Former Keating Associate Pleads Guilty
Another former executive in Charles H. Keating Jr.’s failed financial empire pleaded guilty Friday to fraud charges, providing prosecutors added leverage to persuade Keating to enter a plea bargain that could lead to his son being dropped from the case.
Andrew F. Ligget, former chief financial officer of American Continental Corp., the parent company of Lincoln Savings & Loan, admitted to three felony charges of misapplying $28.7 million in thrift funds before U.S. District Judge Mariana Pfaelzer in Los Angeles.
He is the eighth former Keating associate to plead guilty to charges stemming from the three-year federal probe of Lincoln’s failure, the costliest thrift collapse in U.S. history. All have agreed to cooperate in the investigation and all but one--Robert M. Wurzelbacher Jr., Keating’s son-in-law--agreed to testify against Keating.
The pleas leave only Keating and his son, Charles H. Keating III, to face a federal court trial Aug. 4 on fraud, conspiracy and racketeering charges stemming from the 1989 collapse of the Phoenix company and Irvine-based Lincoln.
Keating’s lawyer said his client maintains his innocence and a plea bargain has not been discussed.
“I’ve had no conversations with prosecutors and I don’t anticipate any conversations with them,” said Stephen C. Neal. “They ought to be getting ready for trial instead.”
Prosecutors refused to discuss the possibility of offering Keating a plea bargain or linking it to the charges against his son. But sources close to the investigation said prosecutors now will likely offer Keating an opportunity to plead guilty to certain charges in return for the dismissal of charges against his son.
Federal prosecutors in Los Angeles are expected to put to test Keating’s avowed dedication to family and the general characterization of the Keating clan as a close-knit family. Keating and his wife also have five daughters and two dozen grandchildren.
Ligget’s plea Friday stemmed from an inter-company tax-sharing plan that pumped $94 million of Lincoln money up to American Continental. Lincoln, however, didn’t have any taxes due when it made its payments. Ligget pleaded guilty to transferring the money illegally.
“I knew it was improper,” he told Pfaelzer.
Ligget, 34, faces a maximum prison term of 15 years plus orders to pay fines and restitution. The charges to which he pleaded will allow him to seek probation instead of a prison term.
In a separate development Friday, a Washington attorney agreed to pay the federal government $600,000 for writing a legal opinion that regulators say cost Lincoln Savings $12.3 million and contributed to its fall.
James S. Fleischer, a partner in the Washington law firm Silver, Freedman & Taff and a former senior staff attorney at the Federal Home Loan Bank Board, declined to comment on the settlement with the Office of Thrift Spervision, in which he neither admitted nor denied wrongdoing. He will continue to practice before the agency.
The OTS said Fleischer issued an incorrect legal opinion that said a transaction proposed by Lincoln did not violate any thrift regulations.
The settlement is the largest levied by the agency against a single lawyer. Fleischer’s law firm was not named in the action.
The Washington Post contributed to this report.
