Wife Charges That Officials Made Keating a Scapegoat : Letter: In her statement, Mary Elaine Keating described her husband’s incarceration as a living nightmare intended to silence all thrift operators.

Describing her husband’s incarceration as a “living nightmare,” the wife of jailed executive Charles H. Keating Jr. charged Monday that he has become a “scapegoat” for officials desperate to find someone to blame for the “destruction of our American banking system.”

The unusual statement in the case of the man who has become America’s best-known white-collar inmate came from Mary Elaine Keating, wife of the former chairman of American Continental Corp., who has been in Los Angeles County Jail since Sept. 18, unable to post $5 million bail.

Her letter, sent to several newspapers, including the Los Angeles Times, charges that the harsh treatment of her husband by authorities is designed to silence all thrift operators.

She lashed out at Los Angeles County Dist. Atty. Ira Reiner, who said that, as a warning to executives, Keating’s mug shot should be hung in corporate boardrooms.

“Try to tell me that Charlie is not being used as a weapon of fear,” Mary Keating wrote. “Try to convince me that he is not now being treated as a convicted felon.”

And she bemoaned the conditions of his incarceration:

“He spends every day in a tiny concrete cell with an iron door,” she wrote. “Except for court appearances, he does not see daylight. He is chained and shackled . . . when he is escorted to the attorney room to meet with his lawyers. He is allowed one visit per day, which consists of talking on a phone through a plexiglass wall while he is chained to a chair and guarded.”

The letter, which appears on The Times’ editorial page today, comes in the wake of Keating’s jailing on charges of committing fraud in the sales of $200 million in bonds through branches of Irvine-based Lincoln Savings & Loan.

“Good, solid citizens, who have been stripped of their businesses and their jobs, are sitting back quietly--ever fearful of becoming another Charlie Keating,” writes Mary Keating in the letter.

Holding an “untried, non-threatening man” in jail before he can go to trial “runs counter to everything I always believed in the Constitution and civil liberties in America,” Mary Keating said.

Keating, long a critic of federal regulators, is charged with 42 counts of securities fraud and other violations of state law in connection with the sale of American Continental bonds to thousands of investors. Many of the investors were the elderly who thought the bonds were safe and federally insured.

The company filed for bankruptcy protection in April, 1989, rendering those bonds worthless. Regulators seized the Irvine-based thrift the following day. Lincoln’s failure is expected to cost U.S. taxpayers more than $2 billion.

But to Mary Keating, her husband is “a loving, caring and honest individual who has time for all our concerns and needs, as well as those of the needy of the world. . . .”

She said the government “delights” in his inability to fight “this immense battle” from a jail cell. “The games they have been playing with him are ludicrous,” she wrote.

Mary Keating scoffed at the idea that her husband should remain in jail because he posed a serious risk of fleeing the country. “Charlie Keating has never fled from anything,” she wrote. “Why should he start now?”

She also criticized the media. “He is lied about and mocked in the press and the media. Every day we read more and more horror stories about the things we’ve never done. Once one paper runs a story, others repeat it like it’s gospel truth.”

Keating, on advice of his lawyers, has refused to grant any interviews while in jail.