Deliberations in Keating Trial Reach 6 Days
Deliberations in Charles Keating Jr.’s civil fraud trial continued for a sixth day Wednesday as jurors considered what damages to assess the former Phoenix financier and whether to find three co-defendants liable for damages.
The 11 jurors began weighing the evidence June 29, three days after the 3 1/2-month trial concluded, and deliberated for three days last week. They went home Wednesday without reaching a verdict.
Several written questions have been passed to U.S. District Judge Richard Bilby, but their contents have not been disclosed.
The jurors were trying to determine whether Saudi European Investment Corp., Conley Wolfswinkel and Continental Southern Inc. helped Keating swindle investors who bought securities from American Continental Corp. Keating is serving a prison term on a California securities-fraud conviction.
When he instructed the jurors, U.S. District Judge Richard Bilby removed the issue of Keating’s liability, telling them he had already found that the 68-year-old former head of American Continental had perpetrated a securities fraud conspiracy and engaged in racketeering. The judge told them they needed to assess only compensatory and punitive damages against Keating.
Lawyers for class-action plaintiffs claimed total losses of $288.7 million and want triple damages assessed under federal and Arizona racketeering statutes. Settlements with other defendants could come to nearly $250 million.
Plaintiffs included 17,000 bondholders who purchased $171 million worth of American Continental junk bonds sold in lobbies of branch offices of its Lincoln Savings subsidiary. Many of those people were elderly customers, some of whom testified that they were led to believe that the securities were government-backed. Others said they thought they were buying or rolling over federally insured certificates of deposit.
American Continental filed for bankruptcy protection on April 13, 1989. Lincoln, based in Irvine, was seized a day later by federal regulators. Its collapse is expected to cost taxpayers a record $2.6 billion.
