Accounting Firm Argues It’s Blameless in Keating Affair : * Court: Judge is expected to rule today whether to exclude Deloitte & Touche and other professionals from cases in which small investors allege more than $250 million in fraud.

Attorneys for the major accounting firm of Deloitte & Touche argued Thursday that the firm did nothing wrong in taking on as clients Lincoln Savings & Loan and its parent company in late 1988--six months before the financially troubled operation fell apart.

The firm, then called Touche, Ross & Co., also asserted that it never issued a certified audit or any other document that investors in the parent company, American Continental Corp., relied upon.

The accounting firm’s arguments were the last in a series of hearings this week by defendants in the complex lawsuits alleging civil securities fraud and racketeering and stemming from the April, 1989, collapse of the financial empire run by Phoenix developer Charles H. Keating Jr.

Touche is one of three major accounting firms, two law firms and other professionals trying to get out of the cases, which accuse them of helping Keating bilk small investors out of more than $250 million.

Nearly 20 state and federal lawsuits filed by thousands of American Continental investors are consolidated for trial here March 2 before U.S. District Judge Richard M. Bilby.

In addition, the federal government is seeking $2.7 billion for losses at the Irvine-based thrift, the industry’s biggest failure. That trial, though, has been delayed until after the investors--mostly elderly Lincoln customers who bought bonds at Lincoln branches--get their day in court.

Touche Ross signed on as independent auditor for American Continental and Lincoln in November, 1988, as the company’s and the thrift’s troubles became more publicly known.

The previous auditor, Arthur Young & Co., which is also a defendant in the litigation, had quit over a disagreement about whether a transaction involving a swap of stock produced more than $50 million in profit for Lincoln. Securities regulators would not allow the profit, forcing the company to report a $36-million quarterly loss.

Bilby said he is troubled that Touche Ross accepted the new clients--and a prepaid $2.2-million retainer--without first performing routine checks on the integrity of management.

“Touche people danced around this like a piece of spit on a hot griddle,” Bilby said.

By the same token, he said, he is not yet sure whether the accounting firm should remain in the case if its conduct did not injure anyone.

“We all have clients that you don’t abandon just because they’re in financial trouble,” Bilby said. “It’s one thing to assist in a fraud but another to perform your duties, like auditing, as you should.”

Bilby is expected to rule on the motions later today.

In a separate action, U.S. District Judge Mariana R. Pfaelzer on Wednesday in Los Angeles reasserted her earlier ruling that Keating’s attorney, Stephen C. Neal, can defend him on criminal bank fraud and conspiracy charges as long as Neal has waivers signed by Keating’s son and son-in-law, whom Neal represented in earlier cases, to prevent them from later complaining that they did not get a fair trial.