Judge Rules OTS Hearing Won’t Impair Keating Trial

A federal judge rejected arguments Wednesday that a restitution hearing against former Lincoln Savings & Loan owner Charles H. Keating Jr. and his top aide infringed on their constitutional rights to a fair trial in a criminal case set to begin next month.

U.S. District Judge Stephen V. Wilson said there was “nothing to justify” a halt in the “important civil proceedings” brought by the Office of Thrift Supervision.

Wilson said Keating and former top aide Judy J. Wischer “are not irreparably harmed” just because the OTS hearing is taking place shortly before their criminal trial in state court, where they face charges of securities fraud in a 21-count indictment.

He said Keating and Wischer have had “more than adequate time” to prepare for the criminal trial and that a four-week period between the trial date and the close of the first phase of the OTS hearing next week would not deprive their lawyers of adequate time to prepare their case.

Keating and Wischer’s lawyers had asserted that the OTS hearing was depriving them of time to prepare for the criminal trial. They also said their clients were being forced prematurely to decide whether to invoke their Fifth Amendment privilege against self-incrimination.

The Los Angeles County district attorney’s office, which is prosecuting the securities fraud case, said Wednesday that it would seek a delay of up to 15 days, if necessary, to give the OTS time to present its case in the civil hearing, which began Monday.

The OTS is seeking repayment of $130.5 million from Keating, Wischer and five others for losses at Lincoln. The agency also seeks to ban them from ever working in the industry.