Suit to Charge That Keating Hides Millions

Holders of American Continental Corp. debt securities are expected to sue Charles H. Keating Jr. this week to freeze what they allege is more than $100 million that he has put into foreign investments and bank accounts--money gleaned through transactions involving Lincoln Savings & Loan in Irvine, a lawyer for the debt holders said Sunday.

The immediate aim of the class-action suit is to gain access to Keating-controlled money in Switzerland, the Bahamas and Panama, said Joseph W. Cotchett Jr. of Burlingame, one of the lawyers for the holders. The suit, a copy of which was obtained by The Times, will restate the racketeering and fraud allegations that debt holders have made in another lawsuit that is also pending. The latest suit will be filed today or Tuesday in U.S. District Court in Los Angeles, Cotchett said.

The suit alleges that Keating and his family unlawfully converted debt holder funds over two years to their own use by transferring money out of the country.

A spokesman for Keating denied that Keating or any of his executives had engaged in any fraudulent activities involving overseas accounts.

The suit contains details of alleged transactions that federal S&L; regulators apparently did not know before they seized Lincoln on April 14, a day after its parent company, American Continental of Phoenix, filed for bankruptcy protection.

Among the allegations in the suit are claims that:

--Keating’s son set up a foreign currency trading company in Zurich, Switzerland, and Dusseldorf, West Germany, and paid it $20 million for “unknown reasons.” The suit claims that the payment was designed to cover up a transfer of money for Keating.

--Keating caused Lincoln to pay $25.5 million to DIA Holdings Overseas, a Netherlands company, for reasons that “have never been explained.”