WASHINGTON - Five former directors of American Federal Savings Bank in Rockville, Md., and the thrift's law firm have agreed to pay $1.5 million in restitution to the thrift, the Office of Thrift Supervision announced Wednesday.

Former directors Marvin Sugar, Sheldon Blitz, William Kaplan, Samuel Lehrman, and Michelle Leavy will pay a total of $730,000 to American Federal. The Bethesda, Md.-based law firm Paley, Rothman, Goldstein, Rosenberg & Cooper will pay the thrift $800,000.

The OTS said the formed directors engaged in a conflict of interest by making decisions that protected their families' interest in second trust loans to Cedar Crest Country Club instead of the interests of American Federal, which had lent the country club $7.15 million in 1989.

The thrift remains open for business.

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