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CHARLES KEATING JR., 1923 - 2014

S&L fraud figure was emblem of '80s excess

April 02, 2014|E. Scott Reckard

Willful and self-assured, Charles H. Keating Jr. strode through a life of outsized public roles -- anti-pornography crusader, luxury hotel developer, political kingmaker -- on his way to becoming one of the nation's most notorious corporate rogues.

The harshest spotlight arrived in 1989 when regulators seized his Lincoln Savings & Loan after years of battles. The failure of the Irvine thrift, which had bankrolled Keating's high-rolling investments, cost the government $3.1 billion, then the costliest bank collapse in U.S. history.

Keating became a national emblem of the fast-buck 1980s, and Lincoln became the poster child of the S&L crisis. In the early 1990s, state and federal juries in Los Angeles convicted Keating of looting Lincoln and swindling thousands of its customers -- convictions that were later overturned. Many of them were elderly Southern Californians, who cashed out federally insured deposits to buy $265 million of uninsured American Continental junk bonds pushed by the S&L.

"He took their life savings and spent them on mansions, pleasure boats, private airports, indulgences of virtually every whim he and his family had," Alice Hill, one of the federal prosecutors on the case, said at the time.

For The Record
Los Angeles Times Thursday, April 03, 2014 Home Edition Main News Part A Page 4 News Desk 1 inches; 30 words Type of Material: Correction
Charles Keating: An obituary in the April 2 Section A of Charles Keating, the former operator of Lincoln Savings & Loan, misidentified his deceased daughter, Maureen Mulhern, as Maureen Hubbard.

Keating, 90, died late Monday in a Phoenix hospital, according to his son-in-law, Bradley Boland, and a family friend. The cause of death was not released. He had moved to Phoenix in 1976 to run American Continental Corp., a land developer that bought Lincoln in 1984.

Before Lincoln blew up in scandal, Keating tarnished the reputations of five U.S. senators, including Arizona's John McCain, who later ran for president. The "Keating Five" they were called, amid accusations that they interceded on Keating's behalf to block an investigation by regulators.

In 1989, Keating addressed the intentions behind his massive political donations to the senators, delivering one of his trademark outrageous comments.

"One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause," he said. "I want to say in the most forceful way I can: I certainly hope so."

Keating became a symbol for corporate malfeasance in the era of deregulation. In the 1980s, Congress and California's Legislature lifted nearly all limits on investments by inflation-ravaged S&Ls. Billions of dollars poured from bank vaults into land development, corporate takeovers, foreign currency trading.

But no thrift operator rivaled Keating's blend of arrogance, risk taking, political influence and multimillion-dollar payments to family and friends, said Michael Manning, a Phoenix attorney whom the government hired to spearhead a civil suit against Keating and his associates.

Deregulation "stoked Charlie's coals and allowed him to fill Lincoln's vault with federally insured cash," Manning said. "He could gamble for those fast bucks with other people's money."

Under attack publicly, Keating once tried to burnish his image with a $500,000 radio campaign in Phoenix. Yet he had his share of supporters too, who saw him as passionate about his work, family and charitable causes.

A lifelong Roman Catholic, Keating donated $1 million to Mother Teresa through his corporation and whisked her around in a private plane when she visited the United States. Before his sentencing in L.A. County Superior Court, Mother Teresa was among 120 people who wrote letters pleading that Keating get probation.

"He was a deeply religious man. People often wonder if that was genuine, and it was," said his lead defense lawyer, Stephen C. Neal, who spoke with him frequently. "He thought everything happened for a reason."

Keating was born Dec. 4, 1923, to Charles Humphrey Keating, a dairy manager from Kentucky, and his wife, Adelle. He was raised in Cincinnati during the Depression. His father, who lost a leg in a hunting mishap, battled Parkinson's disease in a wheelchair as Keating grew up with his younger brother William, who later became a congressman and newspaper publisher.

He graduated from St. Xavier High School in 1941. After struggling through a year at the University of Cincinnati, he joined the Navy, becoming a pilot with a reckless streak.

Stationed in the U.S. during World War II, Keating brought his Hellcat fighter in for a landing one evening in Vero Beach, Fla., his thoughts focused on a date and his radio blaring a Harry James trumpet solo. There was just one problem: He forgot to lower the landing gear. He had to leap from the plane as it skidded down the runway and crashed in flames.

"The tower was telling me, 'Your wheels are up,' but all I could hear was old Harry," Keating told The Times in a 1988 interview.

Keating was on a fast track when he returned to the University of Cincinnati in 1945, receiving academic credit for his Navy service, earning undergraduate and law degrees in three years. A lifelong swimmer, he won the 200-yard breast stroke in the 1946 NCAA men's championship.

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