As a young naval pilot, Charles H. Keating Jr. was in an especially fine mood one evening as he prepared to land his Hellcat fighter plane at an airfield in south Florida.
Eagerly anticipating a date with an attractive woman, Keating had deliberately stayed close to the field as he flew the night training maneuvers. He had quietly arranged to be the first in his squadron to land so he could get off duty as fast as possible.
With a trumpet solo by Harry James blaring from his radio, Keating steered the fighter plane into what he thought would be a routine landing. There was just one problem: He had forgotten to put the wheels down.
"The (control) tower was telling me: 'Your wheels are up,' but all I could hear was old Harry," Keating recalled recently in an interview at his office here.
Though the ensuing belly-flop landing destroyed the Hellcat, Keating survived by jumping from the craft while it was still skidding down the landing strip. Rescue workers found the young aviator sitting on his parachute at the edge of the runway, his expensive plane in flames nearby.
Now nearly 65 and a rich businessman, Keating still conducts himself with the same single-mindedness that nearly claimed his life on that military airstrip in Vero Beach toward the end of World War II. Just as he lived through that crash, Keating has survived many scrapes in the business world without major damage--at least so far.
As the decades have elapsed, Keating has often been at the center of one tempest or another, but they have never slowed him down. In the past 10 years, he has emerged as a businessman without apparent peer in Arizona in terms of riches, clout and color.
"Charlie is impatient, aggressive, always on the move," said William J. Keating, who cited the plane crash story to illustrate his brother's modus operandi . "He has clearly defined goals."
Financier, political fund-raiser and real estate developer Charles Keating is chairman and controlling shareholder of American Continental, a Phoenix real estate development company, which in turn owns a highly unorthodox financial institution in Orange County known as Lincoln Savings & Loan.
Lincoln Savings has been both a bane and blessing for Keating since American Continental bought the thrift for $51 million in 1984. The financial institution has helped finance his ambitious development schemes but has placed him in continual combat with federal thrift regulators.
As well known for his conservative causes as for his business endeavors, Keating has compiled a formidable list of foes over the years. They include pornographers, journalists and--most recently--government bureaucrats who regulate the nation's savings and loan firms.
"Charlie Keating has made a lot of enemies," said one associate who asked not to be further identified. "He's stubborn, he's an entrepreneur and he has his own way of doing things."
"I don't think he worries about the popularity of his positions," said William Keating, who used to be a U.S. congressman from Cincinnati, where the Keating brothers were raised. Charles Keating did not move to Phoenix until the mid-1970s.
Some see Charles Keating as a right-wing partisan with uncommon political influence who tries to conquer his foes through intimidation and litigation. Among those sued by Keating's companies in recent times are a newspaper in suburban Mesa, Ariz., and a government regulatory agency.
So controversial has Keating been in Phoenix in recent years that he spent about $500,000 on radio advertisements recently to spruce up his image. The radio spots promoted his real estate developments and his family-oriented view of the world.
Others see him as a symbol of decency who relishes a good fight, loathes pornography and quietly helps the down and out. A deeply religious Roman Catholic, Keating's passions are his work, his causes and his family, friends say.
American Continental is very much a family affair, although some shares are owned by the public. Keating family members and in-laws own a majority of the stock and dominate its board. Even Keating's wife of 38 years has a job as chief decorator for American Continental hotels.
Keating's only son, Charles H. Keating III, known as C3, is an executive vice president who at age 31 made $800,000 in 1986, a year his father earned $1.77 million, the company's latest proxy statement shows.
Keating lives elegantly in a walled-off mansion in suburban Phoenix that is a favorite gathering spot for a clan that includes six children and 19 grandchildren. Keating and his American Continental executives are ferried around in three jets and a helicopter that are housed in an unmarked hangar at the Phoenix municipal airport.
American Continental's staff is a group of well-scrubbed executives who work long hours in return for big salaries. (Even some secretaries make $65,000 a year.) Tall and gangly, Keating wanders the offices in an informal and benignly dictatorial style, barking orders and demanding instant results.
American Continental's offices have a decidedly high-tech glow, with computer screens everywhere reflecting what is happening in the securities markets. The company invests heavily in stocks and junk bonds.
The company's real estate developments are sharply accelerating the growth and sprawl of metropolitan Phoenix.
Its most ambitious developments are a huge planned community known as Estrella and its 55% ownership in a hotel, known as the Phoenician, that is expected to cost more than $300 million. The hotel, in which investors from the Middle East are minority owners, should be finished in October, but Estrella will not be fully developed until the 21st Century.
American Continental's financial performance of late, though, has not been particularly impressive for a firm that boasts assets of nearly $5 billion. (Lincoln Savings currently accounts for about 80% of the assets, Keating said.)
The parent firm's nine-month earnings totaled only $9.35 million, less than half the comparable year-earlier levels, a drop that the firm blames in part on expenses incurred in a long audit of the S&L; by federal regulatory examiners. Increased real estate development expenses also cut into earnings, the firm said. Year-end earnings are due out shortly.
Keating is one of the many real estate entrepreneurs who flocked to the thrift industry earlier in this decade after state and federal deregulation laws vastly expanded the way these financial institutions could invest their money. But Keating has grown increasingly tired of operating in a regulated environment and apparently may sell the thrift to private investors.
William D. Hinz quit as Lincoln Savings' chief executive just 10 days ago to try to negotiate a purchase of the thrift, and Keating is not opposing the effort at this point. It was only three months earlier that Hinz had been hired to convert Lincoln back into a more traditional savings and loan.
Aversion to Regulators
Before American Continental acquired Lincoln Savings in 1984, the thrift had been a traditional lender, making home mortgage loans. Under Keating's leadership, Lincoln Savings has become a major real estate developer and heavy investor in high-yield "junk bonds."
Though these investments are legal for a California savings and loan, they are frowned on by risk-averse regulators. Partly as a result, Lincoln Savings' relations with federal regulators have been among the poorest in the industry.
Keating sees thrift regulators as meddlesome, unimaginative bureaucrats who are mainly motivated by the fear of being second-guessed.
"Nobody should have to live with regulators," he said in an interview. "Instead of using common sense, they've become persecutors." A spokeswoman for the Federal Home Loan Bank of San Francisco declined to discuss Keating or Lincoln Savings.
Keating has challenged the regulatory establishment and its edicts through lawsuits and political pressure.
One suit charged that regulators deliberately leaked confidential information about Lincoln Savings' allegedly questionable financial condition to the press. The lawsuit was dropped after former Federal Home Loan Bank Board Chairman Edwin J. Gray left office last June.
Another suit sought to head off a Gray-led effort to rein in some of the new investment freedoms that the thrifts had been given, particularly in California. A federal court in Washington ruled in favor of the bank board last October, but Lincoln Savings has appealed the case.
Keating also created a hubbub when he met with the bank board's chief of staff, Shannon Fairbanks, about the possibility of Gray going to work for Lincoln Savings. Although the meeting came to naught, regulators felt that the job feeler was only a ploy to get Gray out of the chairman's job--something Keating has denied.
On another occasion, five U.S. senators met with thrift regulators to discuss why Lincoln Savings was undergoing an unusually lengthy audit. Though nothing visible resulted from the meeting, held last April, it was a fearsome display of Keating's political muscle. The audit was concluded recently, but the results have not been made public.
"I have never met a man with more political clout in my life," said one high-ranking savings and loan regulatory official in California. Senators attending the meeting were California's Alan Cranston, Arizona's Dennis DeConcini and John McCain, Ohio's John Glenn and Michigan's Donald W. Riegle Jr.; all are Democrats except McCain, a Republican.
(Riegle disclosed late last week that he has returned $76,100 in contributions from American Continental employees to avoid the appearance of a conflict of interest in connection with the regulatory meeting on Lincoln Savings.)
Politics comes naturally for Keating, who ran his brother's congressional election campaigns. He has helped bankroll a range of politicians, from Texas' now-bankrupt former Gov. John B. Connally when he ran for President to Phoenix city council members whose votes are crucial to American Continental's development plans.
There have been heavy contributions for senators like DeConcini, who shares Keating's social values. "If he sees somebody working hard for America and the Judeo-Christian ethic, he tends to support the guy," Robert Maynes, DeConcini's press secretary, said. "And his means of support is financial."
Keating caused quite a stir here in 1983, when his companies contributed unusually large amounts to local city council races--much to the disgust of people like Ed Korrick, a former councilman who has just retired.
"The guy is someone who likes to buy power, and he's willing to spread his money around," said Korrick, a stockbroker in suburban Scottsdale.
Keating headed west to Phoenix in 1976 to head a troubled home-building firm that was owned by wealthy Cincinnati financier Carl Lindner. Keating was a vice president and director of Lindner's American Financial Corp.
Keating and Lindner eventually parted ways after Lindner "took his company private," Keating said. "I realized there was no place for me in a private company."
In 1979, both Lindner and Keating consented to a Securities and Exchange Commission order enjoining them from fraudulently diverting corporate assets to their personal use. They neither admitted nor denied the charges.
The case stemmed from SEC charges that the two men had allowed a bank controlled by American Financial to make $14 million in improper loans to officers of the company, their families and others. Keating still resents the SEC action, saying that it cost him a chance several years ago to be ambassador to the Bahamas, where he has a home.
A lawyer himself, Keating uses a large staff of in-house attorneys, as well as numerous outside firms, to carry on his legal battles.
One notable dispute came in 1985, when Dallas-based Gulf Broadcasting accused Keating and his companies in a civil suit of illegally acquiring Gulf's stock and then attempting to force Gulf to buy back the shares far above the market price, a practice commonly called greenmail. At the time, American Continental was a large shareholder in Gulf.
At the heart of the lawsuit was an allegation that Keating had offered Gulf's chairman "many millions of dollars" and a generous price for his Gulf stock if he "would resign and turn control of Gulf" over to Keating. The lawsuit also accused Keating of illegally concealing his troubles with the SEC when he and his companies bought the Gulf stock.
After the case was settled amicably, Keating received a letter from Gulf President John H. Massey apologizing for the personal nature of the dispute. Massey blamed press reports for distorting the differences. Taft Broadcasting eventually bought Gulf.
The press also gets its share of heat from Keating.
In one case, an American Continental affiliate sued the Mesa Tribune and its executive editor, Max Jennings, over an opinion piece by Jennings that condemned a controversial zoning decision by the Mesa City Council.
Jennings criticized the city council for approving a huge Keating residential development project that was to be built right under "the screaming jets" of a nearby Air Force base.
Jennings actually had little critical to say about Amcor, the American Continental affliate. "The only winner I can see in this sorry affair," he concluded, "is Amcor Investment Co., which is certainly doing what it should be--making money."
Amcor sued nonetheless, saying that the article implied that the housing development, known as "the Crossings," would be a "hapless, unwholesome, unhealthful, and dangerous place in which to live."
The suit also said the column threw a wrench into Amcor's plan to sell an interest in the project to other investors. A local judge dismissed the suit, but Amcor has appealed.
Keating's love of battle and his conservative views have made him a leading crusader against pornography, an interest that dates back to the 1950s, when he led a drive to rid Cincinnati newstands of sexually explicit material. He still helps finance an anti-pornography group known as the Citizens for Decency Through Law, whose offices are adjacent to American Continental's on Camelback Road here.
Over the years, Keating and his followers have battled foes varying from Larry Flynt, the publisher of Hustler magazine, to Pacific Bell, the latter for allowing indiscriminate access to dial-a-porn messages.
A continuing skirmish involves an adult movie theater in an Orange County shopping center that Lincoln Savings sued last April after the failure of a long effort by the city of Santa Ana to close the theater.
Operated by Mitchell Bros., the theater has attracted "criminal elements, organized crime and persons who practice sexual deviations, such as homosexuals, lesbians, voyeurs, prostitutes, pedophiliacs, sadists, masochists, rapists, etc., into the area," the suit charged.
Although Lincoln claimed that the theater creates a threat to the safety of employees at one of its nearby branches, the movie theater is, in fact, inconspicuously tucked away in a corner of a shopping center several blocks from the bank branch.
Mitchell Bros. characterized Lincoln Savings as a "wealthy and powerful Arizona-based financial institution . . . owned by political extremists" that is trying to censor what movies people in Orange County may watch.
Keating's moral views have also played a role at Estrella, the American Continental development that is intended to eventually house 200,000 people on 20,000 acres of land on the western edge of Phoenix.
In a court filing known as a "declaration of covenants, conditions and restrictions," American Continental gave Estrella's board of directors the power to remove anything from a private piece of property that it considers obscene. The declaration also sought to prevent anyone living at Estrella from "intentionally termininating a human pregnancy."
After the restrictions were disclosed by the Arizona Republic newspaper, Keating changed the controversial stipulations, saying that they were a "mistake" and had been proposed without his knowledge by an overzealous staff. Keating's son is responsible for the development of Estrella.
Those who know Keating best say his social views are fired by deep religious beliefs. Keating has, for example, donated well over $1 million to the Covenant House, a shelter in New York City for troubled teen-agers.
Lincoln Savings has also loaned Covenant House more than $40 million to buy buildings in Manhattan. "He makes you believe in Providence," said a grateful Father Bruce Ritter, the Franciscan priest who founded the organization and has expanded it to cities throughout the country.
When Mother Teresa came to the United States recently, it was American Continental's helicopter that transported the famous Roman Catholic nun to remote Indian reservations in the Southwest.
"He said he wanted to be damn sure he gets to heaven," said Pat Murphy, publisher of the Arizona Republic, adding: "I'm not sure he said that facetiously."
Replied Keating: "I'll take any way to heaven I can."