Keating Released After Five-Day Incarceration

A federal judge freed Charles H. Keating Jr. from jail Wednesday after a five-day incarceration during which his lawyer said the former Lincoln Savings & Loan operator had his stomach pumped and was placed on suicide watch after drinking shampoo.

Jailed for violating the terms of his 1996 release from prison by applying for a passport, Keating inadvertently took a swig of shampoo that had been placed in a cup on his food tray several hours after his arrest last Friday, his attorney, Stephen C. Neal, said outside the courtroom.

The 74-year-old Keating, who had entered the court in handcuffs and dressed in blue jeans and a blue denim jacket, wouldn’t comment.

In reinstating Keating’s $300,000 bond, U.S. District Judge Mariana R. Pfaelzer scolded Neal for advising his client to seek a passport, saying the application clearly violated the terms of Keating’s release from prison.

“It is totally inappropriate for an attorney to tell a criminal defendant that he can violate the terms of release,” the judge told the attorney. “He is not going to stay out if this happens again.”

To help ensure that further violations won’t occur, Pfaelzer upgraded the government’s supervision over Keating from “routine” to “intensive,” which requires him to call government agents and visit them in person more frequently.

She also restricted his travel to Arizona, where he lives, and California, where Neal maintains offices. Previously, he also was allowed to travel to Illinois, where other attorneys for him are based.

Neal said Keating needed the passport because he was asked to be a consultant on a hotel project in Belize. The lawyer said earlier that the Belize job offer was Keating’s first since he was freed from federal prison.

Outside the courtroom, Neal said Keating became violently ill after drinking the lye-based shampoo in his cell in a federal detention center near Phoenix shortly after he voluntarily surrendered. He was transported to a medical facility, where his stomach was pumped.

“He was given the material with no notion from anybody that it was shampoo,” Neal said. He did not accuse the guards of deliberately trying to induce Keating to drink the liquid.

Keating was chained to his bed Friday night because guards feared he was suicidal, Neal said.

An operator at the Federal Correction Institution Phoenix, where Keating was held, said there was no one on duty late Wednesday afternoon who could comment.

Pfaelzer first released Keating from prison in October 1996. Two months later, she overturned his conviction and ordered a new trial on fraud, racketeering and conspiracy charges stemming from the 1989 failure of the Irvine thrift. The government’s appeal is pending in the U.S. 9th Circuit Court of Appeals.

In his federal trial, Keating was sentenced to 12 years and seven months. He had about seven years remaining when the convictions were overturned by Pfaelzer. Previously, he also was convicted in state court on California security fraud charges, but that conviction was thrown out in February.

Keating became the symbol of the S&L; industry debacle of the 1980s. Lincoln’s collapse is now estimated to cost taxpayers $3 billion, making it the second-costliest failure nationwide.

In addition, thousands of investors, mostly elderly Southern Californians, lost more than $285 million in the collapse of Lincoln and its parent company, American Continental Corp. in Phoenix.

Keating essentially ran Lincoln from his position as chairman of American Continental. He never held an official position at the thrift.