Judge Orders Keating Grand Jury Testimony Released : Thrift: Attorneys for ex-chief of Irvine-based Lincoln Savings said the transcripts might prevent a fair trial.

A Los Angeles County judge Friday ordered the public release of nearly 4,500 pages of grand jury testimony that led to the state securities fraud indictment of former thrift magnate Charles H. Keating Jr. and three co-defendants.

Superior Court Judge Lance A. Ito rejected a defense request to keep the documents secret. The testimony, transcripts of which will be released next Friday, provides the basis for the 42-count indictment against the former operators of the failed Lincoln Savings & Loan, based in Irvine.

Stephen C. Neal, Keating’s attorney, said after the hearing that he does not plan to appeal Ito’s ruling.

Defense attorneys had argued that release of the transcripts could hurt their clients’ ability to get a fair trial. Keating and the others have pleaded not guilty.

Meanwhile, Neal said, he would be willing to talk to federal authorities about limited immunity for his client in exchange for Keating’s testimony before the Senate Ethics Committee, which is investigating the conduct of five senators who intervened on Keating’s behalf.

“I certainly would receive or return a phone call” from committee members, Neal said. His comments were in reaction to a story in The Times this week saying that the panel had considered offering Keating immunity in exchange for testimony against the senators, including Alan Cranston (D-Calif.).

The committee has denied that it ever discussed granting immunity to Keating, an act that would severely damage a federal criminal investigation into one of the nation’s biggest thrift disasters. Lincoln’s collapse in April, 1989, is expected to cost taxpayers more than $2 billion.

Keating, former chairman of American Continental Corp. in Phoenix, which owned Lincoln, wielded influence in Congress and in the state Legislature mainly through heavy contributions to politicians. He raised about $1.3 million for the five senators under ethics panel investigation.

The committee has scheduled public hearings next month on the senators’ actions.

Small investors in American Continental have alleged that the intervention of the senators and others kept Lincoln open for two years after regional federal regulators recommended that it be seized. During that time, more than 17,000 people bought nearly $200 million in bonds through Lincoln’s 29 Southern California branches.

The investors allege that they were misled into believing that the bonds were safe or insured, providing the grounds for the state securities fraud indictment against Keating and the others.

In court Friday, defense attorneys argued that the release of grand jury testimony from 94 witnesses would fuel further damaging publicity in the case, provide one-sided stories on the prosecution’s claims and limit the number of potential jurors who have not been influenced by continued news reports.

Attorneys for The Times and the Orange County Register argued that any stories arising out of the release of the transcripts would constitute only an incremental increase in the amount of information on the case.

Judge Ito found that the defense had failed to provide enough evidence showing that release of the grand jury transcripts would prejudice the defendants’ right to a fair trial.

However, he invited defense attorneys to appeal his decision before the documents are released next week.