Lincoln S & L Law Firm to Settle Suits
A prestigious Los Angeles law firm has agreed to pay up to $14.3 million to settle class-action lawsuits filed against it by 22,000 individuals who bought now worthless junk bonds from Lincoln Savings & Loan branches in Southern California.
In announcing the agreement late Monday, the law firm of Parker, Milliken, Clark, O’Hara & Samuelian--one of several defendants in suits filed by bondholders seeking to recover $250 million--said that it does not admit the validity of the claims of misrepresentation filed in the lawsuits, but wants to put an end to its part in the costly litigation.
Among the law firm’s partners are Karl Samuelian, who is Gov. George Deukmejian’s chief campaign fund-raiser, and former state Corporations Commissioner Franklin Tom, who after leaving his state job represented Irvine-based Lincoln and its parent company, American Continental Corp. of Phoenix, before state regulators. Tom was named individually in the two lawsuits and the settlement would bring an end to the actions filed against him and Parker, Milliken.
The announced settlement is the latest development in the scandal surrounding the demise of Lincoln Savings--a financial collapse that has shaken the savings and loan industry as well as the careers of prominent politicians, including five U.S. senators and a host of politically appointed regulators in both California and Washington, D.C.
Under the terms of the settlement, which is still subject to court approval, the law firm’s insurance carriers would pay $4.3 million to the bondholders and up to $10 million more--depending on how much the other defendants in the suits eventually are required to pay.
A brief, written statement from Parker, Milliken described the claims against it as “totally groundless.” However, the firm said that “in continuing to litigate these complex cases, substantial time and resources will be required. We would prefer to continue to devote our full time and attention to maintaining our high caliber of legal service we have provided to our clients.”
Orange County attorney Ronald Rus, one of several lawyers representing the bondholders, hailed the agreement--the first of its kind in the suits following the collapse of American Continental and the takeover of Lincoln by federal regulators almost a year ago.
“As the first agreement of its kind, it certainly augers well as to what is to come in the future,” Rus said. “It should be viewed with grave concern by the other defendants in the case. They should see there is significant liability potential. Certainly, that’s the conclusion of one group of very astute professionals (Parker, Milliken).”
Shirley Lampel, a Tustin resident who invested $30,000 in American Continental, said she was “tickled” by the news of the settlement.
“For a year, we bondholders have been watching (American Continental Chairman Charles H. Keating Jr.) grinning from ear to ear on the television and in the newspapers, while we had sleepless nights and shed many a tear,” she said. “The tide is turning. Charles Keating is going to have many a sleepless night now and the bondholders will be grinning.”
Among the other defendants named in cases filed with the U.S. District Court in Los Angeles and the Orange County Superior Court are Keating and several close business associates.
Also named are the state of California, and a number of legal and accounting firms, which--like Parker, Milliken--were hired by American Continental to win state approval for the junk bond sales and to represent the troubled savings and loan before regulatory agencies.
Lawyers from the firm--including Tom and Samuelian--represented American Continental before state regulators, who gave approval to the sale of the junk bonds through Lincoln’s branches. In their lawsuits, the bond purchasers--many of them Southern California retirees--contended that the defendants were guilty of fraud, misrepresentation and violations of state and federal security laws.
Lincoln owner Keating has boasted of his own adeptness at using financial support of politicians to enlist their help in protecting his enterprises.
