Ex-Lincoln CEO Targeted in New Recovery Action

A federal regulatory agency on Wednesday added a former chairman and chief executive of Lincoln Savings & Loan to an enforcement action seeking to recover from him and others $40.9 million lost in deals that led to the 1989 collapse of the thrift.

Andrew H. Niebling, already a defendant in some of the civil litigation swirling around Irvine-based Lincoln, becomes the seventh person whom the Office of Thrift Supervision has targeted in its effort to seek restitution in the deals.

The amended OTS charges, filed with an administrative law judge, borrow language from the August decision of a federal judge who threw out a challenge by Lincoln’s former owners to the federal takeover of Lincoln.

In that decision, U.S. District Judge Stanley Sporkin found that a tax-sharing agreement between Lincoln and its then parent firm, American Continental Corp., was a “clever but impermissible way of looting Lincoln.” The S&L; forwarded $94 million to American Continental for the thrift’s share of taxes, even though it didn’t owe any taxes.

The main target of the $40.9-million OTS action is Charles H. Keating Jr., former chairman of American Continental. Keating has been indicted by a state grand jury on securities fraud charges and is under investigation by a federal grand jury in Los Angeles.

The OTS administrative proceeding has been billed by T. Timothy Ryan, the agency’s director, as “the most significant enforcement action OTS has ever undertaken.”

Niebling ran Lincoln from May, 1985, until he resigned in April, 1987. He also was a director, senior vice president and treasurer of American Continental.

The OTS charges that Niebling approved actions that led to a $12.3-million loss to Lincoln from the misuse of an Employees Stock Option Plan. The agency also accused him of operating Lincoln when it provided a $20-million line of credit to the Hotel Pontchartrain, which was owned by a Keating-led partnership that included Niebling and other insiders.

As with Keating and the other five former executives, OTS seeks to ban Niebling from ever again participating in the affairs of a federally insured financial institution.

U.S. District Judge Richard M. Bilby, who has been presiding over all Lincoln-related civil litigation and the bankruptcy of American Continental, approved legal and accounting fees that nearly wiped out 75% of current and potential corporate assets.

The lion’s share of the fees--about $6.1 million--went to the Los Angeles law firm of Wyman, Bautzer, Kuchel & Silbert. Headed by partner James J. Feder, the firm handled American Continental’s bankruptcy litigation and directed its legal effort to overturn the federal takeover of Lincoln.

Creditors had challenged Wyman Bautzer’s fees, claiming the firm was acting more for Keating than for the company’s economic well-being in pursuing various litigation. But the judge pointed out that he had authorized those actions, Feder said, and simply reduced every firm’s fee requests by about 15%.