Angry Bondholder Grabs Keating : Trial: The former owner of the failed Lincoln Savings & Loan is confronted in court by an elderly woman who said she lost money.
An elderly woman, who allegedly lost thousands of dollars because of the failure of Lincoln Savings & Loan, provided sparks on the first day of a fraud trial of former owner Charles H. Keating when she grabbed the executive by the lapels and screamed at him to return her money.
“Mr. Keating, you took all my money away,” the distraught woman yelled. “What happened to my money? I can’t work anymore.”
Keating was taken aback by the confrontation with the elderly bondholder, who identified herself later as Sarah Mandrell of Hollywood. She said she was 90 years old and had lost $100,000 in bonds. But a neighbor who brought her to court identified the woman as Sarah Solomon, a bondholder who was about 80 years old and lost a $5,000 investment.
Bailiffs, who pulled the bondholder off Keating, said no charges would be brought against her.
The confrontation occurred just after proceedings recessed in Superior Court in the securities fraud trial against Keating, who was chairman of Lincoln’s parent company, American Continental Corp. in Phoenix.
In addition to confronting Keating, Abbe David Lowell, a lawyer for co-defendant Judy J. Wischer, said the woman “threw a right jab to my stomach” as she pushed the lawyer out of the way to get to Keating.
After the incident, Superior Court Judge Lance A. Ito returned to the bench. He said because of concern for the safety of the defendants and their lawyers, he would order increased security for the remainder of the trial, including possibly electronic searches.
Keating is accused of misleading 20 small investors about the safety of American Continental bonds and the soundness of the company and its Irvine thrift and defrauding them of $1.8 million. He is charged with 20 counts and faces a maximum sentence of 10 years in prison.
The victims represent thousands of Lincoln depositors who bought nearly $200 million in bonds at the S&L;’s Southern California branches. The depositors lost their money in April, 1989, after the company went bankrupt and regulators seized Lincoln, the biggest thrift failure in U.S. history with an estimated taxpayer cost of $2.6 billion.
In the hallway outside the courtroom, some of the elderly bondholders who sat in court enlisted the help of young bystanders to jeer Keating as he walked out of the courtroom with taunts of “give her back her money.”
Opening statements and testimony in the first criminal trial stemming from the Lincoln scandal won’t start before the last week of August. Lawyers first must go through 300 to 500 prospective jurors to try to find 18 or 20 who could be impartial and who also could remain for a trial of up to six months.
Ito must still rule on a major issue that he said perplexes him. He said he needed more time to determine what standard prosecutors should be held to in trying to prove Keating’s guilt.
William Hodgman, the lead deputy Los Angeles County district attorney, acknowledged in an interview after the court session that there is “a certain vagueness in California law” about the standard, and the prosecution’s theory of the case would depend on how Ito rules.
The prosecution contends that Keating should be criminally liable for his “failure to control corporate misconduct” in the sale of bonds by employees. By his very position and ability to control how bonds were sold, prosecutors say, he should be liable for what the sales force did.
In addition to the state case, several federal grand juries have been investigating allegations that Keating and his top aides looted Lincoln. Keating is also fighting dozens of civil suits stemming from his running of Lincoln.
