Keating, Ex-Thrift Kingpin, Stands Wealthy Until He’s Proven Penniless : Thrifts: Regulators refuse to believe the former executive is broke. Yet his house is for sale and he’s looking for work.
In 1987, Charles H. Keating Jr. had a net worth of about $39 million. Today he claims that he is a pauper.
Federal regulators are incredulous.
So the Office of Thrift Supervision filed administrative charges Thursday seeking $40.9 million in restitution from Keating and five executives at American Continental Corp., the company that once owned the failed Lincoln Savings & Loan. They also want Keating, who gave up his salary last fall as American Continental’s chairman, to produce in five days a detailed accounting of his own assets.
“There was just too much money available to him and too short a time for it to disappear,” said T. Timothy Ryan, OTS director. “We believe Mr. Keating and his associates profited from the improper use of depositors’ funds, and we want that money returned to Lincoln.”
Regulators have claimed that Keating and his family took $34 million in salaries, stock options, stock sales and other benefits out of Irvine-based Lincoln in the five years they owned it.
Despite appearances, the well-dressed and tanned Keating insists that he is flat broke; his debts equal or surpass his assets, he contends.
Keating has practically lived out of suitcases this year. He has flown often to Washington to appear on television, shown up at industry conventions and visited editorial boards of the nation’s major newspapers to explain his side of the April, 1989, failure of Lincoln.
He recently signed a so-called forebearance agreement with creditors and the Federal Deposit Insurance Corp., which insures deposits at banks and thrifts. Under the agreement, he promises not to file for personal bankruptcy and they promise to give him more time to pay off debts, said Bradley J. Boland, a company spokesman and one of Keating’s sons-in-law.
Keating’s $5-million house--at least, that’s the amount of mortgages on it--is scheduled for a foreclosure sale next week and probably won’t sell for anywhere near that amount in Phoenix’s depressed real estate market. Keating is trying to come up with money to pay off the loan amount due, Boland said.
Early this month, he borrowed $690 to put an advertisement in the Arizona Republic saying he is now in business to “remodel, repair or custom-build your residential or commercial property.”
Late last month, he auditioned before the International Platform Assn. in an effort to win a spot on the sometimes high-paying lecture circuit. His topic, of course, would be the savings and loan industry.
“There were a lot of requests that he start speaking for fees,” Boland said. “It’s certainly a good way for us to start generating some income for him, and we’ve got to start generating some income.”
Boland said the trips often are paid for by media groups or others, or by the bankrupt American Continental, which is pursuing lawsuits in Washington and has business elsewhere in the nation.
Keating, who is also an attorney, additionally has been talking about practicing law again, but has found little time to start such a venture, Boland said.
“What we do is no secret to anybody,” he said. “And the worst part is that we haven’t done anything wrong, and we have to live in this reign of regulatory terror.”
Last December, American Continental bondholders tried to freeze Keating’s assets both here and abroad. But Keating swore that neither he nor anyone in his family has bank accounts or any other financial connection overseas.
In court papers at that time, he said he sold his land and home in the Bahamas, which he bought in the 1970s before Phoenix-based American Continental bought Lincoln, and he pledged the proceeds from the sale to bank creditors. He also pledged land he owns in Canada and Flagstaff, Ariz., to the banks.
His net worth, as high as $39 million in 1987, had fallen to $7.8 million at the end of July, 1989, according to court papers. But included in that figure is about $1.35 million in American Continental stock, which is close to worthless now, and $6 million in loans that Keating had given to his children in the late 1970s to buy American Continental stock. Those loans, due in 2002, are largely uncollectible, Keating said in the court document.
Keating’s protestations notwithstanding, regulators and bondholders’ lawyers contend that he has funds stashed away somewhere.
