Duped on Investments, Lincoln Depositors Say
Victims of the worst thrift failure in history told a House committee today that they were duped into investing their life savings in what they were told were federally insured securities only to learn later they were worthless junk bonds.
Connie Wickman, 78, of West Hills in the San Fernando Valley told the House Banking Committee that she and her 80-year-old husband were devastated when they were told earlier this year that their $25,000 in bonds sold through Lincoln and issued by its parent company, American Continental Corp. of Phoenix, was lost.
“When a senior citizen loses their life savings, it is not only the money they lose, but something more important,” she said in a barely audible voice. “They have failed--themselves, their children, their families and also in tomorrow, believing there is nothing left for them to believe in.”
The Wickmans are among 22,000 people, mostly Los Angeles-area retirees who state and federal officials say were targeted by Lincoln to switch nearly $200 million in federally insured deposits into junk bonds after federal examiners first recommended closing the S & L in May, 1987.
Those bonds became virtually worthless when American Continental declared bankruptcy last April, one day before the government finally seized its Irvine Lincoln subsidiary which had lost an estimated $2 billion in savers’ federally insured deposits.
The government last month filed a $1.1-billion suit against Lincoln’s owner, Phoenix millionaire Charles H. Keating Jr., charging fraud and racketeering.
Meanwhile, both the FBI and the Senate Ethics Committee are investigating whether five senators, including Alan Cranston (D-Calif.), who received $1.3 million in political contributions from Keating, intervened with federal regulators in keeping Lincoln open for two years after government examiners recommended closing it down.
Cranston and the four other senators--Dennis DeConcini (D-Ariz.), John McCain (R-Ariz), Donald W. Riegle Jr. (D-Mich.) and John Glenn (D-Ohio)--have denied any wrongdoing.
But Mrs. Wickman’s daughter, Frances Rose of West Hills, held Keating and Cranston responsible for what she described as a fraud that could make her parents destitute in the near future.
Over the past three years, Keating has contributed a total of $974,000 in either campaign funds to Cranston or to voter registration and other political causes headed by members of Cranston’s family. Among the items being investigated by the FBI is whether any of that money was illegally diverted from Lincoln depositors’ accounts.
