Ex-Keating Associate, U.S. to Settle

David Paul, convicted chairman of failed Centrust Bank, has agreed to settle federal securities charges without admitting wrongdoing in junk bond deals with Charles H. Keating Jr., a regulator said Tuesday.

Paul will accept an injunction barring him from any future fraud or disclosure violations following charges brought by the Securities and Exchange Commission.

“He consents without admitting or denying any of the allegations,” said Jonathan Golomb, a branch chief in the SEC’s enforcement division. “He consents to the entry of final judgment enjoining him from any future violations.”

Paul was accused of violating SEC rules in order to create millions in paper profits on Playtex and Grand Union bond trades with Keating’s American Continental Co., while both of their savings and loans were failing. American Continental was parent of failed Lincoln Savings & Loan of Irvine.

Paul faces no immediate sanctions under the charges filed two years ago against him, Keating and several American Continental officials at federal court in Los Angeles. The SEC did not obtain the power to impose fines until 1990, and the charges covered trades in 1987.

Paul is awaiting sentencing on a 68-count fraud case and a second trial on 29 securities and racketeering charges.

Since the settlement contains no admission by Paul, it is not likely to be raised at the criminal trial covering some of the same trades.