Keating to Be Called First in His Trial : Courts: Ex-Lincoln S&L; owner is expected to invoke 5th Amendment, then withdraw from defense against suits because his insurer won’t pay any more legal bills.
Charles H. Keating Jr. will be the first witness called to the stand early next week as testimony gets underway in the trial of the securities fraud lawsuits brought by investors who lost more than $250 million after the 1989 collapse of his company and its Lincoln Savings & Loan subsidiary.
But it is unlikely that the former Arizona developer will say anything. Instead, he is expected to invoke his Fifth Amendment privilege against testifying to avoid incriminating himself.
Lawyers for the investors have said that Keating, who has become the symbol of greed, excess and arrogance in the thrift industry, would be the first witness Tuesday or Wednesday. However, he won’t testify because a previous court order holds him to his decision last year to invoke the Fifth Amendment privilege, said his attorney, Stephen C. Neal.
The final jurors in the trial are expected to be selected today from a pool whittled down over the last two weeks from 104 candidates.
Opening statements will begin Friday and continue next week in U.S. District Judge Richard M. Bilby’s state-of-the-art electronic courtroom, where lawyers are expected to use videotaped depositions for the trial.
Bilby, who said a set of 87-inch speakers make his courtroom “ready for a rock concert,” has been ending each day’s jury-selection process with a sound-system check. Earlier, he played “I Dreamed a Dream” from the play “Les Miserables,” with lyrics about “dreams that cannot be . . . storms we cannot weather.” On Wednesday, it was “There’s No Business Like Show Business.”
The legal team representing about 23,000 small investors in Keating’s company, American Continental Corp., is expected to take four hours Friday to outline the case against Keating and the professionals--accountants, lawyers, appraisers and investment bankers--who helped him.
The investors in corporate stocks and bonds lost more than $250 million after the Phoenix company filed for bankruptcy. Regulators seized Lincoln, and the Irvine thrift has become the nation’s biggest S&L; failure, costing taxpayers $2.6 billion.
The investors charge that S&L; employees steered Lincoln customers away from insured deposits by urging them to buy American Continental bonds--without disclosing how risky the bonds were. They also contend that the defendants portrayed the company as a healthy firm when it was really falling apart.
After Keating takes the stand, he is expected to withdraw from any active defense of the 15 state and federal lawsuits that have been consolidated into one trial before Bilby. His lawyer, Stephen C. Neal, previously told the court that Keating won’t defend himself because the main insurance company that provided coverage for American Continental directors and officers has refused to pay any more legal bills.
National Union Fire Insurance Co. of Pittsburgh said it has paid its policy limits--$5 million--in settling the cases against all other directors and officers, and therefore has no duty to continue defending Keating.
The 68-year-old Keating faces two federal indictments charging him with fraud, conspiracy and racketeering for his role in running Lincoln and American Continental. The indictments have been consolidated for trial, tentatively set for August in U.S. District Court in Los Angeles.
In addition, Keating faces up to 10 years in prison when he is sentenced April 10 for his conviction on state securities fraud charges in Los Angeles County Superior Court.
