Charles Keating
|
|
- For the actor, see Charles Keating (actor)
Charles H. Keating Jr. (born 1923 in Cincinnati, Ohio) is an U.S. American lawyer and banker convicted of fraud in the Savings and Loan scandal of 1989. A conservative Catholic active in the Republican Party, he was formerly involved in anti-pornography efforts.
| Contents |
Early life, education and the war
Keating served as a fighter pilot in World War II. Subsequently he attended the University of Cincinnati and received a law degree after 2 and a half years, in 1948. He became a founding partner of the Cincinnati law firm Keating, Muething & Klekamp. Together with his wife Marie Elaine, he has 5 daughters and a son.
Anti-pornography efforts
In the late 1950s, Keating founded the Cincinnati anti-pornography organization Citizens for Decent Literature, later Citizens for Decency through Law. In 1960 he testified against pornography before Congress. In 1964-1965, he produced the movie Perversion for Profit featuring announcer George Putnam. It is a survey of then-available pornography, and attempt to link pornography to the decline of culture and to the depravity of youth.
In 1969, President Richard Nixon appointed Keating to the President's commission on pornography, which had been begun under Nixon's predecessor, Lyndon B. Johnson. Keating unsuccessfully attempted to stop publication of the commission's rather liberal recommendations with a restraining order. Failing in that effort, he then filed a dissenting report, stating "One can consult all the experts he chooses, can write reports, make studies, etc., but the fact that obscenity corrupts lies within the common sense, the reason, and the logic of every man."
Keating was also instrumental in the (rather ineffective) obscenity prosecution of pornographer Larry Flynt in 1976 in Cincinnati.
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".
Legal consequences
Keating blamed 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.
Swimming
In the 1940s, Charles Keating was a champion swimmer, winning the 1946 NCAA 200 yard butterfly competition. His son Charles Keating III swam in the 1976 Olympics, and his grandson Gary Hall Jr. competed in three Olympics and won 10 medals. Charles Keating has been a long-time supporter of U.S. swimming and helped to finance modern pools in Cincinnati and Phoenix.
External links
- Keating's anti-porn movie Perversion for Profit (http://webdev.archive.org/movies/movieslisting-browse.php?collection=prelinger&cat=Pornography)
- Bibliography about Keating's involvement in the S&L scandal (http://www.fdic.gov/bank/historical/s&l/slbib9.html)