Charles Keating Newsletter
Sign-up to receive daily news on Charles Keating by email.
Charles Keating Filmography
Source:
Theiapolis
Charles Keating Resources
Table of Content
Charles Keating: Failure of Saving & Loan, the Keating Five
In 1972, Keating began to work for American Financial Corp., a company involved in insurance and banking. Four years later he moved to Phoenix, Arizona to run the real estate firm American Continental Corporation, a spin-off of American Financial Corp. In 1984, American Continental Corporation bought the Californian Lincoln Savings. Such savings and loan associations had been deregulated in the early 1980s, allowing them to make highly risky investments with their depositors' money, which Keating took advantage of. Some regulators noted the danger and pushed for more oversight, but Congress refused. Some of this may be due to the Keating Five, five Senators (Dennis DeConcini, John McCain, Alan Cranston, John Glenn, Don Riegle) who had received some $300,000 from Keating in the 1980s. They later met twice with regulators who were investigating American Continental Corp., in an attempt to end the investigation. (In 1990, they would be rebuked to various degrees by the Senate Ethics Committee.)
In 1985, Keating hired Alan Greenspan as an economic consultant, in an effort to convince an oversight agency to exempt Lincoln Savings from certain regulations. Greenspan delivered a favorable report, writing that Lincoln Savings was "a financially strong institution that presents no foreseeable risk to depositors or the government." (Greenspan produced similar favorable reports on numerous other banks who also failed soon after.) The agency ultimately declined the request.
American Continental Corporation, the parent of Lincoln Savings, went bankrupt in 1989; more than 21,000 mostly elderly investors lost their life savings, in total about $285 million, largely because they held securities backed by the parent company rather than deposits in the federally-insured institution, a distinction apparently lost on many if not most of them until it was too late. The federal government covered almost $3 billion of Lincoln's losses when it seized the institution. Many creditors were made whole, and the government then attempted to liquidate the seized assets through its Resolution Trust Corporation, often at pennies on the dollar compared to what the property had allegedly been worth and the valuation at which loans against it had been made.
In 1989, Keating refused to testify before the House Banking Committee, "taking the Fifth".
Keating blaimed the government regulators for the failure of Lincoln Savings and filed suit in order to regain control over the bank. The suit was dismissed in August 1990, with the judge calling the seizing "fully justified" because of the "looting" of the institution by Keating and his associates.
In September 1990, Keating was criminally charged with having duped Lincoln's customers into buying worthless junk bonds of American Continental Corporation; he was convicted in state court in 1992 of fraud, racketeering and conspiracy and received a 10 year prison sentence. In January 1993, a federal conviction followed, with a 12 and a half year sentence. He spent four and a half years in prison, but both sentences were eventually overturned.
In the 1980s, Keating had donated some $1,250,000 to Mother Teresa; during his state trial, she wrote a letter on his behalf to presiding Judge Lance Ito, saying that she was not informed about his business but she knew him as a man who was generous towards the poor.
Various government agencies and private parties initiated civil lawsuits against Keating.One federal class action case involving 20,000 plaintiffs resulted in a $3.3 billion judgement (later reduced to $1.6 billion) against him and his former companies, for having defrauded investors.Another case filed by the SEC was settled in 1994. Keating claimed to be bankrupt but agreed to repay millions should any hidden assets turn up. A third case filed by the Resolution Trust Corporation resulted in a summary judgement of $4.3 billion against Keating and his wife in 1994; it was overturned on appeal in 1999.
Also in 1999, the 9th U.S. Circuit Court of Appeals in San Francisco ruled that the state trial judge Lance Ito had mistakenly allowed the jury to convict Keating without determining whether he
intended to defraud investors. Thus the conviction was overturned; the U.S. Supreme Court refused to hear the government's appeal in October 2000, and state prosecutors declined to move for a retrial.
In 1998, the same Court of Appeals had ruled that some of the jurors in the federal case might have been influenced by their knowledge of the state case and ordered the trial judge to investigate the matter; the trial judge then granted a new trial.
In 1999, on the eve of the retrial of the federal case, Keating entered a plea agreement: he admitted to having committed bankruptcy fraud by extracting $1 million from American Financial Corp. while already anticipating the collapse that happened weeks later; in return, the federal prosecutors dropped all other charges against him and his son, Charles Keating III. He was sentenced to the four years he had already served.
Keating remains essentially unrepentant, maintaining that not his mistakes, but regulators' actions, were ultimately responsible for the losses.
<<
Anti-pornography efforts -
Swimming >>
Table of Content
Latest Film News
