Keating Conviction Elicits Cries for Mercy and Revenge : Sentencing: The former S&L; operator learns April 10 if he will receive probation or go to jail.
Charles H. Keating Jr. once led an exemplary public life, but a Los Angeles Superior Court judge must decide this week if he should make a different sort of example out of the former operator of defunct Lincoln Savings & Loan.
Keating, 68, will be sentenced April 10 for his conviction on 17 counts of state securities fraud. He faces a maximum penalty of 10 years in prison, a $250,000 fine and restitution.
The Arizona business executive, who has become a national symbol of greed and arrogance in the thrift industry, wants a suspended term--probation and community service. But prosecutors want him to serve the full 10 years in jail for swindling Lincoln customers who bought bonds issued by the Irvine thrift’s parent company, American Continental Corp.
Judge Lance A. Ito, who will be passing judgment on Keating, is getting ample advice in testimonials that have poured into his downtown courtroom, much the way that letters of support have swamped judges presiding over other high-profile white-collar cases.
More than 120 people--including Mother Teresa, former Texas Gov. John B. Connally and retired actress Loretta Young--wrote letters vouching for Keating’s integrity, recalling his goodness and pleading with the court to put him on probation, not in prison.
“I only know that he has always been kind and generous to God’s poor, and always ready to help whenever there was a need,” wrote Mother Teresa, the well-known missionary who received $1 million from Keating and red-carpet treatment from him whenever she visited the region.
But prosecutors and about three dozen other letter writers--including William J. Crawford, former commissioner of the state Department of Savings and Loan--want Keating sitting behind bars.
“Stealing large sums of the public’s money and giving it to your friends and charities is not a virtue,” wrote Crawford, who was commissioner from 1985 to 1990.
Despite strict sentencing laws that courts must follow, Ito still has a great deal of discretion in determining whether to put Keating on probation or in prison.
Keating was convicted last December on 17 counts of fraud in failing to disclose the true state of American Continental’s shaky financial condition to bond buyers. The counts are based on 17 separate Lincoln customers who bought American Continental bonds at the Irvine thrift’s Southern California branches. Those victims represent some 17,000 bondholders who lost $168 million, according to the most recent figures available, after Keating’s financial empire crumbled in April, 1989. The majority of the bondholders were elderly customers, and many lost their life savings.
The letters for and against the one-time Arizona real estate and thrift baron reveal the highly charged nature of the case.
The letters from family, friends, acquaintances, business associates and even some who never met Keating portray a man whose good deeds, honesty and integrity have been completely overshadowed by negative publicity and vindictive government bureaucrats.
The supportive letters described Keating’s fights against poverty, homelessness and child pornography. They related previously untold stories of his personal efforts to help those in need by providing jobs, money or even home-cooked meals.
Many people simply can’t believe the Keating they know is the same one the news media has been describing.
“I don’t know one thing about Charles Keating’s business affairs, except what I have read in the newspapers,” wrote Loretta Young. “But I do know Charles Keating. And I honestly don’t believe there is a dishonest bone in his body.”
The star of the 1950s television series, “The Loretta Young Show,” said she prayed that Keating wouldn’t be imprisoned.
“He is devoted to his family, committed to his faith and is a loyal patriotic American who is willing to take a stand for his beliefs,” wrote Joe D. Richards, the sheriff of Coconino County, Ariz., which covers the Flagstaff area. “I have always believed Charles Keating to be a man of integrity and have never known him to use his position to coerce or improperly influence other people.”
Connally, whose 1980 presidential campaign was managed briefly by Keating, said he was “terribly distressed” over his friend’s conviction.
“Charlie Keating is a man who loves his fellow man, has a great sense of humor, has unbelievable capacity to inspire and lead people and to make friends,” Connally wrote.
Robert Mathewson, a Jesuit priest who is president of Brophy College Preparatory School in Phoenix, said that he could not see Keating ever consciously or deliberately promoting bond sales that might hurt buyers, but he could see Keating “vigorously” promoting such sales “as safe and solid “ in the face of contradictory facts.
“He simply could not see his ventures as ultimately failing,” Mathewson said. “He believed in himself and in his ultimate success.”
Prosecutors, however, take exception to those views.
“The first person a con-man must con is himself,” said Paul Turley, deputy Los Angeles County district attorney who helped to prosecute Keating.
Bondholders and other critics, many from out of state, called Keating an “out-and-out crook,” a “criminal mind of the worst kind,” a “dangerous, dishonest man,” a “vicious and vindictive individual,” a “snake and a viper,” the “worst form of life on this Earth” and a person who “truly epitomizes greed and evil and should receive the maximum sentence.”
Lacy E. Johnson Jr. of Scottsdale, Ariz., concurs with Keating that he should be placed on probation and required to serve the community, but after a lengthy jail term. The community service, Johnson said, should be “cleaning bed pans in some of the marginal nursing homes to which he has condemned many of his victims.”
Helen Dinning of Las Vegas said she was moved by Keating’s 7-year-old granddaughter’s plea not to destroy her “papa” and their family. But, Dinning asked, “Does she realize how many granddaughters had their families destroyed by her grandfather?”
Whatever sentence he receives, Keating faces more legal problems. In a civil trial now underway in Tuscon, he is a defendant in a $1.2-billion class-action lawsuit accusing him of fraud and racketeering relating to the failures of American Continental and Lincoln.
He also is under indictment on federal charges of fraud, conspiracy and racketeering. If convicted, he faces more than 500 years in prison. That case is tentatively scheduled to be tried beginning on Aug. 1.
