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No Retrial for Financier Keating

Updated:
LOS ANGELES (AP) — Prosecutors reluctantly said Thursday they will not retry financier Charles Keating on state fraud charges in a case that made him a symbol of the savings-and-loan scandals of the 1980s.

At their request, Superior Court Judge Lance Ito dismissed the case in which Keating was convicted but won a reversal on appeal due to improper jury instructions.

``We take no satisfaction in the request we made today,'' Deputy District Attorney Bill Hodgman told the judge as the case quietly came to an end.

Hodgman said a conviction would have resulted in no more than a six-month jail sentence. He also said that many witnesses who testified in the 1992 trial overseen by Ito have either died or are in bad health.

The fraud convictions were thrown out because Ito's instructions eight years ago improperly allowed the jury to convict Keating without deciding whether he intended to swindle them.

Keating remains convicted of some federal charges involving Lincoln Savings and Loan, which collapsed at a cost to taxpayers of $3.4 billion, and its parent, American Continental Corp.

He planned to celebrate anyway. If the government had left him alone, Keating said outside court, investors ``would all be rich.''

Investors lost nearly $200 million when American Continental's unsecured ``junk'' bonds turned out to be worthless. Many investors were elderly Lincoln Savings customers who claimed they were duped.

In separate state and federal trials, prosecutors alleged that Keating looted Lincoln of its assets to prop up American Continental. They claimed that bond buyers were not told of the risky nature of their investments.

Keating was sentenced to 10 years in prison on the original state charges. He was then convicted in the federal case and served nearly five years of a 12 1/2 -year prison sentence before that conviction was reversed on grounds that some jurors learned of his state court conviction and discussed it in the jury room.

Federal prosecutors had said they would retry their case but in 1999 accepted Keating's guilty pleas to three counts of wire fraud and one of bankruptcy fraud in a deal that allowed him to remain free, with no fines or restitution required. Investors won a $1.5 billion judgment against Keating in a civil suit, but his lawyer has said he can't pay it.
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