Keating Asks Federal Judge to Halt Civil Action by Thrift Regulators
LOS ANGELES (AP) _ A hearing on whether to ban Charles H. Keating Jr. from the thrift industry erupted into a dispute today over whether to postpone it until a criminal trial for Keating is completed.
William Hodgman, prosecutor in the criminal fraud case in state court, touched off the dispute with a letter saying he would seek a 15-day delay in the trial scheduled to begin Aug. 2.
That would allow the thrift regulators’ civil case to finish before the criminal trial begins, said Bruce Rinaldi, prosecutor for the Office of Thrift Supervision.
But Keating’s attorney, Stephen C. Neal, said the Aug. 2 trial date had been firmly set by Superior Court Judge Lance A. Ito and Hodgman could not unilaterally delay it.
He said Hodgman’s letter was written merely ″so Mr. Rinaldi could have a few more days to play whiffleball here before we play hardball down the street.″
That comment, plus Rinaldi’s characterization of emotion by a defense attorney as ″utterly ridiculous,″ prompted administrative law Judge Paul Clerman to tell the lawyers to stop bickering.
On Tuesday, Keating’s attorneys went to federal court to try to halt the OTS hearing, saying it jeopardizes the former Lincoln Savings chief’s right to a fair criminal trial.
Keating’s lawyers also said the hearing duplicates part of a civil case in Phoenix federal court in which the government is seeking $2.7 billion in civil racketeering penalties against Keating and scores of other defendants.
U.S. District Judge Stephen V. Wilson indicated he may hear oral arguments on the issue.
The appeal came after a state judge reaffirmed the trial date for Keating and two other former officers of his Lincoln Savings and its parent company, American Continental Corp., on 21 securities fraud counts.
The OTS also is trying to recover $130.5 million Keating and six others allegedly looted from Lincoln. It had planned to call Keating and former American Continental President Judith J. Wischer as witnesses.
Both are charged in the criminal case along with former Lincoln Chief executive Robin Symes. They could be sentenced to up to nine years and eight months in prison if convicted of six or more counts.
In the criminal case, Keating and the others are accused of duping investors into thinking that $250 million worth of risky junk bonds were safe. The junk bonds, issued by American Continental and sold at Lincoln Savings & Loan branches, are now worthless.
The OTS hearing is the agency’s biggest enforcement action ever. Seven people, including Keating and Wischer, are accused of looting Lincoln in four transactions.
The four transactions cited by the OTS also are part of a federal grand jury investigation into Lincoln’s collapse that could result in a federal criminal indictment against Keating.
Lincoln’s collapse was the biggest in history, with a $2.6 billion bailout by taxpayers. Keating says vindictive regulators hounded him and caused the collapse because he refused to bow to their whims.