Keating Jailed on S&L; Fraud Indictment

Charles H. Keating, who headed the company blamed by the government for the nation’s biggest savings and loan collapse, was indicted on criminal fraud charges today and held on $5-million bail.

The 42-count state indictment charges Keating and three others with selling securities by false statements or omissions, selling securities without qualifications and lying to the state Department of Corporations.

The department approved the sale of the junk bonds at branches of the failed Lincoln Savings & Loan. The government seized the Irvine-based thrift in April, 1989. Regulators estimate the bailout could cost taxpayers as much as $2 billion.

It was the first time criminal charges have been filed against Keating, 66, a Phoenix developer who controlled Lincoln through the American Continental Corp. holding company, of which he was chairman.

Keating has been under investigation in Lincoln’s sale of more than $200 million in now-worthless junk bonds to 22,000 investors, many of them elderly.

Indicted with him were Judy Wischer, former president of American Continental, and Ray Fidel and Robin Symes, both former Lincoln presidents.

The four appeared today in Los Angeles County Superior Court, but Judge Gary Klousner postponed their arraignment until Oct. 5 because they had not yet read the indictment. Keating had no comment to reporters as he entered the courtroom.

Despite arguments that all four had appeared in court voluntarily, Klousner ordered all four held. Bail was set at $5 million for Keating and $1 million apiece for the three others, and they were taken into custody.

Symes’ attorney, Don Smaltz, called the bail amounts “outrageous,” saying they were motivated only by hysteria and politics of the case.

The judge said it appeared that if convicted each defendant could get up to 10 years in prison.

Keating has contended that the government has attempted to make a scapegoat of him because he was an outspoken critic of the thrift regulatory system.

He maintains the bondholders would never have lost money if the government hadn’t seized Lincoln last year and forced American Continental into bankruptcy court.