Keating In-Law Settles SEC’s Fraud Charges
Robert M. Wurzelbacher Jr., son-in-law of convicted thrift operator Charles H. Keating Jr., agreed not to violate securities law in the future as part of his settlement with the Securities and Exchange Commission, the federal agency said Monday.
Wurzelbacher is the fourth of 10 executives and Keating business associates sued by the SEC last December to settle allegations of fraudulently inflating profits at American Continental Corp. and its Lincoln Savings & Loan subsidiary.
Keating’s empire collapsed in 1989, and he was sentenced in April to 10 years in state prison for securities fraud. The Irvine-based thrift’s failure is the biggest to date, costing taxpayers $2.6 billion.
In May, Wurzelbacher, one of the closest family members to Keating, pleaded guilty in federal court to three criminal charges of misapplying nearly $14 million of Lincoln’s federally insured money.
In signing a consent order with the SEC, Wurzelbacher did not admit wrongdoing. The SEC accused him of misreporting income in the purported sale of undeveloped Lincoln-owned land in the Arizona desert when he was a former senior vice president of American Continental, said Jonathan Golomb, an SEC enforcement attorney.
So far, three others have signed similar consent judgments. One of them, Judy J. Wischer, American Continental’s president, also agreed to be barred for life from serving as a top officer or director in a public company.
In its civil case, the agency accuses Keating of earning $7.5 million through insider trading and in engaging in a phony stock swap with David Paul, the former chairman of another failed big thrift, CenTrust Savings Bank in Miami. Paul also is a defendant in the SEC case.
In two previous SEC cases, a major Lincoln borrower and three other executives also have settled securities fraud allegations.
The agency, which started investigating allegations of inflated earnings nearly six years ago, filed its major case against Keating and nine others on Dec. 12, the same day that Keating, Wurzelbacher and three others were indicted on federal fraud, conspiracy and racketeering charges. The trial on the federal criminal case is scheduled to start Oct. 20.
The SEC case is one of several overlapping government actions against Keating, whose attorneys say he is being made a scapegoat for the nation’s S&L; debacle. Keating, 68, is imprisoned in San Luis Obispo and claims that he is destitute.
