Lincoln S&L; Ex-Chairman Pleads Guilty : Crime: Former thrift executive enters pleas in federal and state courts to securities fraud charges.
A former chairman of Lincoln Savings & Loan pleaded guilty Monday to securities fraud charges in both state and federal courts here.
Robin S. Symes, 38, of Malvern, Ohio, is the fourth person in federal court and the second in state court to plead guilty to charges stemming from the nation’s biggest thrift scandal.
Like the others, Symes is expected to testify against his former boss, Charles H. Keating Jr., and other executives at the Irvine thrift and its parent company, American Continental Corp. in Phoenix.
Keating, American Continental’s former chairman, and Judy J. Wischer, the company’s former president, are scheduled to go on trial on the state charges Aug. 2 in Los Angeles County Superior Court.
They and other executives and business associates also are targets in a 2-year-old federal grand jury investigation into the 1989 collapse of Lincoln and the sale of $250 million in American Continental bonds. Federal indictments are expected to be returned soon.
David A. Sklansky, assistant U.S. attorney prosecuting the federal case, said in court that Symes participated in a “strategy of deceit” by misleading small investors about the riskiness of the bonds and the financial soundness of American Continental.
The small investors, mostly elderly Lincoln depositors, bought the lowest form of American Continental debt, sometimes referred to as junior bonds. Sklansky said the company was using the proceeds, in part, to pay off institutional investors who held senior bonds and who agreed to sell them to the company at a substantial discount before they matured.
He told U.S. District Judge James M. Ideman that Symes took part in the company’s plan to mislead investors in 1987. The company told small investors that American Continental was financially sound and reliable, while it told institutional investors that the company was financially threatened and might not be able to pay future interest on their bonds.
In addition, the federal prosecutor said, Symes knew that the bonds sold to small investors carried interest rates that were significantly less than necessary to compensate the buyers for the risk.
Symes was in charge of helping American Continental and Lincoln build their computer systems. Using the computers, American Continental executives in Phoenix could identify customers with large deposits. Many of them were targeted as potential customers for the American Continental bonds.
In pending civil lawsuits, thousands of small investors accuse Keating and others of bilking them in a “bait-and-switch” tactic, causing them to use their insured savings to buy the uninsured bonds. Most of the bondholders lost their life savings after the company went bankrupt and regulators seized Lincoln in April, 1989.
Symes faces a maximum 10-year sentence on the federal charges and a similar term on the state counts.
Symes and Ray C. Fidel, a former Lincoln president, also were named with Keating and Wischer in the state securities fraud indictment. Fidel has pleaded guilty to six state counts and two federal counts in a similar plea agreement. The others who pleaded guilty to various charges in federal court are Mark Sauter, a former American Continental lawyer, and Ernest C. Garcia II, a major Lincoln borrower.
Lincoln’s failure is expected to cost taxpayers $2.6 billion.
