Report: Keating, Other Former Top Lincoln S&L Officials, Indicted
LOS ANGELES (AP) _ Charles Keating Jr., former head of Lincoln Savings and Loan, has been indicted in connection with the sale of junk bonds issued by the failed Irvine-based thrift, according to a report broadcast Monday.
Keating, former head of Lincoln and its parent company, American Continental Corp. of Phoenix, was to be arraigned Tuesday morning in Superior Court on charges of criminal fraud, KCBS-TV reported, citing unidentified sources.
The businessman was indicted in connection with Lincoln’s sale of more than $200 million in now virtually worthless junk bonds to 22,000 investors, many of whom were elderly, according to the report.
The indictment would represent the first criminal charges in the Lincoln case. Numerous civil lawsuits have been filed.
District Attorney Ira Reiner declined to confirm the report, but issued a statement saying his office had completed its presentation to a special grand jury investigating the matter.
″Since grand jury proceedings are confidential, the district attorney’s office will not comment until such time the court lifts the seal of confidentiality,″ the statement from Reiner’s office said.
The grand jury began investigating in February whether Lincoln officials misled bond buyers into believing the high-risk bonds were federally insured. The district attorney had been presenting evidence since April.
The government seized control of Lincoln in April 1989. Regulators estimate the bailout could cost taxpayers as much as $2 billion. Federal and state prosecutors also were not in their offices.
Last month, a federal judge in Washington upheld the government takeover of Lincoln, saying the operation of the thrift by Keating and others ″amounted to looting.″
On Monday night, Shirley Lampel, one of the disaffected bondholders, responded to the report of the indictment, saying: ″I don’t know how many bondholders are out there . . . but they’re dancing in the street tonight.
″We’d like to get our money back,″ she added.
U.S. District Judge Stanley Sporkin dismissed Keating’s suit to recover the collapsed thrift and said it was ″abundantly clear″ Keating and other officials abused their positions.
Keating could not immediately be reached for comment. The Los Angeles-and Chicago-based attorneys representing Keating were not in their offices after business hours.
Under a recent agreement announced by the Justice Department, Keating must tell the Office of Thrift Supervision 48 hours in advance of any transactions exceeding $5,000. Keating already has provided financial statements, which have not been disclosed.
Those terms had previously been imposed on Keating by a preliminary injunction issued by the U.S. District Court in Los Angeles. The announcement indicated he had agreed to them.