Attorneys for Charles H. Keating Jr. Wednesday appealed to the state Supreme Court to lift or reduce the $5-million bail that is keeping the once-wealthy executive behind bars pending trial on 42 counts of securities fraud and other violations.
Keating, former chairman of American Continental Corp., the former parent company of Lincoln Savings & Loan, argues that the bail is excessive and punitive. As such, it violates the state and federal constitutions by exacting cruel and unusual punishment.
It is unknown how quickly the state's high court will act on the petition, technically a writ of habeas corpus.
The appeal to the Supreme Court came a day after a three-judge state Court of Appeal panel unanimously rejected Keating's petition for lower bail. Superior Court Judge Gary Klausner set bail at $5 million on Sept. 18 and refused to lower it in a subsequent hearing because of the seriousness of the charges and the risk of Keating fleeing.
Keating and three associates were charged with wrongdoing in the selling of more than $200 million in American Continental bonds to more than 17,000 investors through Lincoln branches. Many of the investors, mostly elderly Southland residents, said they thought the bonds were insured.
The bonds became nearly worthless when American Continental filed for bankruptcy in April, 1989. The next day, federal regulators seized Lincoln. The thrift's failure is expected to cost taxpayers more than $2 billion.
The alleged securities violations listed in an indictment unsealed last week in Los Angeles Superior Court carry a maximum 10-year prison term.
Keating's petition to the Supreme Court argues that the case against him cannot be distinguished from the charges against his co-defendants and that he cannot pay the high bail. Klausner initially set bail for the other defendants at $1 million but later reduced it, and they have been released from jail.
Testimony last week showed that while he had a net worth of nearly $40 million three years ago, his debts now exceed his assets by more than $5 million. Thrift regulators and prosecutors doubt Keating's pauper status, though they admit they have no evidence to dispute it.
The Supreme Court petition also states that Keating's six children have offered to pledge their homes as collateral if the court reduces the bail to a figure they could meet--about $500,000, according to previous testimony. That should keep Keating from fleeing, the petition contends.
Besides, the papers point out, Keating has shown that he is not a flight risk because he has appeared in more than two dozen civil cases filed against him and appeared in Superior Court last week after knowing for five days that he had been indicted.