Court Sets Aside Ruling Against Keating Over Thrift’s Collapse

In another legal victory for Charles H. Keating Jr., a federal appeals court on Friday voided a $4.3-billion judgment against the former Lincoln Savings & Loan boss, ruling that the government should have given him a full trial before holding him personally liable for the collapse of his thrift.

The decision overturns a 1994 ruling by a federal judge in Arizona, who ordered Keating to pay Resolution Trust Corp.--the government agency responsible for cleaning up the S&L; mess--for the collapse of Lincoln Savings in 1989. At the time, the judge denied Keating’s request for a trial, in part because Keating had already been convicted of criminal wrongdoing.

Keating, 75, who came to personify the excesses of the S&L; scandal in the late 1980s, appealed the decision, complaining he was being made a scapegoat for the S&L; crisis.

On Friday, the U.S. 9th Circuit Court of Appeals in San Francisco set aside the lower court’s decision, ruling “that the summary judgment cannot be sustained on the basis of the criminal conviction.”

Keating’s attorney, Stephen Neal, expressed satisfaction at the decision. “I think it was the largest judgment ever entered against an individual in our judicial system, and it’s terrific that it’s been thrown out,” Neal told Associated Press.

The claims of Resolution Trust, which shut down in 1996, were inherited by the Federal Deposit Insurance Corp.

An FDIC spokesman said Friday the agency would review the court’s decision.

Throughout his legal problems, Keating has insisted that he is broke. He also faces an estimated $1 billion in judgments from investors, including many senior citizens in Southern California, who lost about $285 million by purchasing high-risk bonds.