Squeezed in S&L; vise Integrity: James Fisher was an academic who never thought to question the practices of Baltimore Federal Financial when he was on its board. Then the industry collapsed, and the government went for his throat and his wallet.

THE BALTIMORE SUN

The wind blew through Jim Fisher's hair as he knelt on the deck of his trawler, the Vera Brant, sanding and varnishing its teak when he was interrupted by the beep of the cellular telephone.

On the other end that morning -- Feb. 9, 1992 -- was his assistant, Mary Ann Rice. Her voice was agitated as she explained that the government had just filed a lawsuit against him.

The Resolution Trust Corp. -- created two years earlier to clean up the nation's exploding savings and loan -- was seeking $32 million from Fisher and nine other officers and former board members of Baltimore Federal Financial, accusing them of causing the loss of tens of millions of dollars and the collapse of the thrift.

The news stunned Fisher. But the lawsuit simply certified troubles that had begun two months earlier for the 61-year-old educator of exemplary reputation.

For seven years Fisher had enjoyed a life of status and ease as a noted author and consultant after serving as president of Towson State College, briefly running for governor of Maryland and heading an international organization to promote higher education.

But a four-year nightmare had begun.

Neither government attorneys nor the other officers of Baltimore Federal would comment for this article. But dozens of interviews over six months -- with Fisher, members of his family, friends, federal officials and industry experts -- and an examination of documents and notes of meetings and conversations reveal two distinct but interwoven tales.

The first is how Fisher was swallowed into the deepest crisis of his life -- one that would cost him his marriage and pit this patriotic stalwart against the most unlikely of foes: the federal government.

The other shows how ill-equipped Fisher was to be a member of the board of directors of the thrift, how casually business was sometimes conducted and why the federal government was so zealous in its prosecution.

The first signs of trouble had come two months earlier.

James Lee Fisher began the morning with a comfortable routine. He pulled himself out of bed at 7 and threw on a sweat suit, grabbed a piece of toast that he washed down with coffee from his favorite Marine Corps mug, then took a three-mile walk

through his McLean, Va., neighborhood with Tracker, his yellow English lab.

After a simple breakfast of cold cereal and fruit, Fisher settled into a hunter-green leather chair behind an antique oak desk in his library -- Tracker curled in a ball at his feet.

The routine had been the same for six years, ever since his heart attack.

From his library, he wrote his scholarly books and served universities as a consultant, advising them on candidates for president and on ways to resolve conflicts between boards of trustees and top administrators. On this particular morning -- Dec. 2, 1991 -- he prepared to undertake his first chore: the morning mail. Rice had already tossed the junk mail and slit open the other envelopes, placing them in a neat stack on his desk.

Fisher flipped through the letters -- a note from a college president. Another from a doctoral student. A letter from his publisher, inquiring how his latest book was coming.

And a terse, three-paragraph note from the Resolution Trust Corp.

It came quickly to the point: "Enclosed are two subpoenas, one requiring you to produce documents, the other requiring you to give testimony."

He was ordered to appear for a deposition at the offices of a Washington law firm.

Fisher knew only generally what this was about. The RTC had been created only two years earlier to clean up the S&L; crisis sweeping across the country. Congress had given it vast powers to punish officers who had violated laws and squandered depositors' money.

No worries

But Fisher wasn't worried. He had resigned from Baltimore Federal 30 months earlier. He had an impeccable reputation.

And besides, he told himself, he'd done nothing wrong and performed his board duties capably -- even though the thrift had failed, like so many others.

But none of that would matter.

After studying the letter from the RTC, he telephoned his son, Kerry, a former assistant state's attorney for the city of Baltimore and a 38-year-old lawyer for Baltimore Gas & Electric Co.; and his close friend and confidant, Robert A. DiCicco, a lawyer in Towson whom he had first met while president of the college.

Kerry Fisher and DiCicco were anxious. They knew depositions could be rough, and they were aware of the RTC's no-nonsense reputation. They advised Fisher to hire an attorney.

But Fisher objected.

"I don't take it seriously," he told them. "I can't believe they will find anything irregular about my conduct or the conduct of any other officer."

His son finally insisted that he at least attend the deposition with his father.

The night before the deposition, Fisher's wife, Joan, was nervous, but he slept well, confident that he'd be asked few questions, then be on his way.

His son insisted that he keep his answers to "yes" and "no." But Fisher replied: "I won't compromise my sense of self by keeping quiet."

On Monday, Dec. 16, Fisher awoke at 6: 30 a.m. He took his customary walk, then dressed, making sure to stuff plenty of quarters in his pocket because he wanted to park on the street.

He left the house promptly at 9 and drove his Jeep directly to the law offices at 15th and I Street, just across from the hulking gray Department of Veterans Affairs building, and parked.

Fisher rode the elevator to the 10th floor and waited for his son to arrive. Almost immediately, though, an attorney with the firm greeted him.

The lawyer wasn't involved in the case, but he knew Fisher's reputation and was eager to meet him. He escorted Fisher to another room and poured two cups of coffee.

Kerry Fisher finally arrived, but he was in no mood for pleasantries when he was introduced to the lawyer chatting with his father.

Moments later, Christopher A. Myers, an attorney who would conduct the deposition, walked into the room, greeted the men and directed them to a small office.

Two other lawyers for the RTC and a recorder were already seated at a conference table.

Questioning begins

The questioning began at 10:20.

For the first hour, things went exactly as Fisher had anticipated. Myers asked him where he grew up and worked, what books he'd written and inquired about Fisher's tennis game.

"You look like you can still play," Myers remarked.

"I am an excellent player," Fisher replied. "My son is a little better."

Despite the pleasantries, Kerry Fisher didn't like Myers' tone from the beginning. He was especially annoyed that Myers kept referring to his father as "Mr. Fisher" instead of displaying proper courtesy by using his title, "Doctor."

"My father has a doctorate," the younger Fisher interjected. "It's Dr. Fisher!"

Myers ignored the reprimand.

Slowly, the questions became sharper. Myers wanted to know more about Baltimore Federal, the bad loans it had made in Florida and Texas and how they had been approved.

He asked who made decisions about executive compensation and the condo the thrift owned in Ocean City.

And there were persistent questions about Robert E. Hecht Sr., the chairman and chief executive officer of Baltimore Federal.

Fisher praised Hecht's performance, at one point saying:

"He epitomized so many good qualities, the effective leader, the effective human being. He was absolutely an extraordinary man, never in private or public a hint of anything that could be questioned.

"He was the person to be applauded as a human being, as a citizen, and I always felt very fortunate to have him."

The questioning stretched well into the afternoon, until, finally, all agreed to a break at 2 p.m.

During the recess, Myers pulled Kerry Fisher aside and complained that Fisher was "bending over backward to praise Bob Hecht. He should tell the truth."

To the son, the implication was clear: The RTC would go easier on his father if he'd roll over on the others.

Kerry Fisher was shocked. He knew his father would neither criticize his colleagues nor perjure himself just to get off the hot seat.

There was no more friendliness when the deposition resumed. And the questions showed just how little Fisher knew about the S&L; business.

Myers asked Fisher to explain the term underwriting.

"I think you should tell me," Fisher replied.

"I am asking you. Do you know?"

"No, just a general notion."

"What is your general notion?" Myers asked.

"That the underwriter would be responsible for assuming the validity of a project," Fisher replied.

"I'm not sure I understand what you mean by that," Myers responded.

"That's probably the reason I said it. I'm not sure either," Fisher answered.

The session didn't end until 4:30, and Fisher made arrangements to get a copy of the deposition.

As they rode the elevator the the ground floor, Kerry Fisher was pleased. He told his father he'd performed well.

Neither thought there was anything to worry about.

A winter vacation

Convinced that the RTC was through with him, Fisher sailed to North Key Largo, Fla.

It was something he did every January for the winter as part of his self-imposed regimen since the heart attack to suppress his Type A personality.

In addition to sailing, that included driving in the slow lane and picking the busiest checkout line in the markets.

Key Largo was perfect; the weather warm and the pace sleepy. There, he worked on his books -- all serious works on the role of university presidents, leadership and the inner workings of colleges.

But the call from Rice shattered all that on Feb. 9.

Fisher was stunned and angry. He had served on the board for 13 years and believed he'd always worked hard and made the best possible decisions.

"This can't be happening," he protested.

He had been asked to join Baltimore Federal's board in 1975 when he was president of Towson State College.

As in many other companies, board members were chosen not for their knowledge of the S&L; industry but for their names, connections and influence.

"A lot of them had no business being on the board because they didn't understand the business," Bert Ely, an industry expert, would recall later.

"These were self-perpetuating organizations, so you put on a family member, you put on friends, you put on safe people who kind of go along and don't ask many questions."

Fisher was paid $5,000 a year as a board member, which required him to meet with his colleagues once a month to make decisions on loans, compensation for top executives and long-range planning.

At the time, Baltimore Federal was heady with success. And by 1980, it was the city's second-largest thrift, with more than $1 billion in assets.

In January 1984, it erected a 20-story headquarters on East Lombard Street, adorned with antique paneling, original paintings, collages, antique inkwells, a marble fireplace and a telescope that provided the S&L;'s executives and officers with a marvelous view of the Inner Harbor.

Fisher called it a "monument to our success."

A shift in strategy

By the mid-'80s, though, the thrift's strategy had shifted away from simply making loans to home buyers.

Now, it was invested heavily in mortgage-backed securities. It acquired a troubled thrift, and it bought pieces of multimillion-dollar construction loans in Florida and Texas.

There was $10 million to Mountain Creek, a residential-commercial project outside Dallas; $8 million for Sybar Plaza, a shopping center in Florida; $5 million for Del Lago, a hotel and convention center near Houston; and $3 million to renovate 16 condominiums in La Mar Tower in Houston.

In Fisher's mind, Baltimore Federal's chairman, Robert Hecht, and top management were the experts. If they thought a loan was good, then why should he question them?

By 1986, the bad loans were mounting and the intoxicating profits were vanishing. Baltimore Federal tried to sell itself, but the deal fell through.

By the end of 1987, the thrift lost $120 million and was $77.5 million in the red. The government desperately tried to find a buyer for Baltimore Federal, but there were no takers.

In February 1988, Hecht was forced out. And in June, Fisher and the other board members were told to resign.

Finally, on Feb. 7, 1989, a team headed by the Federal Deposit Insurance Corp. seized the thrift and placed it in !conservatorship.

After the government's investigation into the failed thrift, Fisher and the other nine board members were accused of gross negligence and breach of contract.

The government characterized the S&L;'s officers and board as a group that "gambled their depositors' money on high-risk strategies."

Those decisions, the government said, cost Baltimore Federal $40 million in bad loans.

In addition, it cost taxpayers $400 million for the government to seize the bank, take over and dispose of numerous real estate developments that the thrift had financed but had gone sour, and sell off the S&L;'s assets bit by bit.

"Like the drunk drivers in the manslaughter by automobile cases, [they] were willing to accept the risk that their reckless behavior could cause harm to others. Like the drunk driver who says that he never intended to hurt anyone [they] are claiming that they never intended to cause losses to Baltimore Federal. They contend that their good intentions excuse the harm they caused."

In its lawsuit, the government sought to recover $32 million from Fisher and the others.

After hearing the news about the lawsuit from his assistant, Fisher called his son and DiCicco. Both urged him to retain an attorney -- just as they had two months earlier.

Then he booked a flight to Baltimore.

'A fool for a client'

It was cloudy and looked like rain on Wednesday, April 1, 1992. Fisher and his son left an interview with an attorney and were walking briskly to another on East Fayette Street.

They had spent the past several weeks talking with lawyers, sometimes in person, other times on the phone. Each time, though, Fisher found some reason why they wouldn't do.

Fisher still wasn't convinced that he needed one. Two things bothered him: price and control. The only law firm he found at all suitable wanted $14,000 a month. He considered selling the house and his boat and using his savings.

But he rejected that, concluding that even if he won the case, he'd lose everything else in the process. As important was his reluctance to entrust the outcome to someone else.

"I've always fought my own battles," he told his son.

Kerry Fisher and DiCicco frantically tried to persuade him to hire a lawyer. "If you represent yourself, you're going to have a fool for a client," DiCicco warned.

DiCicco knew the Resolution Trust Corp. was nothing to take lightly. Congress had created it in 1989 to deal with the S&L; crisis, abolishing the Federal Home Loan Bank Board in the process.

With virtually endless resources, the RTC had assembled an array of accountants, insurance claims specialists, liquidators, and experts in savings and loan litigation from among the best firms in the country.

Its mandate: dispose of the assets from failed S&Ls;, investigate every thrift that collapsed and assess blame.

The agency was also armed with the power to seek triple damages and to refer cases to the Justice Department for criminal prosecution.

"You'll be a little guy," DiCicco cautioned Fisher, "and they'll just paper you to death."

Despite the protests, Fisher decided to represent himself, declaring: "I've always taken care of myself. I can't put myself in the hands of another."

Research, sleepless nights

At 3 a.m. at the Hartge Yacht Yard on the West River, Fisher tossed and turned on the Vera Brant until he was fully awake.

He pulled himself from the bunk and angrily snapped on a lamp attached to the bulkhead.

Next to the bunk was a green ice cooler-shaped filing cabinet with stacks of law books, papers and scribbled notes.

Clutter from his work was everywhere -- in piles on the floor, on a second bunk and on a 2-by-3-foot table just two steps from his bunk. Fisher sifted through the disorder, searching for a passage he'd seen that seemed crucial to his case.

Earlier that month, in May 1992, Fisher had sailed the Vera Brant from Florida and docked at the yacht club in the quiet town of Galesville, about 12 miles south of Annapolis.

There, he would prepare for his defense and, he hoped, spend restful nights on the West River.

But the case was consuming, and not even the solitude and splendor of the water that Fisher loved so much could provide him with peace. Sleepless nights and dizzy spells became routine.

"It's a constant shadow, a dark shadow," Fisher observed to a friend. "It's in your head all of the time.

"Virtually all of the time it's in the back of your mind -- sometimes it's right in front."

Kathryn Murry, Fisher's 36-year-old daughter, was getting worried.

As Kerry Fisher was the one his father turned to for strategy, Kathryn provided emotional support -- offering words of encouragement, entertaining him, diverting his attention.

Since Fisher's return from Florida, she would invite him to dinner once a week at her home in Annapolis, where she'd serve his favorite meal -- pot roast and mashed potatoes.

One Sunday, as he stepped into the house, she noticed changes her father. He stood slightly stooped; his eyes had lost their sparkle and turned deep and melancholy.

"I saw lines around my father's eyes that I had never seen before," she would say later. "It was obvious there were a thousand tons of bricks on his shoulders."

Things simply got worse over the next year and a half, as Fisher was sucked deeper and deeper into the dark pool of his legal battle with the federal government.

Fisher felt the weight, but he didn't notice the changes he was going through.

DiCicco and others did.

DiCicco saw his good friend turn increasingly sullen. "There was something foreboding in his personality that hadn't been there before. He'd be talking to you and there seemed to be something chewing on him," he would say later.

"For him it was the equivalent of making a disparaging remark about his mother or his wife. To him it was horrible."

The case strained Fisher's marriage to Joan, his second wife, and in August 1993, they separated.

He was becoming more desperate. By day he pored through mountains of legal books and cases. By night, he wrote a flurry of letters on his boat deploring the government's action against him and pleading for help.

He wrote to Maryland Sen. Paul S. Sarbanes, Virginia Sen. Charles S. Robb, RTC attorneys -- even President Clinton.

"This is the second time I have written to you regarding my torment by the Resolution Trust Corp. I assume that my earlier correspondence was lost in the transition," he wrote Clinton on Jan. 29, 1993.

"Mr. President," the letter continued, "there is more at stake here than a lawsuit. My very life is at stake. Again, I implore you to exercise your good offices to review this lamentable situation."

Some didn't reply. Others dodged the sensitive issue.

Less than two months later, he asked for a meeting with the RTC's Robert Soffer, and Christopher Myers and Gina Scharr-Howard, the two outside attorneys assisting the RTC, to discuss the government's case.

None knew why Fisher wanted to meet.

A shiny vial

The meeting began at 9:30 a.m. sharp on March 22 at the plush Washington offices of Dunnells, Duvall & Porter. After coffee, they gathered around a conference table.

The group sat silently. Without saying a word, Fisher reached for a silver chain around his neck. Fastened to it was a shiny vial, shaped like a bullet.

He held the vial between his thumb and forefinger for a long moment, making sure everyone in the room saw it.

The bottle, he announced, contained nitroglycerin.

Fisher then proclaimed that the charges against him were so serious that they could cause a heart attack.

Should that happen, he instructed them: "Place one tablet under my tongue every three to four minutes, and call medical services."

The others sat there, stunned.

Fisher then asked: "Will the RTC drop the case against me?"

"Why?" Myers replied.

"Because things haven't been going well for the RTC lately," Fisher said, noting that the agency had lost some of its cases against board members of failed thrifts.

The attorneys glanced at one another, and then Howard simply smiled, more out of amusement over Fisher's theatrics than concern over the government's record.

Deeper changes were occurring in Fisher -- changes that once would have been unfathomable.

A patriot and a Marine

He was the eldest of three children of Vera Brant and Morris Lee Fisher, the chief of police in Decatur, Ill.

Jim Fisher had grown up believing politics was a noble profession and government was designed to help and protect people.

He considered himself a patriot and was proud that he had

enlisted in the Marine Corps in the early '50s.

But now, his government was chasing him.

His daughter desperately tried to ease the pressure, confiding: "I am afraid they took some time and years away from my father."

Sometimes her efforts helped, especially when she met Fisher at Pusser's in Annapolis, where they danced to the piano like Ginger Rogers and Fred Astaire.

Other times they simply went for long walks.

But Fisher was seething.

The occasional times he went to parties, his chest tightened and he felt sickened when introduced to someone who worked for the government.

"It is a feeling of disdain," he told DiCicco. "I don't want to see them -- I don't want to be around them. They are not held accountable; they are not responsible."

His scorn grew, until he acknowledged: "I have absolute contempt for the agency of my government, for the elected officials of my government. I lost confidence in my government -- those things that we accept implicitly as a part of our citizenry.

"The things I was taught in grade school, why I enlisted in the Marine Crops. All of these things totally collapsed."

"We'll get through this," Kathryn told him. "The SOBs can take everything from you, but they will never be able to take us. We will always be a family."

Privately, though, she worried that the stress on her father would cause another heart attack.

Finally, she pleaded with him to find someone who would take over the case.

"Just throw in the towel, Daddy. Can't we get this over?"

Stand on principle

Throwing in the towel wasn't something that Fisher could do. The fight with the RTC, he told his family and friends, was over principle.

"I am completely guiltless," he protested repeatedly.

And to throw in the towel would be tantamount to admitting guilt and leaving his reputation forever tarnished.

Long ago he had come to rely on his instincts. He had just flunked out of Millikin University as a 19-year-old freshman, and Fisher was foundering.

Without discipline, he told himself, he would never amount to anything.

He decided there was only one place to find the discipline, announcing to his family in 1951 that he was enlisting in the Marines.

"I need to be tested, and the Marines Corps is the toughest branch in the military," he told them, adding, "and I want to make things better for the country."

Over the years, Fisher had developed an unwavering belief in himself and his principles.

He resigned in 1961 as assistant director of admissions at Northwestern University for what he considered policies that discriminated against Jewish applicants.

And in 1971, he refused to sign the final report of a blue ribbon commission appointed by President Richard M. Nixon to study reform of higher education.

"It just isn't what I believe in," he explained to White House officials. "I won't be able to face myself or others."

Now, it was his family asking him to just go along and end the fight with the RTC.

Talk of settlement

They had an added weapon, though. The RTC had settled with six of the 10 Baltimore Federal board members it had sued.

Fisher ignored the pleadings.

On Sept. 25, 1995, Fisher received another letter from the RTC.

It was an olive branch.

"As you may have heard," the letter said, "the RTC has reached a settlement in principle with your co-defendants. The RTC is willing to settle with all of the remaining defendants for very reasonable amounts considering the RTC's likely success and your individual finances."

A day later, he met with Myers, the private attorney retained by the government to head the prosecution of the Baltimore Federal case, in Washington for another deposition.

As the session ended, Myers offered to end the case against Fisher for a $100,000 fine.

Fisher was angry. He replied that he'd stand trial rather than compromise.

In early December, he received a phone call from Myers, who had a new offer.

This time he could walk away with a fine of only $20,000.

As he had so many times before, Fisher called his son and DiCicco to inform them of the RTC's offer.

They told him to accept.

"This is strictly a business decision," DiCicco advised. "It is ridiculous for you to spend another year of your life on this.

"You can do better things with your time even though you have to pay this ransom."

For days Fisher struggled. The fine would be relatively minuscule, but paying it would still represent some admission of guilt.

Payment by check

Finally, on Dec. 10, he instructed his assistant to drive to 'N Provident Bank and withdraw $20,000 and send a cashier's check to the RTC.

Five days later, he signed a document releasing him from all claims. He immediately called Kathryn to tell her, then drove to her home.

As he walked to the door, his daughter flew out of the house and jumped into his arms, smothering Fisher with a bear hug.

On Dec. 19, 1995, U.S. District Court Judge Marvin J. Garbis dismissed the lawsuit against Fisher and the others.

The government had spent four years and $1.5 million prosecuting them. It settled for a total of $1.7 million in fines.

Fisher celebrated by treating himself to a white Porsche convertible and promptly took Kathryn for a ride down Bay Dale Drive, a windy, two-lane road in Annapolis.

"He was like a 16-year-old," she would say later. "That is the first time I saw him happy."

But Fisher's exhilaration didn't last.

Today, he believes that he abdicated by paying the fine -- no matter how small.

"I took peace over principle," he says. "I have always maintained principle until the very end.

"And here I sold out."

Pub Date: 12/15/96

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