Judge Lets Stand Fraud Charges Against Keating
LOS ANGELES - A Los Angeles Superior Court judge has let stand fraud charges against Charles Keating Jr., the former head of the failed Lincoln Savings and Loan Association, paving the way for a trial beginning Aug. 2.
Defense lawyers argued that the Los Angeles County grand jury that handed up indictments last year did not have enough evidence to justify the charges.
Attorney Abbe Lowell said the prosecution's case was based on "guilt by aspersion," since it relied on the illegal acts of individual sales people to prove that executives committed criminal violations.
Proof Termed Sufficient
But Judge Lance Ito said the prosecution has met its burden of proof as to these counts.
Mr. Keating and two former top executives of Lincoln and its parent, American Continental Corp., face trial on felony charges on the sale of worthless bonds to investors. The sales have been called a scheme that brought about the collapse of the savings and loan.
Mr. Keating's lawyers contend that as the head of the company he could not be responsible for the actions of employees.
But the prosecution says that it was on Mr. Keating's instructions that sales people were told to seek out the "weak, meek, and ignorant" as potential buyers of the high-risk bonds.
Mr. Keating originally had been charged with 46 securities fraud offenses, but earlier this year Judge Ito threw out 12 because they had not been properly documented by the prosecution.
On June 7 the judge threw out 13 more charges, reducing the number pending to 21.
Judy Wischer, a former top aide to Mr. Keating, and former Lincoln Savings president Robin Symes are codefendants in the case.
Ray Fidel, another former Lincoln president, has pleaded guilty to a number of securities fraud charges and has told prosecutors he will testify against Mr. Keating and the others.