Judge Upholds U.S. Takeover of Lincoln S&L; : Thrifts: Federal jurist calls it ‘abundantly clear’ that Keating abused his position to loot savings and loan in Irvine.

A federal judge today upheld the government’s takeover of Lincoln Savings & Loan Assn. from Phoenix financier Charles H. Keating Jr.

U.S. District Judge Stanley Sporkin, in dismissing Keating’s suit to recover the collapsed Irvine, Calif., thrift, said it is “abundantly clear” that Keating and other officials of the S&L;’s holding company “abused their positions with respect to Lincoln.”

“Bluntly speaking, their actions amounted to a looting of Lincoln,” the judge ruled. “This was not done crudely. Indeed, it was done with a great deal of sophistication.”

Federal regulators have estimated that Keating’s use of federally insured deposits in Lincoln to finance various junk bond, stock and real estate ventures and the institution’s subsequent collapse could cost taxpayers up to $2 billion.

The government seized control of Lincoln in April, 1989, and took ownership of the $5.5-billion thrift away from Keating the following August.

Keating had filed suit in Sporkin’s court calling the government’s action “capricious and arbitrary” and seeking Lincoln’s return to him. He had said earlier that he would appeal the judge’s ruling if it went against him.

Sporkin’s ruling followed more than 30 days of hearings beginning last December into several complicated stock, tax and real estate transactions.

On Wednesday, U.S. District Judge Stephen V. Wilson ruled in Los Angeles that Keating must prove he is broke. Keating was ordered not to send any money out of the country. Keating must also give 48 hours notice before spending more than $5,000, Wilson ruled.

The federal Office of Thrift Supervision sought the action as part of an effort to recover $40.9 million from Keating and five associates in connection with three soured business deals at Lincoln.

“It’s an absolute victory for the American taxpayers,” said William Fulwider, OTS spokesman.

The ruling will help recover taxpayer-insured money allegedly misspent at the thrifts and there will be more such efforts, he predicted.

Both Lincoln Savings and Keating have become emblems of the S&L; debacle.