Holders of Worthless Bonds Cheer, Say Justice Is Served : Reaction: Conviction of Keating, whose firm owned Irvine-based Lincoln S&L;, may help bondholders’ suits.

The news that Charles H. Keating Jr. was convicted Wednesday on 17 counts of securities fraud on his 68th birthday brought a chorus of cheers from those who liked him least: the bondholders of American Continental, Keating’s former real estate development company.

“I’m happy, I’m happy,” said Leah Kane, 70, a resident of Laguna Hills Leisure World who lost $15,000 in American Continental bonds. “I want a shot of whiskey right now and I don’t even drink.”

The news was particularly sweet for people such as Los Angeles accountant Norman Lapin, whose elderly parents invested $120,000 in the bonds, which were rendered virtually worthless after American Continental went into bankruptcy in 1989.

“My father has never been the same since,” Lapin said. “He was a Depression kid and he had to live through this.”

Though the bonds are now worthless, the bondholders still stand to get some of their money back if pending lawsuits against Keating’s attorneys and accountants are successful, said Kevin P. Roddy, one of the bondholders’ several attorneys.

The criminal conviction should help the bondholders’ case, Roddy added. “I would think that this decision moves that ball down the field,” he said.

Only a few years ago Keating was one of Arizona’s leading businessmen when it came to riches, color and political clout. Phoenix-based American Continental owned Lincoln Savings & Loan in Irvine.

Keating was specifically charged with defrauding 19 small investors who were among the thousands of people who together lost in excess of $250 million when the Keating empire collapsed more than 2 1/2 years ago. The 19 investors lost more than $1 million.

Using 53 witnesses who gave 35 days of testimony over four months, prosecutors showed that Keating promoted the sale of American Continental bonds at the same time he knew that the financial health of its primary subsidiary, Lincoln Savings, was in serious trouble.

The collapse of Lincoln Savings in April, 1989, will be remembered as a low-water mark in the history of the nation’s savings and loan scandal, which unraveled gradually throughout the 1980s and is costing American taxpayers dearly in the 1990s.

Not all the bondholders were swept up in the euphoria of Keating’s conviction, however. “I don’t care if he goes to jail. I care for my money,” said Youssef Davoudian, 68, an Anaheim Hills resident who lost $50,000 buying American Continental bonds and faces costly cancer treatment. “I need this money.”

Another bondholder who asked not to be identified added: “He’s going to get off the hook (on appeal). He’s a clever fellow.”

Though she applauded the decision, bondholder Shirley Lampel, 60, of Irvine, found a tinge of sadness in the news. “Some of the bondholders have already died, destitute,” she said. “They aren’t around to enjoy this day.”

Lampel had to move out of her Tustin condominium and into a mobile home in Irvine after she lost $30,000 on American Continental bonds. “That’s a lot of money with lettuce costing $1.25 a head,” she said.

Keating “got what he deserved,” said Harold Rosenberg, a Sherman Oaks attorney. “His fraud and connivances brought a lot of hardship for senior citizens who could ill afford it.”

Times staff writer Gregory Crouch contributed to this story.