Keating Defense Gains a Delay in Sentencing

Former Lincoln Savings & Loan owner Charles H. Keating Jr., convicted of securities fraud last month, won a two-month delay Wednesday in his Superior Court sentencing so his attorneys can gather character evidence on his behalf.

Judge Lance A. Ito, saying he was swayed by the fact that Keating has had little time to prepare for his sentencing, scheduled April 10 as the new sentencing date. Keating, who was to be sentenced Feb. 7, had sought a 90-day delay.

Wednesday’s hearing could hardly have cheered Keating, however, as he listened to the judge speak ominously in an unrelated case about the need for white-collar criminals to face jail time.

Waiting for his case to be called, Keating sat expressionless as Ito issued his warning to a suspected toxic polluter who was trying to arrange a plea bargain to avoid a proposed 90-day jail term.

“There’s a message that has to go out” to white-collar defendants, Ito said, and that message is that “there’s a jail sentence that has to be given” after corporate defendants are found guilty.

Keating, 68, a former Arizona developer, faces up to 10 years in prison and a $250,000 fine. On Dec. 4, he was found guilty on 17 counts of defrauding bondholders in the Irvine thrift’s parent company, American Continental Corp. in Phoenix.

Thousands of Lincoln customers lost more than $250 million after Keating’s financial empire collapsed in 1989. Lincoln’s failure is the nation’s largest, costing taxpayers $2.6 billion.

Life turned hectic for Keating after his conviction. He was moving out of his home in Paradise Valley, Ariz.--giving it up to creditors--when he was indicted Dec. 12 by a federal grand jury in Los Angeles on conspiracy, bank fraud and racketeering charges.

Jailed until his $2-million bail was reduced to $300,000, he soon was indicted on bankruptcy fraud charges by a federal grand jury in Phoenix.

In addition, federal prosecutors in Los Angeles sought to disqualify Keating’s attorney from the case, saying Stephen C. Neal has potential conflicts of interests because he also represented co-defendants in previous civil matters.

A federal judge rebuffed the attempt, but Keating had to hire other attorneys temporarily and had no one representing him in the sentencing for a while, Neal’s associate, Scott Devereaux, told Ito.

Devereaux argued that the judge has had only a one-sided portrait so far of Keating--who has also been a world-class swimmer, crusader against pornography and heavy donor to charitable causes and politicians.

“The court has not heard from innumerable people that Mr. Keating has helped and assisted,” he said.

Prosecutor William Hodgman argued that the original sentencing date had given Keating enough time--63 days after the jury returned its verdict--to prepare a report on Keating’s character.

The sentencing delay was welcomed by both Thomas Aiken, the Los Angeles County probation officer assigned to write a probation report, and criminologist Sheila Balkan of Santa Monica, who was hired by Keating to write a private probation report.

“I need two years to write this one,” Balkan quipped after the hearing.