LOS ANGELES X — LOS ANGELES -- Charles H. Keating Jr., who became a national symbol of greed and excess in the thrift industry, has been convicted of securities fraud stemming from the sale of his company's bonds at Lincoln Savings & Loan branches.
A group of bondholders held hands tightly, smiled broadly and barely suppressed cheers as the court clerk read each of the 17 guilty verdicts.
The conviction in Los Angeles County Superior Court ended a long, complex trial that for the first time probed some of the events surrounding Lincoln's 1989 collapse, the largest thrift failure in U.S. history.
Keating, who turned 68 yesterday, stood ramrod straight, stoically taking the jury's judgment count by count. In the audience, two of his sons-in-law sat grim-faced, one with his head in his hands. Keating's secretary held back tears, once biting one of her knuckles to hold herself in check.
Keating faces a maximum of 10 years in prison and a $250,000 fine at his sentencing, which is scheduled for Feb. 7. He remained free after the verdict on $100,000 bail, after Judge Lance A. Ito rejected the prosecution's effort to raise bail to $1 million.
"I firmly believe in myself, my family, my friends and I very much believe in my counsel," Keating said outside court. "I look forward to the future unafraid, sure that justice will be done."
Stephen C. Neal, his attorney, said that he would ask Ito to overturn the verdicts and, failing that, appeal the decision.
Prosecutors, who faced an uphill battle with a much-criticized case and adverse rulings, were elated.
"We were able to weave a web of circumstantial evidence tightly enough" to prove Keating's culpability, said William Hodgman, the lead deputy Los Angeles County district attorney who prosecuted the case.
The verdict does not end the threat of further criminal prosecution against the former Arizona businessman. TC long-awaited federal grand jury indictment is expected soon. Keating was told more than a year ago that he was a target defendant in that investigation.
He also faces massive civil litigation involving many of nearly 20,000 small investors who purchased about $250 million in bonds from Keating's American Continental Corp. The company sold many of the junk bonds through Lincoln branches.
"Mr. Keating has left behind him a trail of suffering and human debris," said bondholder Tom Shelley. "I think he ranks shoulder to shoulder with those villains of history who have adversely affected the good people of America who have trusted -- just trusted and trusted -- their banks."
"It don't get me money, but that's not the point. We finally found him guilty," said bondholder Jeri Mellon as she broke down in tears outside the courtroom.
The prosecution's case attempted to show that Keating withheld important information from customers about the shaky financial condition of Lincoln and American Continental from the start of the bond sales program in early December 1986.
Jury deliberations began Nov. 18 after 11 weeks of testimony, 53 witnesses and more than 100 exhibits.