Keating to Take 5th Amendment at S&L; Hearings : Thrifts: The former owner of Lincoln Savings says the House is not ‘the best forum’ for answering the charges against him.

Former Lincoln Savings & Loan owner Charles H. Keating Jr., citing the Fifth Amendment, will refuse to testify today when he is called before a House committee to answer allegations that his fraudulent business practices caused the $2.5-billion collapse of the Irvine thrift, according to his lawyer.

Attorney John J. Quinn of Los Angeles told The Times that Keating has decided that the House Banking, Finance and Urban Affairs Committee hearing would not be “the best forum” to answer the many charges leveled against him since Lincoln was seized by the federal government last April.

Over the last two months, numerous witnesses have accused Keating of improperly using the thrift’s deposits to make risky investments, buy political influence in Washington and enrich himself and his family. One witness testified that Keating and his family received $34 million in salaries and other payments in the three years before Lincoln went bust.

Quinn, who persuaded the committee to delay Keating’s testimony when it was scheduled for Nov. 7, indicated that his client would prefer to tell his side of the story during an upcoming federal court hearing on Keating’s suit charging that federal regulators illegally seized control of Lincoln. Just two weeks ago, U.S. District Judge Stanley Sporkin ruled that Keating could have a court hearing in early December on part of his suit.

At the time, Robert K. Huffman, a Washington lawyer for American Continental Corp., Lincoln’s parent company, described the court session as “a chance for a fair hearing.”

“It’s no secret that the company thinks the Gonzalez hearings are not fair,” he added, referring to committee Chairman Henry B. Gonzalez (D-Tex.).

Witnesses who refuse to testify before a congressional hearing are sometimes permitted to read a prepared statement in their defense, but Quinn indicated that Keating would make no such statement. In fact, he said, Keating had been discouraged by the committee from making any opening statement if he intended to rely on the Fifth Amendment to avoid answering questions put to him by the panel.

The committee apparently was unaware of Keating’s plans to invoke the Fifth Amendment. Julie Black, spokeswoman for the panel, said the committee still is assuming that Keating will testify and that he had obtained the earlier delay so that he could prepare testimony for his appearance today.

Although Keating’s business practices have figured prominently in the testimony, the hearings so far have focused much more attention on the failure of federal regulators to control the thrift and on the intervention of five senators--Alan Cranston (D-Calif.), Dennis DeConcini (D-Ariz.), John Glenn (D-Ohio), John McCain (R-Ariz.) and Donald W. Riegle Jr. (D-Mich.)--on behalf of Lincoln. Keating helped raise $1.4 million for the senators’ campaigns and favorite causes.

Scheduled to testify immediately before Keating is M. Danny Wall, director of the Office of Thrift Supervision, who frequently has been blamed by Gonzalez for failing to act more swiftly against Lincoln. He will be accompanied by two of his top employees, Rosemary Stewart and Darrel W. Dochow.

Dochow assumed responsibility for regulating Lincoln in 1987 after Wall took the unusual step of stripping the Federal Home Loan Bank Board’s San Francisco office of its usual role of overseeing savings and loans in California. The San Francisco office had recommended that the federal government seize Lincoln in 1987.

Stewart is the author of a 1988 side letter to a memorandum of understanding between the bank board and Lincoln assuring the thrift that no information about its activities would be referred to criminal authorities.

In numerous interviews, Wall has criticized Gonzalez for not allowing him to answer the charges against him earlier. He admits that he met privately at least three times with Keating while his agency was investigating Lincoln but insists that his decision not to seize the Irvine thrift in 1987 was made solely on the basis of sound legal judgment.

Keating will be the final witness called this year as part of the House committee’s inquiry into the demise of Lincoln, the most expensive single thrift collapse in history.

Black said the committee staff has been instructed to prepare a report to be released early next year summing up the results of its inquiry so far into the Lincoln collapse. She said the panel has not yet decided whether it will hear more testimony related to the Lincoln affair after Congress reconvenes next January.

Unless the committee resumes the hearings next year, it will not take testimony from any of the four associates of Gov. George Deukmejian who were slated to be called about their alleged actions on behalf of Lincoln. Gonzalez had said last week that he wanted to subpoena “at least some of them, maybe all four.”

He identified the four as Franklin Tom, former commissioner of the California Department of Corporations; Christine Bender, Tom’s successor; Thomas C. Stickel, a long-time Deukmejian fund-raiser, and Karl Samuelian, the governor’s chief fund-raiser.

Meantime, a federal judge in Los Angeles on Monday delayed a hearing on a request to freeze Keating’s assets worldwide.

Small investors in American Continental filed a racketeering suit Monday--one of many filed in state and federal courts--and sought to put a hold on what they say is more than $100 million that Keating has put into foreign investments and bank accounts.

U.S. District Judge Stephen V. Wilson set a Dec. 4 hearing on the investors’ request for a temporary order freezing those assets. Keating and other defendants have until Nov. 29 to file any written response with the court.

The investors include nearly 22,000 people who bought almost $200 million in American Continental debt securities at Lincoln’s 29 Southern California branches.

Times Staff Writer James S. Granelli contributed to this story.

STEP The subpoena of Charles H. Keating Jr., former head of Lincoln Savings & Loan, to appear before the House Banking, Finance and Urban Affairs Committee today is just the first of many appearances that the beleaguered Arizona businessman will be forced to make as he defends his stewardship of the bankrupt Irvine thrift. The case also is being investigated by the Justice Department, the Securities and Exchange Commission and the California legislature. In addition, Keating has been sued by the Federal Desposit Insurance Corp. and a group of investors who purchased worthless bonds in Keating’s American Continental Corp.