Cardin v. State

• Decision Date: 02 December 1987
• Docket Number: No. 200,200
• Citation: 73 Md.App. 200,533 A.2d 928
• Parties: Jerome S. CARDIN v. STATE of Maryland. Sept. Term 1987.
• Court: Court of Special Appeals of Maryland

Page 200

73 Md.App. 200

533 A.2d 928

Jerome S. CARDIN v. STATE of Maryland.

No. 200 Sept. Term 1987.

Court of Special Appeals of Maryland.

Dec. 2, 1987.

Aubrey M. Daniel, III (John K. Villa, Gerson A. Zweifach, Stephen D. Raber and Williams & Connolly, on brief) Washington, D.C., George L. Russell, Jr. (Russell & Thompson, on brief), Baltimore, for appellant.

Dale P. Kelberman, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Charles O. Monk, II, Deputy Atty. Gen. and Peter E. Keith, Asst. Atty. Gen., on brief), Baltimore, for appellee.

Argued before WEANT, GARRITY and BLOOM, JJ.

BLOOM, Judge.

A jury in the Circuit Court for Baltimore City convicted appellant, Jerome S. Cardin, of five counts of theft under Maryland's consolidated theft statute, Maryland Code Annotated, art. 27, § 342 (1957, 1982 Repl. Vol.). Appellant was sentenced to five concurrent fifteen year terms of imprisonment. In this appeal he makes numerous assertions of error with regard to the sufficiency of evidence, the jury instructions and the conduct of both the State and the trial court during voir dire, during the trial, and during closing arguments.

Finding no reversible error, we affirm the judgments of the circuit court.

Facts

Jerome Cardin, a native of Baltimore City, was, at the time of trial, a 60-year-old attorney and businessman. He had formed Old Court Savings and Loan Association ("Old Court") as a stock savings and loan association ¹ in 1959. Under Cardin's control, Old Court was a conservatively run institution. Even though Old Court generated no dividends for its shareholders, it was profitable until the late 1970's. In 1979, however, Old Court began to fail, primarily as a result of rapidly rising interest rates, and by August 1982 it had a negative net worth. The Maryland Savings Share Insurance Corporation ("MSSIC"), a private insurance authority that participated with the State in regulating the savings and loan industry, advised Old Court to seek an injection of fresh capital through a merger or sale of the association.

At MSSIC's direction, Cardin began negotiations to sell Old Court or to merge it with a stronger institution. In September 1982, MSSIC's executive vice president introduced Cardin to prospective buyers, Jeffrey Levitt and Allan Pearlstein. Cardin, Levitt and Pearlstein eventually entered into a written agreement ("the sale agreement") whereby Cardin sold controlling interests in the institution to Levitt and Pearlstein, retaining only an 18% ownership interest in Old Court.

As part of the sale, Cardin negotiated a five year agreement retaining his law firm, Cardin and Cardin, P.A., as counsel to Old Court at an annual retainer of $40,000 plus hours billed in excess of that amount. The sale agreement also provided for the firm of Cardin and Cardin, P.A., to perform legal services in connection with Old Court loan closings ("the loan closing agreement"). In exchange for those legal services, Cardin and Cardin, P.A., or its designee would receive 50% of the closing fees charged by attorneys handling Old Court's loan settlements.

MSSIC approved the sale agreement in its entirety. The loan closing agreement, however, did not operate as it had been represented to MSSIC. The role of Cardin and Cardin, P.A. in loan closings progressively diminished over time; by the summer of 1984 the law firm was providing no legal services whatsoever in connection with Old Court's loan closings. Cardin testified that the loan closing agreement degenerated to a "fee splitting agreement" in that Cardin & Cardin, P.A., continued to receive 50% of all fees generated by Old Court in connection with loan closings even after that law firm ceased to perform the legal services contemplated by the loan closing agreement. Old Court borrowers were not informed that Cardin, who performed no legal services in connection with their loans, received 50% of the closing fees collected at Old Court loan settlements.

Jeffrey Levitt paid Cardin & Cardin, P.A. its "settlement fees" under the fee splitting agreement from his personal expense account at Union Trust Co. Bank. Between December 1983 and May 1985, Levitt wrote twelve checks, in the total amount of $1,040,000.00, to Cardin pursuant to the fee splitting agreement.

As early as the summer of 1983, attorneys at Cardin & Cardin, including Jerome Cardin's son, Sanford, became concerned that the fee splitting agreement might violate the Code of Professional Responsibility's prohibition against unethical fee splitting. ² Cardin testified that in the fall of 1983, in response to this concern, he and Levitt entered into two agreements retaining Cardin & Cardin, P.A., as general counsel for Levitt and for Charles Street Title, Inc. (one of Levitt's companies), respectively.

Each agreement provided for Cardin & Cardin, P.A., to receive $6,000.00 per month. Cardin testified that the legal services to be performed consisted of being "available to furnish general legal advice as requested by Jeffrey Levitt on the one hand and Charles Street Title on the other." The monthly retainer fees were increased to $7,000, then to $8,000, and finally to $9,000 per month.

Cardin explained that he would deduct from the amounts owed pursuant to the fee splitting agreement the amounts received pursuant to the Levitt and Charles Street Title retainers. The fees received pursuant to the Levitt and Charles Street Title retainers brought Cardin's total Old Court earnings far above the $1,040,000 received from Levitt pursuant to the fee splitting agreement.

Meanwhile, between the 1982 sale of Old Court and its collapse in 1985, Cardin continued to be involved in Old Court's management. Cardin, Levitt and Pearlstein attempted to meet at least weekly to discuss Old Court's current and future business. Cardin and Levitt joined in a number of business and real estate ventures financed through Old Court. On at least two occasions, Cardin sent memos to Levitt, warning Levitt of "the importance of Old Court's strict compliance with all regulations" and preaching that "no matter how big one is, it is imperative that he comply with the letter of the law" and that "perception is more important than fact." Prophetically, Cardin attached to one of his warning memos a 14 November 1984 Wall Street Journal article concerning the indictment of a former bank chief executive officer on 44 counts of bank fraud.

From the fall of 1982 through May 1985, when Old Court collapsed and was placed into conservatorship by the state, Cardin & Cardin, P.A., received $1.3 million for "legal services" rendered to Old Court over and above the $1,040,000 it received pursuant to the fee splitting agreement. In addition to those sums, Cardin was paid a total of $385,000 in five separate transactions, for which he was indicted and convicted in this case.

The five counts of theft were as follows:

Count I: Count I charged Cardin with stealing $100,000 in connection with a project known as "Bloody Point." The state produced evidence from which the jury found that, in October and November of 1984, two real estate developers obtained a $6.5 million loan from Old Court Savings and Loan to purchase and eventually develop property known as Bloody Point. The loan proceeds in excess of the purchase price were placed in escrow to be withdrawn as needed. Cardin admittedly had no involvement whatsoever with Bloody Point; nevertheless he submitted to Jeffrey Levitt an invoice on the letterhead of Cargol Consultants, Inc. ("Cargol") for "services rendered" in the amount of $100,000.00. Cargol, a shell corporation formed and controlled by Cardin, had rendered no services. At the time of settlement, Levitt drew a check to Cargol for $100,000.00 as part of the distribution of the $6.5 million loan proceeds. The jury convicted Cardin of theft of the $100,000.00, which would otherwise have remained in escrow at Old Court for use by the developers. In so doing, the jury rejected Cardin's defense that the $100,000.00 actually represented his rightful share of the closing fees and that Cargol was merely the "designated payee" pursuant to the fee splitting agreement.

Counts II and III: Counts II and III concerned two checks, each for $75,000, which Cardin received in February of 1985. One check was drawn on the account of Old Court Joint Venture (OCJV), the other on the account of Old Court Investment Corporation, Inc. (OCIC). Both OCJV and OCIC were wholly owned subsidiaries of Old Court. Cardin had submitted to OCJV and to OCIC invoices on Cargol letterhead, in the amount of $75,000 each, for services rendered. At trial, Cardin admitted that Cargol rendered no services for OCIC or OCJV, and that the invoices were "inaccurate." In convicting Cardin of theft in connection with each of those transactions, the jury rejected Cardin's defense that the two $75,000 payments were actually "bonuses" representing Cardin's rightful 18% share of Old Court's recent profits. Cardin admitted that he knew that Old Court's Board of Directors never approved such a distribution of profits, and he also conceded that under Maryland Code Ann. Financial Institutions article § 9-328 (1986 Repl. Vol.), a saving and loan's board of directors must approve the distribution of any profits. It is interesting to note that Cardin testified that he served on the committee that promulgated the current Financial Institutions Code.

Count IV: Count IV involved a project known as "Galleria Enterprises of Maryland" (Galleria). Galleria's owners borrowed $300,000 from Old Court and deposited the money into an account opened in Galleria's name. Cardin submitted two invoices to Galleria on May 1, 1984, and July 18, 1984, on his personal stationery. Each of those invoices requested payment "for consultation services" in the amount of $25,000. Admitting that no services were performed for Galleria and that the invoices were "inaccurate," Cardin claimed the $50,000 paid from the Galleria...