Four in Keating Case Agree to Huge Pay-Back : Thrifts: The record amount of restitution-- $75 million--may never be collected, however, because they maintain that they are broke.
Two of Charles H. Keating Jr.’s sons-in-law and two other associates in Lincoln Savings & Loan have agreed to pay a record restitution of $75 million to settle civil charges relating to the thrift’s failure, regulators said Tuesday.
The money may never be collected, however, because the four say they’re broke. Any funds collected will go to the Resolution Trust Corp., the government’s S&L; cleanup agency, to partially compensate taxpayers for their losses in bailing out Lincoln.
The S&L;’s failure is the nation’s biggest to date, costing taxpayers $2.6 billion.
In their settlement with the Treasury Department’s Office of Thrift Supervision, the four do not admit liability. They agree, however, to be banned from the banking industry for life.
The consent agreements were signed by Judy J. Wischer, American Continental’s former president and Lincoln’s onetime chairman; Robert M. Wurzelbacher Jr., a former corporate senior vice president; Robert J. Hubbard Jr., a corporate vice president and onetime Lincoln president, and Andre A. Niebling, a former corporate senior vice president and onetime Lincoln chairman and chief executive. Wurzelbacher and Hubbard are two of Keating’s five sons-in-law.
The settlement does not require any of the four to turn over future earnings that are legitimate, said Carolyn Lieberman, the OTS’ senior deputy chief counsel.
“The settlement was set up this way because we were concerned that some large blocks of money might be transferred to them in the future,” Lieberman said. “If there is money secreted offshore, we could capture it. But based on our look of their financial capacity at this time, they don’t have the ability to pay the judgment.”
The OTS had accused them, along with Keating and others, of taking part in four illegal transactions in which Lincoln lost $130.5 million. The agency pursued two of the four charges against them in administrative hearings in Phoenix in April. None put up a defense.
Of the $75 million in restitution, Wurzelbacher agreed to pay $30 million, of which $133,000 was taken immediately from proceeds of the sale of a vacation home in Leland, Mich. Wischer agreed to pay $25 million, Hubbard $15 million and Niebling $5 million.
The four, who signed almost identical restitution agreements earlier this year with the RTC, will not be required to pay twice. The RTC agreement is being challenged in court, and the OTS agreement could fall apart if an appeals court reverses the RTC settlement, said Bruce J. Rinaldi, a senior OTS lawyer who prosecuted the administrative case.
Keating was convicted last fall of state securities fraud charges and is serving a 10-year term in the prison at San Luis Obispo. The OTS is also asking restitution from Keating, who says he is destitute.
