Appeals court reinstates Keating's Calif. conviction Ruling faults procedure of former S&L chairman

Securities fraud

January 16, 1998|By BLOOMBERG NEWS

SAN FRANCISCO -- A federal appeals court reinstated the state securities fraud conviction of Charles Keating yesterday, ruling that the former Lincoln Savings & Loan Association chairman didn't follow proper procedure in his appeal.

Keating's California conviction had been overturned by a federal district court which found the trial court judge gave improper instructions to the jury.

The 9th U.S. Circuit Court of Appeals in San Francisco reinstated the conviction on the grounds that Keating raised issues in his federal appeal that hadn't been presented to California courts. The court said Keating must pursue the issues in California courts.

Keating's attorney, Stephen Neal, said in a telephone news conference that he would ask the federal district court to overturn the conviction on grounds not covered by the appeals court order.

Neal said he doubted that Keating would be jailed while hearings were pending.

Keating, a central figure in the 1980s savings and loan scandals, was chairman of American Continental Corp., parent of Lincoln Savings. The thrift was seized by federal regulators in 1989.

Keating was convicted on 17 counts of securities fraud in California state court in December 1991. Two years later, he was convicted on 73 federal counts of fraud, racketeering and conspiracy.

The federal conviction was overturned in December 1996.

In the California case, Keating was held responsible for Lincoln Savings' practice of selling junk bonds issued by the thrift's parent company to customers who thought they were making safe investments.

The bonds proved next to worthless when Lincoln Savings vTC collapsed under the weight of bad real estate loans.

Keating served more than four years in prison before being released in 1996.

Pub Date: 1/16/98

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