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Fired Keating Hotel Workers File $42 Million Lawsuit

January 5, 1990

PHOENIX (AP) _ Twenty-one former employees of Charles H. Keating Jr.’s Phoenix hotels filed a $42 million lawsuit Thursday against a federal official who fired them last fall in what their lawyer called ″an early-morning, Gestapo-like raid.″

The lawsuit, filed in Maricopa County Superior Court, claims the workers were fired improperly, treated ″like common criminals″ and refused severance pay or references in many instances.

Named as defendants were Herbert Chin, a senior investigations specialist with the federal Resolution Trust Corp.’s regional office in Denver, and three former Keating companies that are now controlled by the RTC.

Chin, in a telephone interview, said he had not seen the lawsuit but believed his actions were proper.

The suit does not name the federal government itself, but could be amended later to include the government, according to Kraig Marton, the lawyer who filed it.

The hotels, the Phoenician and the Crescent, are owned by companies that are 55 percent owned by Lincoln Savings and Loan Association and 45 percent by a group of Saudi Arabian investors.

Keating controlled Lincoln until federal banking regulators seized control last year, saying the thrift was in danger of collapse.

Keating remained in control of the two hotels as long as the Saudis sided with him, however, and it was not until Nov. 16 that the federal regulators won agreement from the Saudis and seized control of the hotels.

They moved in at 2 a.m., posting termination notices at the homes of the employees and allowing them to collect their belongings from the hotels under guard and while being videotaped by guards and news organizations.

Chin said that the regulators picked 2 a.m. as the time to fire the workers in order to minimize disruption and that extra security and videotapes were meant to ensure that no one later claimed to be missing property.

But Marton alleges in his lawsuit that the way the firings were handled caused great emotional distress.

The government made it look like the fired workers were ″so dishonest as to require a large body of guards, many armed and in uniform, to be present″ and treated them ″like common criminals″ as the media recorded the events, Marton said.

Marton also said in his suit that Chin and the companies under RTC control fired the workers without sufficient cause, refused to give many of them severance pay and refused to provide job references.

Chin said he did not believe most of the workers had contracts specifying what was needed in order to justify a firing. He also said he believed all the fired clerical workers had been given severance pay and that the workers should seek job references from the Keating group rather than the government.

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