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SAVINGS & LOANS : Former Lincoln Official Gets Probation, Fine : Sentencing: Judy J. Wischer aided authorities in their probe of Keating and $3.4-billion collapse.


Federal judge in Los Angeles Monday sentenced Judy J. Wischer, once the top aide to former Lincoln Savings & Loan operator Charles H. Keating Jr.,--to three years of probation and ordered her to pay $3.5 million in restitution for her role in Lincoln's collapse.

Wischer's sentencing ends the long investigation and court proceedings against those responsible for the thrift industry's most notorious failure during the go-go 1980s. Lincoln's failure in 1989 is expected to cost taxpayers $3.4 billion.

In addition, the bankruptcy of the S&L's parent company, American Continental Corp. in Phoenix, wiped out nearly 22,000 investors, most of them elderly Southern Californians. The investors lost a total of more than $285 million, though they eventually recovered about 70% of that by filing civil lawsuits.

Keating, 70, whose arrogance and outspokenness made him the national symbol for greed and excess in the thrift industry, is serving concurrent sentences totaling 12 years, 7 months for his racketeering, conspiracy and fraud convictions in state and federal courts.

Both Assistant U.S. Atty. Alice C. Hill and defense attorney Donald C. Randolph had asked the court to put Wischer on probation. She had faced up to 15 years in prison for her 1992 guilty plea to two bank fraud charges and a securities fraud charge. As part of a plea bargain, she agreed to testify against Keating and to cooperate with authorities.

In a brief statement to U.S. District Judge Mariana R. Pfaelzer, Wischer apologized for hurting others, particularly the small investors who bought risky American Continental bonds.

"First, I'd like to say I'm very sorry," she said, her voice trembling. "I regret the losses, especially to the bondholders."

Pfaelzer praised Wischer for cooperating with federal prosecutors and the FBI and said her testimony at Keating's federal trial two years ago was crucial to convicting the former Arizona businessman.

"I really don't think the case could have been prosecuted without you," said Pfaelzer, who presided over the trial. "I thought that when I was listening to the testimony."

The Resolution Trust Corp., the federal agency charged with liquidating failed thrifts, told Pfaelzer in a letter that Wischer's cooperation was a "substantial factor" in recovering $80 million from lawyers, accountants and other professionals who helped Keating.

In addition, she provided information on Lincoln's deals with thrifts in Arizona, Colorado and Texas. Besides helping the RTC, she also traveled to Washington to help the Office of Thrift Supervision and the Securities and Exchange Commission in various investigations.

Wischer, did not help state prosecutors in their case against Keating. She did not enter a plea to six counts of state securities fraud until after Keating was convicted in state court. Under her state plea bargain, she will be given an identical probation term to be served concurrently with her federal term.

* Times wire services contributed to this report.

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