Keating Pleads ‘Absolutely Not Guilty’

With a firm voice, Charles H. Keating Jr. told a criminal court Friday that he is “absolutely not guilty” of 42 state securities fraud charges stemming from his company’s bond sales at Lincoln Savings & Loan branches.

Keating, former chairman of American Continental Corp., appeared relaxed and confident as he entered his not guilty plea in Los Angeles Superior Court. If convicted, the Phoenix businessman and three co-defendants could be sentenced to up to 10 years in prison.

The other three defendants--Judy J. Wischer, 42, former American Continental president, and Robin S. Symes, 38, and Ray C. Fidel, 32, both former Lincoln presidents--also entered pleas of innocence.

Superior Court Judge Gary Klausner transferred the case to Superior Court Judge Lance A. Ito for trial. The first hearing in Ito’s court was set for Oct. 15.

After the brief hearing, Keating waved to several family members and friends as he was led back to the Los Angeles County Jail, where he has remained since Sept. 18, unable to post $5-million bail. Keating is waiting for the state Supreme Court to act on his request to lower the bail.

The Phoenix-based American Continental filed for bankruptcy protection in April, 1989, and thrift regulators seized its main subsidiary, Irvine-based Lincoln Savings, the next day. Regulators estimate that Lincoln’s collapse will be one of the nation’s most expensive, costing taxpayers more than $2 billion.

The criminal charges stem from the sale of nearly $200 million in American Continental debt securities to more than 17,000 people at Lincoln’s 29 Southern California branches. Many bondholders have said they were misled into thinking that the bonds were safe or insured by the federal government.

Both the company and S&L; are headed for liquidation, and the bonds that were sold for two years, mainly to elderly Lincoln depositors, are now nearly worthless.

The state grand jury indictment against Keating, 66, and his co-defendants is the first criminal case brought against anyone involved in Lincoln since its collapse.

While Keating remains in jail, the other defendants have been free on much lower bail. After the hearing, lawyers for Keating and Wischer criticized the indictment and the continued jailing of Keating, who claims he is now bankrupt.

Wischer’s lawyer, Abbe David Lowell of Washington, called the indictment unfair and poorly drawn. “There’s a guy (Keating) sitting in jail over charges that are not specific, that do not provide him with any notice and don’t even accuse him of a crime,” he said.

Keating’s lawyer, Stephen C. Neal of Chicago, decried his client’s high bail, saying there is “no reason in the world” that Keating should be incarcerated while awaiting trial.

“Mr. Keating is looking forward to vigorously defending himself against these charges,” Neal said, reiterating that Keating posed no risk of fleeing before trial.

The indictment, which lists 20 victims and alleges the defendants violated certain state laws to hurt those victims, provides sufficient notice and specific allegations to withstand any court challenge, said Sandi Gibbons, a spokeswoman for the Los Angeles District Attorney’s Office.

In court, defense attorneys said they would seek a preliminary hearing to determine if a crime has been committed and if there was reason to believe that the defendants committed the crime.

The district attorney’s office, however, said it would challenge the need for a preliminary hearing.