Keating Bail Cut but He’s Still in Jail : Hearing: The ex-S&L; owner says he can’t immediately raise the money for his release.
A federal judge in Los Angeles on Wednesday reduced the bail of former thrift owner Charles H. Keating Jr. to $300,000 from $2 million, but Keating was not able to immediately raise enough money to secure his release from jail.
U.S. District Judge Mariana Pfaelzer reduced the bail after Keating, 68, submitted a sworn statement outlining his assets. At a hearing, defense attorney Stephen C. Neal said Keating is more than $5 million in debt.
Keating, former chairman of American Continental Corp., has been in custody at the federal Metropolitan Detention Center since Dec. 12, when he and four associates were indicted on 77 counts of racketeering and fraud related to the collapse of Lincoln Savings & Loan. All five defendants have pleaded not guilty.
The judge also reduced the bail for Keating’s son, Charles Keating III, 36, a co-defendant in the case, to $150,000 from $300,000.
Neal said family members are trying to raise funds to release the Keatings. He said the Keating family has about $275,000 in combined equity in their homes to pledge toward a bond and hope to raise an additional $175,000 before Christmas.
Bail for a third defendant, Judy J. Wischer, 43, was reduced to $300,000 from $500,000. Wischer, former president of American Continental, was to be released immediately after her mother and a former business associate posted a bond.
Assistant U.S. Attorney Alice Hill argued against a bail reduction for the senior Keating, saying he was a flight risk and suggesting that he may have hidden assets. Hill argued that Keating had a “history of a lack of candor” on his assets. Hill made similar arguments at a bail-setting hearing Tuesday, which ended when Pfaelzer said she would not lower bail for the three defendants unless they presented sworn statements about their assets.
When Hill on Wednesday told Pfaelzer that she knew of no assets other than those listed in the affidavits of the three defendants, the judge rejected the prosecution’s request to cross-examine the senior Keating about his sworn financial statement.
The other two defendants in the case--Keating son-in-law Robert M. Wurzelbacher Jr., 37, and Andrew F. Ligget, 34, the company’s chief financial officer--are free on surety bonds of $300,000 and $200,000 respectively.
The indictment accuses the defendants of using five schemes to swindle more than $250 million from Lincoln and from investors who bought bonds issued by American Continental, Lincoln’s parent company. Lincoln’s failure, the largest thrift collapse in U.S. history, is expected to cost taxpayers $2.6 billion.
Keating could face 510 years in prison and fines of $17 million if convicted on all the charges in the trial set to begin on Aug. 4, 1992. The indictment also seeks recovery of $265 million allegedly siphoned from Lincoln by the defendants.
Keating was convicted on Dec. 4 on state securities fraud charges relating to the sale of bonds at Lincoln branches. He will be sentenced on Feb. 7 and faces a maximum of 10 years in prison and a $250,000 fine. Neal said he will appeal the conviction.
Keating’s Net Worth
Here is a summary of the statement Charles Keating Jr. filed in federal court Wednesday to support his contention that his bail should be reduced because he is insolvent by more than $5 million.
ASSETS
Cash: $3,500
Notes receivable: $819,400
Including a $500,000 loan made to Gary and Mary Hall, a Keating daughter and son-in-law.
Personal property: $100,000
“Household furnishings, vehicles and the like. These items have not been appraised and could be worth either more or less than I have estimated.”
Real estate: $1,625,000
Including $1.5 million for Keating’s Paradise Valley, Ariz., home “if sold on a liquidation basis, as is now likely,” and three lots at Lang Lake near Sudbury, Canada. Keating said the lots are worth $125,000 now because they are snowed in during winter and must be sold sight unseen. Keating’s home is listed for sale at $2.9 million. He said the Canadian property would be worth $200,000 if sold in summer.
Total: $2,547,900
LIABILITIES
Federal, state, local taxes: $1,070,000
Bank and personal debts and accumulated interest: $4,418,125
Mortgages: $2,625,000
Total: $8,113,125
NET WORTH: ($5,565,225)
UNCOLLECTIBLE NOTES FROM INSOLVENT FAMILY MEMBERS
Daughter and son-in-law Maureen and Thomas Mulhern: $2.5 million
Daughter and son-in-law Elaine and Bradley Boland: $1.7 million
Daughter and son-in-law Beth and Robert Wurzelbacher: $830,000
Daughter and son-in-law Kathleen and Robert Hubbard: $500,000
Son Charles Keating III: $480,000
Total: $6.01 million
