Keating Faces 75 Counts in New Federal Trial : Thrifts: He faces a maximum prison term of 525 years. Jury selection is scheduled to start this week.
The federal criminal trial of former Lincoln Savings & Loan operator Charles H. Keating Jr. gets underway this week after lawyers argue today about whether jurors should hear a variety of evidence--including details about his state court conviction on securities fraud.
The final pretrial arguments before U.S. District Judge Mariana R. Pfaelzer signal that both sides are ready for battle in one of the biggest S&L; fraud cases to go to trial.
Keating is charged in two indictments with 75 counts of bank fraud, bankruptcy fraud, conspiracy, wire and mail fraud, and racketeering. He faces a maximum of 525 years in prison. His son, Charles H. Keating III, is charged in one indictment with 64 counts and faces up to 475 years in prison.
The charges stem from the April, 1989, collapse of the Irvine thrift and its parent company, American Continental Corp. Lincoln’s failure is the nation’s largest, costing taxpayers $2.6 billion.
Keating is serving 10 years in state prison after being convicted last fall of state securities fraud for orchestrating the sale of American Continental bonds at Lincoln branches. He was moved from the state prison in San Luis Obispo on Friday to the federal Metropolitan Detention Center in downtown Los Angeles for the trial.
More than 17,000 small investors, mainly elderly Southern California customers of the S&L;, lost from $168 million to $192 million when Keating’s empire collapsed.
They and other investors won jury awards of $4.4 billion against Keating and three of his cohorts last July. The judge presiding over that trial reduced $4.1 billion in judgments against Keating and two others to $1.6 billion last week.
The federal criminal trial involves securities fraud allegations, but it is focused more on alleged banking fraud and the loss to the taxpayers.
The trial starts Wednesday when about 250 potential jurors will be called to fill out written questionnaires about themselves and their views on other topics. The questionnaires help spot possible prejudices. Final jury selection, opening arguments and testimony are expected to begin next week.
In arguments today, federal prosecutors want Pfaelzer to prevent Keating’s lawyers from contending that thrift regulators’ misconduct caused Lincoln’s failure. Keating has maintained that regulators ruined Lincoln as part of a vendetta against him for his outspoken criticism of them and the stricter rules they were imposing.
Prosecutors also plan to challenge Keating’s continued use of lawyer Stephen C. Neal. They contend he may have a conflict of interest because he and Keating signed at least three agreements for a joint defense with Judy J. Wischer, Keating’s top aide and American Continental’s former president. Indicted along with Keating, she pleaded guilty and is expected to testify against him.
Neal has motions pending to exclude evidence of Keating’s state court conviction as well as evidence about other questionable transactions he was involved in, and incriminating statements he made to regulators. Once asked by a regulator, for instance, why he wasn’t a director on Lincoln’s board, Keating responded: “I don’t trust regulators. I don’t want to go to jail.”
