D.A. Team Overcame Obstacles : Trial: The prosecution’s familiarity with judges and the community helped win the conviction

Federal authorities thought the state indictment was seriously flawed. Some lawyers in the civil securities cases worried that the Los Angeles district attorney’s office moved too fast with too little.

And most everyone thought that Dist. Atty. Ira Reiner was simply out for political glory after the office’s crushing defeat in the McMartin Pre-School child abuse case.

But the three prosecutors who worked to convict Charles H. Keating Jr. on state securities fraud charges never doubted their mission.

“Obstacles developed along the way, but we did what we could to streamline and simplify the case,” said Deputy Dist. Atty. William Hodgman, 38, the chief trial lawyer for the prosecution team.

Despite repeated setbacks, Hodgman and Deputy Dist. Attys. Paul Turley and Terry Bork pushed their case and won over the jury. Keating was convicted on 17 securities fraud counts for failing to disclose to bondholders the shaky financial condition of Lincoln Savings & Loan and its parent company, American Continental Corp.

The Irvine thrift and the Phoenix company collapsed in April, 1989, leaving taxpayers with the nation’s biggest thrift bailout tab--$2.6 billion--and investors with a $285-million hole in their wallets.

Now, for Hodgman and his team, the end is near. On Friday, Superior Court Judge Lance A. Ito will sentence Keating, unless he unexpectedly grants a defense motion for a new trial.

One of the prosecution team’s biggest assets in tackling Keating was its familiarity with the judges and the community.

Turley, for instance, said the defense had not done its homework when Keating was first indicted in September, 1990, or it would have realized that Superior Court Judge Gary Klausner, whom Keating first appeared before, was likely to impose a hefty bail. Keating spent 33 days in jail before a federal judge, on appeal, reduced the $5-million bail Klausner set to $300,000.

And at trial last fall, veteran prosecutor Hodgman endeared himself to the jury by quickly learning their names and appearing friendlier and more at ease than Keating’s bright, rapid-fire Chicago lawyer, Stephen C. Neal, who jurors have said came across as a little too slick, possibly arrogant.

Hodgman, a native Southern Californian with a knowledge of the tough neighborhoods where many of the jurors lived, also simplified the case better by likening complicated Keating schemes to more familiar activities.

“Why is Mr. Keating’s conduct like a drive-by shooting?” the prosecutor asked in closing arguments. “He doesn’t have the intent of hurting anyone, but when he shoots into a crowd, someone gets hurt.”

Interviewed two weeks before Keating was convicted, the three prosecutors were confident they had done the best job they could and didn’t express any concern over long jury deliberations.

Their biggest obstacle, they said, was overcoming a court ruling that had gutted Reiner’s unusual approach to the case.

Reiner wanted to use little-known state business laws that allowed a conviction without proof that Keating intended to commit a crime, which is called strict liability, and without proof that he knew his salespeople were lying to customers, which is called vicarious liability.

“There was no California precedent for this, but we had the feeling that the application of (a corresponding federal doctrine) was not a quantum leap but the next logical step in the development of the law,” Hodgman said.

Ito disagreed. He modified the strict liability aspect and totally ditched the federal doctrine on vicarious liability, forcing prosecutors to show that Keating aided and abetted in the fraud.

For the three prosecutors, the trial was the biggest and most important case they ever took on.

Hodgman, 39, a graduate of Hastings College of Law in San Francisco, joined the district attorney’s office in 1978 but left three years later for private practice. He said he soon found that handling product liability and maritime law cases in a mid-size Los Angeles law firm bored him.

“I am far more motivated to represent people rather than corporations,” Hodgman said. He rejoined the district attorney’s office, prosecuting career criminals in Compton and Long Beach. Little more than a week before Keating was indicted, Hodgman was picked as chief trial lawyer.

Turley, 53, the pit bull on the team who pounced on Keating’s misdeeds and wouldn’t let go, started out as a minister for the American Baptists of Valley Forge, Pa. He was a pastor at a church in Anchorage, Alaska, before going to the University of Wisconsin Law School, from which he graduated in 1973.

He soon joined the Federal Trade Commission, working in five different offices as assistant director and then regional director. After heading the Los Angeles FTC office for three years, Turley left in 1986 for private practice, but he wanted to return to public service and joined the district attorney’s office in 1988.

Bork, 34, a Massachusetts native raised in Napa, Calif., was brought into the case a month after Keating was indicted.

Profiles of the Prosecution

William Hodgman Age: 39

Personal: Born in La Habra, raised in Southern California; married with a son

Legal Education: 1978 graduate of Hastings College of Law, San Francisco

Experience: Private practice for one year. With Los Angeles County district attorney’s office for 12 years, where work included prosecutions of murder suspects and career criminals in Long Beach and Compton and a stint on the special trials task force in downtown Los Angeles.

Paul Turley Age: 53

Personal: Born in St. Joseph, raised in Southern California; married with a son and a daughter

Legal Education: 1973 graduate of University of Wisconsin Law School

Experience: Minister (American Baptists faith), pastor in Anchorage, Alaska, for three years before law school. Federal Trade Commission attorney for 11 years, regional director in three cities. Private practice for two years before joining district attorney’s office in 1988.

Terry Bork Age: 34

Personal: Born in Taunton, Mass., raised in Napa; married with a daughter due in seven weeks

Legal Education: 1985 graduate of Pepperdine University Law School, Malibu

Experience: Before law school was office assistant to Sen. Alan Cranston (D-Calif.); campaign manager, fund-raiser for congressional candidate; news reporter, anchor and talk show host for Napa radio station. Private practice for three years before joining D.A.’s office in 1988.