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High Court Won't Hear Appeal of $36.4-Million Levy Against Keating

October 03, 1995|JAMES S. GRANELLI | TIMES STAFF WRITER

The U.S. Supreme Court refused Monday to hear an appeal of a $36.4-million judgment against convicted Lincoln Savings & Loan operator Charles H. Keating Jr., who says he is broke and cannot pay the judgment stemming from one of the nation's most expensive thrift failures.

The high court, without comment, denied Keating's final appeal of a decision by the Office of Thrift Supervision that he repay amounts he gained in two illegal deals involving his now-defunct Irvine-based thrift.

The federal agency, which regulates the nation's thrifts, does not expect to get much more than a few hundred thousand dollars from the sale of vacant land Keating owned in Canada, spokesman William Fulwider said.

Recovery efforts, he said, were turned over to the Justice Department and the Resolution Trust Corp., the agency that liquidates failed thrifts. Both those entities, along with the Securities and Exchange Commission, have judgments pending against Keating.

The Supreme Court allowed Keating, who once had a net worth of nearly $40 million, to file his appeal as a "pauper" so the $300 filing fee could be waived.

Keating, 71, who once practiced law in Cincinnati, has been working as his own attorney in various civil actions from his cell at a federal prison in Tucson. He is serving concurrent terms of 10 years and 12 years, seven months, for state and federal fraud convictions.

The former chairman of Lincoln's parent company, American Continental Corp. in Phoenix, had argued to the Supreme Court that the Office of Thrift Supervision should have postponed its enforcement action while state and federal criminal prosecutions were pending against him.

Keating had refused to testify in the administrative hearing to protect his Fifth Amendment privilege against self-incrimination. After he was convicted of securities fraud in state court and racketeering, conspiracy and fraud in federal court, Keating sought to reopen the hearing to testify, but the agency refused to allow it.

In his appeal, Keating asserted that the agency "distorted, interfered with and, for all practical purposes, nullified any chance of justice, fairness or due process" by drowning him in litigation. He charged that he was the "primary scapegoat" of the savings and loan crisis.

Keating's financial and real estate empire collapsed when he put American Continental into bankruptcy on April 13, 1989. Federal regulators seized Lincoln the next day.

Lincoln has become the nation's second-costliest thrift failure, leaving taxpayers with an estimated cleanup bill of $3.4 billion. In addition, more than 21,000 investors, most of them elderly Southern Californians, lost more than $285 million when their American Continental bonds became worthless.

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