Appeals to Delay Recovery of Some Keating Suit Money : Litigation: American Continental bondholders reportedly will get first 40 cents on the dollar back in mid-September.

Lawyers for small investors who won a multibillion-dollar verdict last month against Charles H. Keating Jr. and some of his cohorts aren’t sure yet if they’ll be able to collect the judgment.

Joseph W. Cotchett Jr., the chief trial lawyer for the investors, said Thursday that appeals of the multibillion-dollar federal court verdict last month will delay any recovery of the total $288.7 million that his clients lost after Keating’s financial empire collapsed in April, 1989.

Nevertheless, about 600 Southern Californians who bought worthless bonds in Keating’s company at Lincoln Savings & Loan branches cheered Cotchett of Burlingame and colleague Ronald Rus of Orange at a meeting in Van Nuys late Thursday for their work in getting some of their money back.

“Three and a half years ago, when I found out Lincoln had gone under, I would never have thought I’d feel this good again,” said Tom Shelley, a leader of a bondholders’ support group in the San Fernando Valley.

“I always felt we would win, just like I always felt Keating would land in jail,” said Jeri Mellon, another group leader.

She said bondholders will get their first 40 cents on the dollar back in mid-September.

Another lawyer cheered by bondholders was William Hodgman, the Los Angeles County deputy district attorney who led the state’s prosecution of Keating last year. Keating was convicted of securities fraud and is serving 10 years in a state prison in San Luis Obispo.

The investors, holding a regular monthly meeting Thursday night in Van Nuys, consist mainly of elderly Southern Californians who bought bonds in Keating’s American Continental Corp. at the company’s Lincoln branches.

A federal judge ruled that Keating had defrauded the bondholders and other investors, and the jury found that three defendants left in the huge civil case had aided Keating. The jury awarded $2.1 billion in damages against Keating--the largest U.S. civil judgment against an individual--and $2.3 billion in damages against the other defendants.

Keating has said he is broke, and no one has been able to find any holdings of value.

Only one of the other defendants, Saudi European Investment Corp., is solvent, but it is an offshore company that could prove to be difficult to collect from.

Before the judgment, lawyers settled with more than 90 defendants for a total of $251 million. But $84 million of that amount won’t come in for a while, and attorneys’ fees, court costs and a loan from a federal agency will reduce the total by $90 million. Investors will be left with 56 cents on the dollar from the settlements, though bondholders may end up with 6 cents more on the dollar.

The bondholders constitute most of the 23,000 investors who lost money. Many of them lost their life’s savings, and several committed suicide over the loss. They eventually banded together to apply pressure wherever possible--courts, Congress and the media--to seek justice.

“When we started, we had people who were too embarrassed to come to the meetings and say they had lost money,” said 76-year-old Katherine C. Bartolone of North Hollywood, who invested $50,000 with Lincoln. “Now we have a wonderful, active, go-get-’em group.”

Bondholders also invited Los Angeles’ new Police Chief Willie Williams. He couldn’t make it.

“We are coming to the end of our purpose as a grass-roots organization, and I think we are ready to sink our teeth into some other cause,” said Jeri Mellon, a North Hollywood resident who invested $40,000 in the American Continental bonds. “Our group is feeling very good, very accomplished. We might be able to help the chief with crime in the Valley.”

The Associated Press contributed to this report.