Keating Jurors to Testify in His Bid for New Trial

Federal jurors who convicted former Lincoln Savings & Loan operator Charles H. Keating Jr. of fraud and racketeering are scheduled to testify behind closed doors today about possible jury misconduct.

Keating, trying to win a new trial in his federal case, has alleged that jurors improperly learned about the 1991 state securities fraud verdict against him and discussed it during his federal trial a year later. The state conviction was overturned last April.

Evidence of the state conviction was barred in the federal trial because it was deemed too prejudicial to Keating’s right to a fair trial.

At the request of prosecutors and defense attorneys, U.S. District Judge Mariana R. Pfaelzer decided Wednesday to hear the testimony in her chambers. Pfaelzer, who presided over Keating’s federal trial, also closed part of Wednesday’s conference with lawyers to go over questions that jurors can be asked.

“Because they’re jurors, we wanted to minimize the possible intimidation of a public proceeding,” Assistant U.S. Atty. Sharon McCaslin said.

The judge is scheduled to hear from 11 of the 12 jurors and three of the four alternate jurors. One juror, a key defense witness, died last month. An alternate juror is in Hawaii and unavailable.

Pfaelzer must determine if jurors knew about the state conviction and discussed it. Lawyers will not be allowed to ask questions that delve into deliberations and whether knowledge of the conviction influenced the jury’s verdict.

The hearing was ordered in June by the U.S. 9th Circuit Court of Appeals, which held off ruling on other issues raised by Keating and his son, Charles H. Keating III, who also was convicted and alleges jury misconduct.

Lawyers familiar with jury issues and pretrial publicity say that the jury process is held sacrosanct by appellate courts and that evidence of misbehavior is considered a serious threat to any conviction. It would be particularly troubling, they say, if jurors were influenced by a state court conviction that was later overturned.

“The whole process of selecting a jury is so critical, and a mistake on just one juror can cause the reversal of a conviction,” said Janet Levine, a Los Angeles lawyer involved in such issues.

Only last week, she pointed out, the appellate court threw out a conviction, ruling that a trial judge erred in failing to grant a defendant’s automatic right to dismiss a prospective juror.

Keating has spent 4 1/2 years in prison for looting the Irvine thrift and bilking investors of its parent company in Phoenix in what has become the nation’s most notorious thrift failure. He was sentenced to more than 12 1/2 years. His son is free on bail pending appeal.

The elder Keating has adamantly denied any criminal guilt for the 1989 collapse of his financial and real estate empire. He has blamed federal regulators for hamstringing his high-flying operation, which put Lincoln’s federally insured deposits into a myriad of investments, from raw desert land to foreign currencies.

His outspokenness, brash conduct and Washington connections helped to turn him into the nation’s symbol of the arrogance, greed and political clout that typified the thrift industry in the free-wheeling 1980s.

In today’s hearing, defense lawyers will have to proceed without one of their main witnesses. Juror David A. Webb of Tujunga died early last month of cancer. He was one of five jurors who told defense attorneys after the trial that they knew about the state case before the federal trial or learned about it during the proceedings.

Webb, contradicting a pretrial statement, admitted in an affidavit after the federal case “that he had knowledge of Keating’s state conviction just months prior to jury selection,” the defense argued in its appellate brief.

“Webb either lied or grossly misinformed the trial court of the truth in his pretrial questionnaire,” the brief asserts.

It’s unclear, though, how much help Webb would have been to the defense at the hearing. After the trial, he told The Times that Keating simply wasn’t believable on the witness stand.

“I don’t want to hurt his feelings, but we all felt we would have liked to have one of those fake expanding noses that grows longer and longer,” Webb said then. “We just didn’t think any of it was valid.”

After the appellate court ordered a hearing into possible jury misconduct, Webb defended the verdict. He said that his knowledge of Keating’s state case had “no bearing on whether I found him guilty” and that a new trial for Keating would be a “waste of taxpayers’ money.”