Judge Tentatively Denies Retrial in Keating Case : Courts: Jurist is not swayed by defense claim that four jurors were improperly aware of the S&L; operator’s previous fraud conviction.

Citing “overwhelming” evidence against former Lincoln Savings & Loan operator Charles H. Keating Jr., a federal judge on Monday tentatively denied his request for a new trial in his fraud and racketeering case.

In lengthy pleas before U.S. District Judge Mariana R. Pfaelzer, Keating’s lawyer said the Jan. 6 conviction of Keating was tainted because at least four jurors were aware of his previous state conviction.

The jury found Keating and his son, Charles H. Keating III, guilty of looting the Irvine thrift and swindling investors in the S&L;’s parent company, American Continental Corp. in Phoenix.

Keating, 69, had been convicted a year earlier in state court and sentenced to a 10-year prison term for defrauding Lincoln investors by selling them risky American Continental bonds billed as safe investments.

In the federal hearing, Keating’s attorney, Stephen C. Neal, submitted affidavits from four jurors who said they were aware of Keating’s state conviction.

Neal said two jurors learned of the conviction after jury selection, leaving the judge no way of determining whether they could set any prejudice aside. A third juror misrepresented his knowledge of the case on a questionnaire before his selection, Neal said.

Assistant U.S. Atty. David Sklansky said the questionnaire, which was drafted by Keating’s lawyers, met all federal requirements for cases generating pretrial publicity.

Arguing against the motion for a new trial, Sklansky said virtually every witness, including five former Keating employees who turned state’s evidence, had supported the prosecution’s version of the case.

Pfaelzer appeared to agree.

“I think the evidence was overwhelming,” she said. “I think there should not be a new trial.”

But Pfaelzer gave Neal 30 days to obtain a transcript of trial proceedings that he said was needed to complete a motion for acquittal. The judge said she will rule on that motion and another for a new trial after prosecutors submit their reply.

Pfaelzer pushed back federal sentencing for the Keatings from May 17 to June 7. The two face maximum prison sentences of hundreds of years, although attorneys have said federal guidelines could result in 15- to 20-year terms.

The judge also delayed a hearing on a request by the government that the Keatings be ordered to forfeit nearly $500 million they allegedly gained through illegal activities. She set no date for the forfeiture motion.

The April, 1989, failure of Lincoln and the bankruptcy of American Continental is expected to cost taxpayers $2.6 billion and investors $288.8 million. Lincoln’s collapse was the largest thrift failure in U.S. history.