former associates; Billman was recorded discussing a plan to transfer $500,000 from a European bank to the U.S.
Arrested in Paris and booked in a Baltimore jail while he awaited his sentencing, Billman made one last attempt at escape. Using his son and a Brazilian man as couriers, he tried to transfer $5 million from his Swiss bank account into an account in Austria. He was sentenced to 40 years in prison in 1994 and ordered to pay $25 million in restitution.
Con Timeline: 1984-1985
