The former Lincoln Savings manager in charge of junk bond sales said Wednesday that bond sellers complied with guidelines carefully crafted by lawyers, not by Lincoln owner Charles H. Keating Jr.
Former Lincoln President Raymond C. Fidel testified at Keating’s fraud trial that bond sellers were told, starting in late 1986 training sessions, to warn investors not to put money in the bonds unless they were prepared to lose it.
He testified on cross-examination by Keating’s lawyer, Stephen C. Neal, who was seeking to counter Fidel’s earlier, damaging portrait of a desperate Keating who said “Can we cheat?” on the bond sales.
Fidel said Wednesday that the sellers were told to describe the bonds as uninsured and say that they would be paid off only after other debts of the issuing company, Keating’s American Continental Corp., were satisfied.
They also were supposed to disclose that Keating had clashed with thrift regulators over how American Continental’s main subsidiary, Lincoln, was being operated, he said.
American Continental was Lincoln’s parent company. Keating is charged with duping investors about the safety of the bonds, which became worthless when the companies collapsed. Lincoln’s failure was the biggest thrift collapse in history.