PHOENIX -- Federal investigators, suspicious about what a prosecutor calls the "unexplained disappearance" of Charles H. Keating Jr.'s storied wealth, are searching worldwide to determine whether he has stashed a fortune overseas.
Federal authorities, who have accused Keating of using bogus real estate transactions to record phony profits for his company, now want to know whether he claimed sham losses on his overseas trading to siphon corporate funds for personal use, according to people knowledgeable about the investigation.
A focus of the investigation, they said, is Keating's relationship with German businessman Bernd-Georg Herrdum, who lent Keating $400,000 last year after Keating announced he was broke.
Mr. Herrdum heads the Duesseldorf, Germany-based Gesellschaft fuer Trend Analysen, or Society for Trend Analysis.
Keating's son spent much of 1987 in the company's Swiss office speculating in foreign currencies for Keating's American Continental Corp. and its chief subsidiary, Lincoln Savings and Loan Association.
People knowledgeable about the investigation say that from 1986 to 1989, Keating's Phoenix-based operations lost more than $75 million in foreign investments, principally in the futures markets of the German mark, Swiss franc, British pound and Japanese yen.
Keating has vehemently denied rumors that he has millions in secret overseas accounts. Such rumors have dogged him since early 1989, when American Continental sought U.S. Bankruptcy Court protection and regulators seized its Irvine, Calif.-based thrift.
"I never had a dime overseas," he said last year. "Neither has any member of my family."
Stephen Neal, Keating's attorney, did not return telephone calls.
Mr. Herrdum also could not be reached for comment last week.
Federal investigators, as part of their inquiry into Keating's assets, are trying to unravel his relationship with Mr. Herrdum and several other foreigners with whom Keating invested tens of millions of dollars.
Keating was attracted to Mr. Herrdum's company in 1986 because of his claim to have a computerized system for speculating in foreign currencies, former American Continental employees said.
Mr. Herrdum kept the system so shrouded in secrecy that it was nicknamed "the Black Box" by Keating employees, who monitored markets round-the-clock at Keating's headquarters in Phoenix.
"Nobody really understood the Black Box," said a former American Continental employee who spoke on condition of anonymity. "It gave you advice, and you just implemented it."
Mr. Herrdum's company officially describes its business as providing "services in the area of programming, software production and data processing for the analysis of financial-economic charts and trends."
Keating's son, Charles H. Keating III, spent much of 1987 in the company's Zurich office. Several Lincoln Savings employees also were stationed there.
An employee said the support staff spent much of its time in Zurich providing services to Mr. Herrdum.
"That's why we were there, helping track his clients' investments in exchange for people like 'C-Three' [the younger Keating's nickname] getting an understanding of the markets and getting trained in foreign currencies and futures."
The employee described the Black Box as a computer "with programs that analyzed trends and gave signals whether to buy, sell or hold."