Couple Say Lincoln Salesmen Told Them Bonds Were Insured : * Courts: No one explained risk involved in buying their $101,000 American Continental bond, they tell jury in Charles Keating trial.

An elderly couple told jurors Thursday that they were misled into believing that the $101,000 bond they bought at Lincoln Savings & Loan more than four years ago was insured like a certificate of deposit.

Leon and Esther Bonan also said they were never told about the risks involved in buying the bond issued by Lincoln’s parent company, American Continental Corp.

They testified that they would not have bought the bond--even though it provided them with nearly $800 a month in income--had they known it was an uninsured, high-risk junk bond.

“To me, junk is something you throw away, not buy,” Esther Bonan, 77, said during the first day of testimony in the securities fraud trial of Charles H. Keating Jr., American Continental’s former chairman.

The Bonans were the first of 22 bondholders scheduled to testify as prosecutors try to show how investors were hoodwinked into buying the American Continental bonds. Many, like the Bonans, have said they intended to put their money into insured certificates of deposit.

The bondholders are among thousands of investors who lost more than $250 million after the collapse of Keating’s financial empire in April, 1989. Most of the bondholders were small investors who purchased their securities at the Southern California branches of Irvine-based Lincoln.

Keating, 67, is charged with 20 counts of making false statements and omitting material information in the sale of the bonds from late 1986 to February, 1989. Conviction on six or more counts carries a maximum penalty of 10 years in prison.

The Bonans, who emigrated from the French Moroccan city of Casablanca in 1942, told jurors they did not know the risks involved in buying an American Continental bond.

“I don’t take these chances,” Leon Bonan, 80, said. “If I had the little doubt, I never would have bought.”

Keating contends that he had no doubts about the safety of his company’s bonds because he had hired top-notch lawyers and accountants to put together the bond sale program.

The Bonans said they had just sold their town home in Van Nuys in April, 1987, and wanted to put $101,000 of the proceeds into a certificate of deposit at a Lincoln branch in Sherman Oaks, where they had been customers for years.

“We wanted to make it grow a little to buy a better home,” Esther Bonan said.

But as soon as a Lincoln teller saw the check, she directed the Bonans to two American Continental bond salesmen. Leon Bonan testified that one of the salesmen told them, “I have a better deal for you than a certificate of deposit.” The interest rate on the five-year bond was slightly more than 2 percentage points higher than the Lincoln deposit rates at the time.

Esther Bonan said she asked if the bonds were insured and was told they were. When she asked who insured them, she said she was told, “We do. ACC (American Continental) is the parent.”

Under cross-examination, Leon Bonan conceded that he had received copies of various materials, including a prospectus that told bond buyers to rely only on the prospectus, not on comments from salesmen. But he said he wasn’t given time to read the documents before buying the bonds. Later, he said, “I looked at them (at home) but didn’t read them all: It was too much to read.”