BANKING / FINANCE : Deukmejian Joins Law Firm Linked to Lincoln S&L; Case
Former Gov. George Deukmejian, whose administration was touched by the Lincoln Savings & Loan scandal, recently joined a law firm that is a defendant in litigation involving the failed Irvine-based thrift.
The Chicago-based law firm of Sidley & Austin is being sued by bondholders of Lincoln’s former parent company, American Continental Corp. in Phoenix. And federal regulators said they may add the law firm to the government’s pending $1.7-billion fraud and racketeering suit stemming from the S&L;’s collapse.
Deukmejian, expected to be a rainmaker in Sidley & Austin’s office in Los Angeles, was aware of the litigation involving the law firm and, as a partner, is exposed to liabilities attributed to the firm, said Daniel Kelly, the firm’s managing partner in Los Angeles.
Sidley & Austin’s Washington office represented American Continental’s and Lincoln’s interests before the federal bureaucracy. The firm’s problems stem from a letter written by partner Margery Waxman to Charles H. Keating Jr., then the company’s chairman, that said she had “put pressure” on the nation’s top regulatory agency to defer to Keating’s wishes.
“You have the (Federal Home Loan Bank) board right where you want them and you should be able to reach an agreement . . . which will completely satisfy you,” she wrote in her May 10, 1988, letter. Waxman also took Keating to see various senators and congressmen.
Deukmejian himself benefited from Keating’s political largess, receiving nearly $153,000 in donations from Keating, his associates, American Continental and Lincoln. His chief fund-raiser, Karl M. Samuelian, and Samuelian’s Los Angeles law firm represented American Continental before the state Department of Corporations to gain approval for the sale of corporate bonds at Lincoln’s 29 Southern California branches.
Both the current and the former Deukmejian-appointed commissioners of the state agency came from Samuelian’s law firm. The former commissioner, Franklin Tom, returned to the firm in 1987 after his office approved the first batch of bond sales. He soon started representing American Continental.
American Continental filed for bankruptcy protection in April, 1989, and is now being liquidated.
