The Robbed Rejoice at Fraud Conviction : Banking: Charles Keating’s victims voice vindication, but say there were other officials, public and private, at fault.

Charles H. Keating Jr.’s federal conviction seals his name in history as the symbol of greed and excess in the savings and loan industry during the high-flying 1980s, lawyers and investors in his company said.

“It’s a wonderful day,” said Joseph W. Cotchett Jr. of Burlingame, the chief trial lawyer for small investors in Keating’s financial empire. “Charlie Keating over the years has been able to buy and sell a lot of people. He now came up against a court system where he couldn’t buy 12 jurors.”

One of the most vocal investors, Irvine resident Shirley Lampel, 62, said that the conviction of the one-time operator of Irvine’s Lincoln Savings & Loan should send a message “that you can no longer get away with white-collar crime in the United States.”

“We were robbed inside the bank by the bank owner, rather than by someone with a gun hiding in the bushes outside,” said Lampel, who lost $30,000 in bonds when the thrift and its parent company, American Continental Corp. in Phoenix, collapsed nearly four years ago. She has recovered $13,000 of her investment from settlements reached with a host of defendants in various class-action lawsuits.

A jury Wednesday convicted Keating and his son, Charles H. Keating III, on all counts in two federal indictments charging that they looted the S&L.; Both face maximum penalties of hundreds of years in prison, as well as fines, restitution and forfeiture orders in the hundreds of millions of dollars.

The failure of Lincoln is the nation’s costliest, leaving taxpayers with a $2.6-billion clean-up bill. American Continental’s bankruptcy cost small investors more than $285 million, but they are expected to get much of it back from settlements and a $1.9-billion judgment last July against Keating and three other defendants. Keating and two of the others are broke; the fourth defendant is an offshore company that cannot pay the total judgment.

“The sad part about the Keating story is not that Keating has gone but that those people who have been his facilitators have not been similarly prosecuted,” said G. Robert Blakey, a law professor at the University of Notre Dame.

“Keating didn’t do this by himself. He had lawyers and accountants and real estate brokers and executives who helped him,” said Blakey, who co-authored the federal racketeering law that was used to convict Keating. “Without the facilitators, there never would have been a Charles Keating.”

Blakey includes the five U.S. senators who received more than $1.5 million in political donations from Keating while at the same time acting on Keating’s behalf to try to bring an end to a long regulatory audit of Lincoln. The Senate Ethics Committee reprimanded Sen. Alan Cranston, helping him decide to retire at the end of December, and chastised the four other senators.

The law professor called it an “injustice” that Keating faces up to 525 years in prison while the five senators got slaps on the hands.

“Conviction of a Charles Keating gives society and government a feeling that justice was done, but the facilitators have got off scot-free,” Blakey said. “The system that created him, sustained him and profited off him is not materially different now than it was before.”

Bondholders and their lawyers have often complained that regulators should have closed Lincoln two years earlier than they did, and that they dragged their feet through more than three years of investigation after Keating’s financial empire fell apart.

“While we’re glad the federal government finally got around to prosecuting him, the real question is, what took so long?” said Ronald Rus of Orange, who also represented bondholders.

Tom Shelley, a bondholder from West Hills in California’s San Fernando Valley, said his “great satisfaction” in the verdict was tempered by the “misery and torment that Mr. Keating has caused for so many I’ve known.”

“The age of excess and overreach is over,” Shelley said. “There really can never be a Keating again because this was the classic example of bank fraud.”

Juror Gege Martinez of Riverside said the defendants were businessmen, and “it just totally got away from them.”

“I don’t think they were vicious or it was an intent,” she said. “But there were so many problems, and they had to get it out, and it didn’t work.”

Charlie J. Parsons, special agent in charge of the FBI office in Los Angeles, called the convictions “gratifying.” The Lincoln loss, he said, “eclipses the annual losses from all U.S. bank robberies.”

In Washington, U.S. Atty. Gen. William P. Barr said: “This conviction stands as concrete proof of this department’s longstanding commitment . . . to convict those who looted our financial institutions.”

But Stephen Neal, Keating’s attorney, said he still thinks the evidence never showed that Keating and his son should have been convicted. Both plan to appeal.

Neal said the continued pursuit of Keating by three federal regulatory agencies is a waste of taxpayers’ money.

Times staff writers Jim Granelli and Susan Christian contributed to this report.