California Jury Prepares To Weigh Keating's Fate

November 18, 1991|By New York Times News Service

LOS ANGELES -- Charles H. Keating Jr. has been widely portrayed -- unjustly in his view -- as an embodiment of all that went wrong with the savings and loan industry. Now a jury gets the chance to decide, albeit on a somewhat narrower issue.

Superior Court Judge Lance Ito directed jurors to return to court today to hear final instructions and begin deliberating.

Arguments in Mr. Keating's securities fraud trial drew to a close Friday, with jurors asked to decide whether the real estate developer and former savings and loan owner should be held criminally responsible for losses suffered by small investors who bought high-risk junk bonds issued by his company.

Mr. Keating's lawyer, Stephen C. Neal, told the jury that the prosecution had "utterly failed" to link Mr. Keating to any crime.

Mr. Neal, who did not call any witnesses on Mr. Keating's behalf, spent most of Friday attempting to blast holes in arguments presented Thursday by the lead prosecutor, William Hodgman.

Mr. Hodgman had told the jury that Mr. Keating had misled the investors by failing to inform them fully of the financial condition of the Lincoln Savings and Loan Association, based in Irvine, Calif., and its parent company, American Continental Corp. of Phoenix.

Mr. Keating is standing trial in California Superior Court in Los Angeles on 18 counts of fraud related to the bonds of American Continental, which he controlled.

The trial has been the only criminal case brought against Mr. Keating. Lincoln's collapse is expected to cost taxpayers more than $2.5 billion to reimburse depositors, once the institution's remaining assets are sold and deducted from the total cost. That makes Lincoln the most expensive of the hundreds of failures in the savings industry in recent years.

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