Tuesday, January 12, 1999

Charles Keating, son face new trial

U.S. reinstates fraud charges

The Associated Press

        LOS ANGELES — Former Lincoln Savings & Loan chief Charles H. Keating Jr. will be tried again on charges that he defrauded customers by selling them millions of dollars in worthless bonds, a federal prosecutor said Monday.

        The case of Mr. Keating and his son, Charles Keating III, was returned to U.S. District Court after an appellate court threw out their federal convictions and said they deserved a new trial.

        During a brief hearing, Assistant U.S. Attorney Brad Sonnenberg told Judge Mariana Pfaelzer that the government intended to retry the Keatings.

        In a conference afterward, Mr. Sonnenberg and the Keatings' attorneys tentatively agreed on a Sept. 14 trial date, which the judge must approve.

        Mr. Sonnenberg declined to comment on the case.

        (Mr. Keating rose to national prominence in Phoenix but grew up in Cincinnati, where he practiced law with his brother, former congressman and En quirer publisher William J. Keating, and got his start in business.)

        Known for lavish spending and big salaries during his days as chairman of American Continental Corp., Mr. Keating became a symbol of the savings and loan crisis of the 1980s. He was convicted in federal and state court on charges stemming from the $3.4 billion collapse of Irvine-based Lincoln Savings, which American Continental owned.

        Charles Keating III also was convicted during the federal trial. However, the federal convictions were overturned on grounds that jurors learned of Mr. Keating's state conviction and discussed it in the jury room.

        The elder Keating's state conviction also was thrown out after an appeals court determined the trial judge gave jurors improper instructions.

        Stephen Neal, attorney for the elder Mr. Keating, said prosecutors should give up. Both convictions were constitutionally flawed, he said.


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