BANKING/FINANCE : Phoenician Resort’s Ex-Employees Sue Government, Claim Wrongful Firing

The government takeover two months ago of the luxury Phoenician Resort, the only Lincoln Savings & Loan asset eluding the grasp of federal regulators, has spawned the expected litigation--but not by embattled Arizona businessman Charles H. Keating Jr.

Instead, 21 former employees of the resort claim they were wrongfully terminated and defamed by regulators, who took over the Phoenician and the Crescent hotels about 1 a.m. Nov. 16. Regulators notified the employees that they were fired by posting notices on the front doors of the workers’ homes.

“This was a Gestapo raid,” contends Kraig J. Marton, the Phoenix lawyer for the plaintiffs. “The employees were placed in a false light.”

Putting them in such false light, he said, is an invasion of their privacy and a form of defamation. The suit seeks a total of $42 million in damages, or $2 million for each plaintiff.

Keating had kept control of the hotels after the April 14 takeover of Irvine-based Lincoln because Kuwaiti investors, who bought 45% of the hotels’ holding company and whose consent was needed to change management, were siding with Keating against regulators. The Kuwaitis changed their minds in November.

The names of the Kuwaiti investors had never been publicly revealed, but Marton identified them in his suit as Rula Al-Adasani and Fahed Al-Salem, whom Marton believes to be a crown princess and a crown prince, respectively, of Kuwait. Though identified in the suit, they were not named as defendants.