THE KEATING INDICTMENT : Arrest Delights Many Holders of Worthless Bonds : Thrifts: Victims who lost their life savings by buying the American Continental paper at Lincoln S&L; hope that Keating will get a long prison term.

When Jack Lower was looking to reinvest his savings in 1988, he went to Lincoln Savings & Loan in Hemet where he had $34,000 on deposit. A teller there suggested that he put it in bonds being sold by American Continental Corp., Lincoln’s parent.

Lower did, but now rues the day. American Continental’s securities--high-yield, high-risk junk bonds--now are virtually worthless.

But Lower, 75, of San Jacinto took some satisfaction out of the news Tuesday that American Continental’s former chairman, Charles H. Keating Jr., and three other American and Lincoln officials were indicted on 42 counts of securities fraud and related charges.

“I hope this will mean a long prison term for Mr. Keating, and his accountants and his lawyers,” he said, adding that his investment in the bonds “was practically everything we had saved, both my wife and I working all our lives.”

The sentiment is widely shared by others who lost money by investing in bonds issued by American Continental, which filed for bankruptcy in April, 1989. The next day, federal regulators seized control of Irvine-based Lincoln. The thrift’s failure is expected to cost taxpayers more than $2 billion.

But American Continental’s collapse has already hit the pocketbooks of more than 15,000 investors--many of them elderly and depositors of Lincoln--who bought nearly $200 million in bonds sold through the thrift. Some of the investors thought that the bonds were insured.

Keating has contended that the bondholders should have known otherwise, noting that the public prospectus accompanying the bonds stated clearly that the bonds were not insured and were not the same as certificates of deposit. Also, Keating has contended, the bondholders are not as innocent and unsophisticated as they make themselves out to be; they bought the bonds lured by their more attractive yields, often 10% or more.

Such arguments don’t hold much water with investors such as Donald Mikami, a 43-year-old Fountain Valley dentist, who lost $25,000 by investing in American Continental’s junk bonds. The money was being set aside for his and his wife’s retirement.

He called the charges against Keating “a modest beginning.”

“We’re all elated that finally some serious action has been taken, some non-handslapping,” he said. “We want to see some blood, we want to see some teeth, or at least a pound of flesh.”

Norman Lapin, a Los Angeles accountant whose parents invested $120,000 in American Continental bonds, said people hold Keating personally responsible for their lost savings.

“He knew what was going on,” Lapin said.

He said the loss hasn’t ruined his parents financially, but it has shaken them, especially his father, a worrier who is 75 years old and the retired owner of a dry cleaning plant.

“I can see it in my father, he won’t spend a penny anymore to do anything,” Lapin said. “He grew up in the Depression, and it’s like somebody slapping you again. For the first time in his life, he had felt secure.”

Another investor, Harold Rosenberg, a Sherman Oaks lawyer who declined to say how much he lost, said Keating is a product of his times.

“(Keating) put it very bluntly, he told the world that the government gave him this opportunity. There it was staring him in the face and he did it,” Rosenberg said. “I’m not built that way. I wouldn’t know what to do with the fancy china or the $2-million salary.”

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