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Crook Charles H Keating, who owned 5 US Senators dies

Apr 14, 2014

Arizona Republic

When it comes to bribing elected officials to get government business Charles H Keating was a genus at at. Oops, sorry I didn't mean to say bribes, the correct term is "campaign contributions" as our elected crooks, oops, I mean elected officials call it. At the Federal level he owned 5 U.S. Senators who were called t he Keating Five. They were Alan Cranston (Democrat of California), Dennis DeConcini (Democrat of Arizona), John Glenn (Democrat of Ohio), John McCain (Republican of Arizona), and Donald W. Riegle, Jr. (Democrat of Michigan).

It's rumored that Charles H Keating also owned the members of the Phoenix City Council.

Charles H Keating was also a master at mixing government and religion, which he used as a cover to hide the fact that he was screwing the taxpayers out of billions. That's was his politically correct crusade against pornography, or helping the government throw people in prison for looking at dirty pictures.

Sadly the politicians have rigged the election system so it's almost impossible for the voters to throw these crooks out of office

Charles H Keating Jr. dies at age 90

Source

Charles H Keating Jr. dies at age 90

Charles H Keating Jr., a banker and financier whose name became the moniker for a group of senators who intervened on his behalf with regulators during the 1980s savings-and-loan scandal, died Monday night. The Valley resident was 90.

Craig Harris, Dennis Wagner, Paul Giblin and Dan Nowicki , The Republic | azcentral.com 10:14 p.m. MST April 1, 2014

His real-estate developments are crown jewels of the Valley. His well-publicized charitable works included befriending and offering financial help to Mother Teresa.

Yet Charles H Keating Jr. likely will be remembered as the man whose financial empire cost many investors their life savings when it crumbled and whose name became the moniker for a group of senators who intervened on his behalf with regulators during the 1980s savings-and-loan scandal.

Keating died late Monday night at age 90, friends and family members confirmed Tuesday afternoon.

"It is with great sadness I learned of Charlie Keating's death. I had the honor to represent him over many years, and I got to see a side of him many others did not. Though his controversies were many, he faced adversity with great dignity, wit and courage," Stephen C. Neal, Keating's longtime attorney, said Tuesday.

Neal, who represented Keating since 1989, said his client had become sick a few weeks ago and died in a Phoenix hospital. He did not know the cause of death.

Keating, a Cincinnati native also known for his crusades against pornography, was a banker and financier who bought Lincoln Savings and Loan of Irvine, Calif., in 1984.

It became part of a financial and real-estate empire built by taking advantage of loose government restrictions on banking investments. He built the Valley's noted Phoenician resort and major residential developments such as Dobson Ranch in Mesa and Estrella Mountain Ranch in Goodyear.

By the end of the go-go '80s, however, Keating's empire was crumbling.

In 1989, federal regulators seized control of the savings-and-loan company and Keating's other holdings, alleging that he looted the federally backed Lincoln Savings at taxpayer expense, sank money into risky ventures and cheated the company's investors.

Federal regulators filed a $1.1billion civil racketeering and fraud lawsuit against Keating, accusing him of siphoning Lincoln's deposits to his family and into political campaigns.

Sen. John McCain and then-Sen. Dennis DeConcini, both of Arizona, and three other senators became known as the "Keating Five" during the S&L debacle after being accused of improperly intervening with federal regulators on Keating's behalf.

McCain and DeConcini offered condolences to Keating's family in separate statements issued Tuesday. McCain called him "a loving father and grandfather," while DeConcini said, "Family was very important to him."

The effort to wield his political clout was not unusual for Keating. He often used campaign donations to try to influence elected officials and candidates for elected office, former Phoenix City Councilman Ed Korrick said.

Keating used those tactics largely to sway decisions on development zoning requests, according to Korrick.

"He had some ideas about buying votes and doing things of that sort that most of us on the council resented," he said. "He was man with limited morals, I thought."

In September 1990, Keating was booked into Los Angeles County Jail and charged with 42 counts of fraud. His bond was set at $5million.

Two months later, the Senate Ethics Committee convened to decide what punishment, if any, should be doled out to the Keating Five. It was determined that DeConcini's "aggressive conduct" in helping Keating was "inappropriate" but broke no rules.

The panel found that McCain had shown "poor judgment" in meeting with the regulators, but he was cleared of all charges.

In January 1993, a federal jury convicted Keating of 73 counts of wire and bankruptcy fraud in the collapse of Lincoln and its parent company, American Continental Corp.

Keating was sentenced to 12 years and seven months in prison, but served just 50 months before the conviction was overturned on a technicality. In 1999, at age 75, he pleaded guilty to four counts of fraud. He was sentenced to time served.

"Charlie never wavered in his faith. It was gratifying for Charlie and all close to him that our appeals system eventually overturned past convictions and history ultimately vindicated so many of his actions," said Neal, his attorney. "My sympathies are today with those who were close to him and who stuck by him through it all."

Neal added that Keating "got along remarkably well" with other inmates. He said Keating was even the best man for some of the men he met in prison.

Keating enjoyed anonymity in recent years, attending Arizona Cardinals football games at University of Phoenix Stadium, sitting in the same seats near the 40-yard line, unrecognized by those in the crowd. Neal said Keating, a former champion swimmer, stayed in shape right up to his death by regularly swimming and walking.

"He was staying really fit. He spent a lot of time exercising, and he spent time with old friends," Neal said.

Lincoln's collapse cost taxpayers $3.4billion, and investors lost an estimated $285million on high-risk bonds.

Phoenix attorney Michael Manning, who led the federal government's investigation of the American Continental empire, said Keating looms among the most notorious entrepreneurs in American business lore.

"The looting of Lincoln Savings that he was responsible for was the largest and most catastrophic savings-and-loan failure in our country's history," Manning said. "He occupies an embarrassing and uncomfortable position in the history of banking fraud."

Manning said Keating was a "highly intelligent and remarkably charismatic man" who could have become a tycoon honestly, but was corrupted by avarice and excess.

He said Keating created a phony public persona of virtue, donating money to Mother Teresa and financing an anti-pornography campaign.

"That was all a fraud, too," Manning said. "The money he gave to Mother Teresa was money he took from the public."

While Keating was synonymous with the savings-and-loan era, he also was a military veteran and championship athlete. He served in the Navy during World War II, returning home to resume a swimming career at the University of Cincinnati in 1945.

The following year, he won the 200-yard breaststroke by a foot at the NCAA Men's Swimming and Diving Championships, according to the University of Cincinnati. Keating captured Cincinnati's first national championship in any sport, and he and a teammate became the first All-Americans for the Bearcats.

Keating's swimming legacy extended to his grandson, Phoenix's Gary Hall Jr., who won 10 Olympic medals, including five golds.

Gary Hall Sr., who was reached in Florida, said, "I can confirm that that (death) has happened." He declined to comment further.

Keating was an Ohio banker-turned-homebuilder when he sat down at a farmhouse table with Arizona's Dobson family in 1971 and agreed to buy 2,000 acres. The result was Dobson Ranch, Keating's first planned community built around artificial lakes.

Even then, Keating was wheeling and dealing to close the deal.

"We agreed to give them a million dollars down," Keating said in a 2002 interview with The Arizona Republic. "I don't remember the price, and we weren't sure we had a million dollars."

So, he sold 100 acres to Desert Samaritan Center to get the down payment. Eventually, other prominent developments came along: Mountain Park Ranch and Lakewood in Ahwatukee Foothills, the Islands in Gilbert, and Anderson Springs in Chandler.

"Those were such fun days," Keating said in the 2002 interview. "No reporters, and everybody believed me and trusted me."

McCain Profile: The Keating Five

Source

McCain Profile: The Keating Five

by Dan Nowicki and Bill Muller - Mar. 1, 2007 10:52 AM

The Arizona Republic

CHAPTER VII: THE KEATING FIVE

As a war hero and U.S. senator, John McCain has been chronicled in pictures.

There are grainy mug shots of a young McCain, printed in U.S. newspapers after his jet was shot down over North Vietnam. There are black-and-white images of his return, grinning and waving.

In happier times, there is McCain holding his newborn daughter while his wife, Cindy, smiles from her hospital bed.

But it is an innocent vacation picture that carries the reminder of the scandal that threatened his political career.

In the picture, taken in the Bahamas, McCain is seated on a bandstand while wearing an outrageous straw party hat. Next to him on the dais sits Charles Keating III, son of developer Charles H Keating Jr.

McCain calls the Keating scandal "my asterisk." Over the years, his opponents have failed to turn it into a period.

It all started in March 1987. Charles H Keating Jr., the flamboyant developer and anti-porn crusader, needed help. The government was poised to seize Lincoln Savings and Loan, a freewheeling subsidiary of Keating's American Continental Corp.

As federal auditors examined Lincoln, Keating was not content to wait and hope for the best. He had spread a lot of money around Washington, and it was time to call in his chits.

One of his first stops was Sen. Dennis DeConcini, D-Ariz.

The state's senior senator was one of Keating's most loyal friends in Congress, and for good reason. Keating had given thousands of dollars to DeConcini's campaigns. At one point, DeConcini even pushed Keating for ambassador to the Bahamas, where Keating owned a luxurious vacation home.

Now Keating had a job for DeConcini. He wanted him to organize a meeting with regulators to deliver a message: Get off Lincoln's back. Eventually, DeConcini would set up a meeting with five senators and the regulators. One of them was McCain.

McCain already knew Keating well. His ties to the home builder dated to 1981, when the two men met at a Navy League dinner where McCain spoke.

After the speech, Keating walked up to McCain and told him that he, too, was a Navy flier and that he greatly respected McCain's war record. He met McCain's wife and family. The two men became friends.

Charlie Keating always took care of his friends, especially those in politics. McCain was no exception.

In 1982, during McCain's first run for the House, Keating held a fund-raiser for him, collecting more than $11,000 from 40 employees of American Continental Corp. McCain would spend more than $550,000 to win the primary and the general election.

In 1983, as McCain contemplated his House re-election, Keating hosted a $1,000-a-plate dinner for him, even though McCain had no serious competition. When McCain pushed for the Senate in 1986, Keating was there with more than $50,000.

By 1987, McCain had received about $112,000 in political contributions from Keating and his associates.

McCain also had carried a little water for Keating in Washington. While in the House, McCain, along with a majority of representatives, co-sponsored a resolution to delay new regulations designed to curb risky investments by thrifts such as Lincoln.

Reluctant participant

Despite his history with Keating, McCain was hesitant about intervening. At that point, he had been in the Senate only three months. DeConcini wanted McCain to fly to San Francisco with him and talk to the regulators. McCain refused.

Keating would not be dissuaded.

On March 24 at 9:30 a.m., Keating went to DeConcini's office and asked him if the meeting with the regulators was on. DeConcini told Keating that McCain was nervous.

"McCain's a wimp," Keating replied, according to the book Trust Me, by Michael Binstein and Charles Bowden. "We'll go talk to him."

Keating had other business on Capitol Hill and did not reach McCain's office until 1:30. A DeConcini staffer already had told McCain about the "wimp" insult.

When he arrived, Keating presented McCain with a laundry list of demands for the regulators.

McCain told Keating that he would attend the meeting and find out whether Keating was getting treated fairly but that was all.

The first meeting, on April 2, 1987, in DeConcini's office, included Ed Gray, chairman of the Federal Home Loan Bank Board, as well as four senators: DeConcini, McCain, Alan Cranston, D-Calif., and John Glenn, D-Ohio.

(Years later, McCain recalled that DeConcini started the meeting with a reference to "our friend at Lincoln." McCain characterized it as "an unfortunate choice of words, which Gray would remember and repeat publicly many times.")

For Keating, the meeting was a bust. Gray told the senators that as head of the loan board, he worried about the big picture. He didn't have any specific information about Lincoln. Bank regulators in San Francisco would be versed in that, not him. Gray offered to set up a meeting between the senators and the San Francisco regulators.

The second meeting was April 9. The same four senators attended, along with Sen. Don Riegle, D-Mich. Also at the meeting were William Black, then deputy director of the Federal Savings and Loan Insurance Corp., James Cirona, president of the Federal Home Loan Bank of San Francisco, and Michael Patriarca, director of agency functions at the FSLIC.

In an interview with The Republic, Black said the meeting was a show of force by Keating, who wanted the senators to pressure the regulators into dropping their case against Lincoln. The thrift was in trouble for violating "direct investment" rules, which prohibited S&Ls from taking large ownership positions in various ventures.

"The Senate is a really small club, like the cliche goes," Black said. "And you really did have one-twentieth of the Senate in one room, called by one guy, who was the biggest crook in the S&L debacle."

Black said the senators could have accomplished their goal "if they had simply had us show up and see this incredible room and said, 'Hi. Charles Keating asked us to meet with you. 'Bye.'"

McCain previously had refused DeConcini's request to meet with the Lincoln auditors themselves. In Worth the Fighting For, McCain wrote that he remained "a little troubled" at the prospect, "but since the chairman of the bank board didn't seem to have a problem with the idea, maybe a discussion with the regulators wouldn't be as problematic as I had earlier thought."

McCain concedes that he failed to sense that Gray and the thrift examiners felt threatened by the senators' meddling.

'Always Hamlet'

The five senators, including McCain, seemed like a united front to Black.

"They presented themselves as a group," Black said, "and DeConcini is the dad, who's going to take the primary speaking role. Both meetings are in his office, and in both cases it's we want this, with no one going, 'What do you mean we, kemo sabe?'"

According to nearly verbatim notes taken by Black, McCain started the second meeting with a careful comment.

"One of our jobs as elected officials is to help constituents in a proper fashion," McCain said. "ACC (American Continental Corp.) is a big employer and important to the local economy. I wouldn't want any special favors for them. . . .

"I don't want any part of our conversation to be improper."

Black said the comment had the opposite effect for the regulators. It made them nervous about what might really be going on.

"McCain was the weirdest," Black said. "They were all different in their own way. McCain was always Hamlet . . . wringing his hands about what to do."

Glenn, a former astronaut and the first American to orbit the Earth, was not as tactful.

"To be blunt, you should charge them or get off their backs," he told the regulators. "If things are bad there, get to them. Their view is that they took a failing business and put it back on its feet. It's now viable and profitable. They took it off the endangered species list. Why has the exam dragged on and on and on?"

DeConcini added: "What's wrong with this if they're willing to clean up their act?"

Cirona, the banking official, told the senators that it was "very unusual" to hold a meeting to discuss a particular company.

DeConcini shot back: "It's very unusual for us to have a company that could be put out of business by its regulators."

The meeting went on. McCain was quiet. DeConcini carried the ball. The regulators told the senators that Lincoln was in trouble. The thrift, Cirona said, was a "ticking time bomb."

Then Patriarca made a stunning comment, according to transcripts released later.

"We're sending a criminal referral to the Department of Justice," he said. "Not maybe, we're sending one. This is an extraordinarily serious matter. It involves a whole range of imprudent actions. I can't tell you strongly enough how serious this is. This is not a profitable institution."

The statement made DeConcini back off a little.

"The criminality surprises me," he said. "We're not interested in discussing those issues. Our premise was that we had a viable institution concerned that it was being overregulated."

"What can we say to Lincoln?" Glenn asked.

"Nothing," Black responded, "with regard to the criminal referral. They haven't and won't be told by us that we're making one."

"You haven't told them?" Glenn asked.

"No," said Black. "Justice would skin us alive if we did. Those referrals are very confidential. We can't prosecute anyone ourselves. All we can do is refer it to Justice."

After the meeting, McCain was done with Keating.

"Again, I was troubled by the appearance of the meeting," McCain said later. "I stated I didn't want any special favors from them. I only wanted them (Lincoln Savings) to be fairly treated."

Black doesn't completely buy that argument. If McCain was concerned about Keating asking him to do things that were improper, why go to either meeting at all?

Black said McCain probably went because Keating was close to being the political godfather of Arizona and McCain still had plenty of ambition.

"Keating was incredibly powerful," Black said. "And incredibly useful."

McCain's reservations aside, Keating accomplished his goal. He had bought some time, though the price was very high.

Short-lived reprieve

A month later, the San Francisco regulators finished a yearlong audit and recommended that Lincoln be seized. But the report was virtually ignored because of politics on the bank board.

Gray was being replaced as chairman by Danny Wall, who was more sympathetic to Keating.

The audit, which described Lincoln as a thrift reeling out of control, sat on a shelf.

In September 1987, the investigation was taken away from the San Francisco office, away from Black and Patriarca. In May 1988, it was transferred to Washington, where Lincoln would get a new audit.

It was a win for Keating. A battle, not the war.

Back in San Francisco, Black was fuming.

"Clearly, we were shot in the back," he would say later.

Despite the reprieve, Keating's businesses continued to spiral downward, taking the five senators with him. Together, the five had accepted more than $300,000 in contributions from Keating, and their critics added a new term to the American lexicon: "The Keating Five."

The Keating Five became synonymous for the kind of political influence that money can buy. As the S&L failure deepened, the sheer magnitude of the losses hit the press. Billions of dollars had been squandered. The five senators were linked as the gang who shilled for an S&L bandit.

S&L "trading cards" came out. The Keating Five card showed Charles Keating holding up his hand, with a senator's head adorning each finger. McCain was on Keating's pinkie.

As the investigation dragged through 1988, McCain dodged the hardest blows. Most landed on DeConcini, who had arranged the meetings and had other close ties to Keating, including $50 million in loans from Keating to DeConcini's aides.

But McCain made a critical error.

He had adopted the blanket defense that Keating was a constituent and that he had every right to ask his senators for help. In attending the meetings, McCain said, he simply wanted to make sure that Keating was treated like any other constituent.

Keating was no ordinary constituent to McCain.

On Oct. 8, 1989, The Arizona Republic revealed that McCain's wife and her father had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators.

The paper also reported that the McCains, sometimes accompanied by their daughter and baby-sitter, had made at least nine trips at Keating's expense, sometimes aboard the American Continental jet. Three of the trips were made during vacations to Keating's opulent Bahamas retreat at Cat Cay.

McCain also did not pay Keating for some of the trips until years after they were taken, after he learned that Keating was in trouble over Lincoln. Total cost: $13,433.

When the story broke, McCain did nothing to help himself.

"You're a liar," McCain said when a Republic reporter asked him about the business relationship between his wife and Keating.

"That's the spouse's involvement, you idiot," McCain said later in the same conversation. "You do understand English, don't you?"

He also belittled reporters when they asked about his wife's ties to Keating.

"It's up to you to find that out, kids."

The paper ran the story.

In his 2002 book, McCain confesses to "ridiculously immature behavior" during that particular interview and adds that The Republic reporters' "persistence in questioning me about the matter provoked me to rage."

"I don't know how (The Republic journalists) would have reported the story had I been more civil and understanding or just more of a professional during the interview," McCain wrote.

At a news conference after the story ran, McCain was a changed man. He stood calmly for 90 minutes and answered every question.

On the shopping center, his defense was simple. The deal did not involve him. The shares in the shopping center had been bought by a partnership set up between McCain's wife and her father. (The couple also had a prenuptial agreement that separated Cindy McCain's finances and dealings from his.)

But McCain also had to explain his trips with Keating and why he didn't pay Keating back right away.

On that score, McCain admitted he had fouled up. He said he should have reimbursed Keating immediately, not waited several years. His staff said it was an oversight, but it looked bad, McCain jetting around with Keating, then going to bat for him with the federal regulators.

"I was in a hell of a mess," McCain later would write.

Meanwhile, Lincoln continued to founder.

In April 1989, two years after the Keating Five meetings, the government seized Lincoln, which declared bankruptcy. In September 1990, Keating was booked into Los Angeles County Jail, charged with 42 counts of fraud. His bond was set at $5 million.

During Keating's trial, the prosecution produced a parade of elderly investors who had lost their life's savings by investing in American Continental junk bonds.

Verdict: 'Poor judgment'

In November 1990, the Senate Ethics Committee convened to decide what punishment, if any, should be doled out to the Keating Five.

Robert Bennett, who would later represent President Bill Clinton in the Paula Jones case, was the special counsel for the committee. In his opening remarks, he slammed DeConcini but went lightly on McCain, the lone Republican ensnared with four Democrats.

"In the case of Senator McCain, there is very substantial evidence that he thought he had an understanding with Senator DeConcini's office that certain matters would not be gone into at the meeting with (bank board) Chairman (Ed) Gray," Bennett said.

"Moreover, there is substantial evidence that, as a result of Senator McCain's refusal to do certain things, he had a fallout with Mr. Keating."

Among the Keating Five, McCain took the most direct contributions from Keating. But the investigation found that he was the least culpable, along with Glenn. McCain attended the meetings but did nothing afterward to stop Lincoln's death spiral.

Lincoln was the most expensive failure in the national S&L scandal. Taxpayers lost more than $2 billion on the bailout. McCain also looked good in contrast to DeConcini, who continued to defend Keating until fall 1989, when federal regulators filed a $1.1 billion civil racketeering and fraud suit against Keating, accusing him of siphoning Lincoln's deposits to his family and into political campaigns.

In January 1993, a federal jury convicted him of 73 counts of wire and bankruptcy fraud in the collapse of American Continental and Lincoln. Keating was sentenced to 12 years and seven months in prison but served just 50 months before the conviction was overturned on a technicality. In 1999, at age 75, he pleaded guilty to four counts of fraud. He was sentenced to time served.

In the end, McCain received only a mild rebuke from the Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating. Still, he felt tarred by the affair.

"The appearance of it was wrong," McCain said. "It's a wrong appearance when a group of senators appear in a meeting with a group of regulators because it conveys the impression of undue and improper influence. And it was the wrong thing to do."

McCain noted that Bennett, the independent counsel, recommended that McCain and Glenn be dropped from the investigation.

"For the first time in history, the Ethics Committee overruled the recommendation of the independent counsel," McCain said. For his part, DeConcini is critical of McCain's role in the affair. The two senators never were particularly cozy, and the stress of the public scrutiny worsened their relations.

In his memoir Senator Dennis DeConcini: From the Center of the Aisle, he praises the decision to keep McCain on the hook.

"It became clear to me, and it was later confirmed by Ethics Committee members, that Bennett was attempting to dismiss the charges against McCain, and in order to appear nonpartisan, he included Glenn in this effort," DeConcini wrote with co-author Jack August. "Thanks to the three Democrats on the committee and perhaps with the help of Senator (Jesse) Helms (R-N.C.), however, the charges remained in place for all the senators under investigation. So all of us had to attend the 23-day public hearing, which was indeed a trial, before the six-member Senate Ethics Committee."

In the book, DeConcini reiterates his allegation that McCain leaked to the media "sensitive information" about certain closed proceedings in order to hurt DeConcini, Riegle and Cranston. It's a fairly serious charge. The Boston Globe revisited the Keating Five leaks in 2000. The story paraphrased a congressional investigator, Clark B. Hall, as personally concluding that "McCain was one of the principal leakers." The newspaper also reported that McCain, under oath, had denied involvement with the leaks.

McCain owns up to his mistake this way:

"I was judged eventually, after three years, of using, quote, poor judgment, and I agree with that assessment."

Oct. 8, 1989: Kin's deal, trips reveal close McCain-Keating tie

Source

Oct. 8, 1989: Kin's deal, trips reveal close McCain-Keating tie

by Jerry Kammer and Andy Hall - Oct. 8, 1989 01:25 PM

The Arizona Republic

Sen. John McCain had more than a constituent relationship with Charles H Keating Jr. prior to 1987, when he and four other senators helped Keating battle federal thrift regulators, records show.

The Arizona Republic has found that the senator's wife, Cindy Hensley McCain, and her father, beer distributor James W. Hensley, invested $359,100 in April 1986 in a north Phoenix shopping-center project led by Keating.

In addition, The Republic has found that the McCains - sometimes with their daughter and baby sitter - made at least nine trips at Keating's expense from August 1984 to August 1986 aboard either Keating's American Continental Corp.'s jet or chartered planes and helicopters owned by Resorts International. Three of the trips were for vacations at Keating's luxurious retreat in the Bahamas.

Keating is a multimillionaire Phoenix businessman, developer and financier whose business dealings are under federal investigation and whose relationships with five U.S. senators have been questioned. Keating has said he did nothing wrong and blames federal regulators for his problems.

John McCain has consistently said Keating was a constituent who headed an important and large Arizona business and he helped Keating just as he has helped other constituents.

Documents supplied Friday by McCain's office indicate that this year - as much as five years after most of the trips were taken - he reimbursed American Continental $13,433 for the travel, using personal funds.

The reimbursement came in three payments starting in May, a month after federal regulators seized control of Keating's Lincoln Savings and Loan and disclosures that Lincoln was the target of a U.S. Justice Department fraud probe.

On June 30, the day he made the last reimbursement payment, McCain wrote the House and Senate Ethics committees, saying he had failed both to make timely reimbursements and to disclose the gifts on his financial-disclosure statements.

McCain served two terms in the House, starting in 1982, before he was elected to the Senate in 1986.

Panels lack jurisdiction

The Senate Ethics Committee told McCain in August that it had no jurisdiction over his disclosures because the violations had occurred while he was in the House, according to copies of the correspondence supplied by McCain's office. The House Ethics Committee said it had no jurisdiction because McCain is now a senator.

Both committees, however, said they were satisfied with how McCain handled the matter. The House said the reimbursements, although nearly five years late, meant the trips were not ''gifts,'' which would have been improper under congressional rules.

During several interviews with The Republic, McCain:

* Angrily denied that his family's business relationship influenced his actions in behalf of Keating and contended that he would not benefit from it anyway, because his wife's investments are separate.

* Acknowledged that he was aware of his wife and father-in-law's investment with Keating when he and the other senators attended two April 1987 meetings to grill federal regulators about their overseeing of Lincoln Savings. He said he did not disclose the relationship because in his view, it was not - and still is not - a conflict of interest.

* Conceded that the meetings appeared to be ''improper.''

Keating had asked the senators to intervene in his behalf in a long- running feud with federal thrift regulators. The regulators since have complained that the political pressure by the senators was inappropriate.

After a delay - which many regulators attributed to the senators' pressure - the government seized Lincoln this April, contending it was being operated recklessly.

The collapse of Lincoln is projected to cost taxpayers $1.1 billion to $2.5 billion, potentially the biggest thrift bailout in the nation.

* Bitterly complained that disclosure of the business ties would be unfair and could destroy his political career. He said it would be ''irresponsible to write a story that has the appearance of impropriety without some evidence.''

''After the feeding frenzy that you all have been on, this will be incredibly damaging,'' he said.

''If I had financial ties with him, I would think that you have a big story, but I don't.''

* Conceded that the tardy reimbursement of Keating for the flights was a ''terribly serious oversight.''

That comment, ironically, came Friday night, the same night McCain achieved his greatest political victory, besting both the Democratic and Republican leadership to win Senate passage of a bill to reform Medicare's catastrophic-illness program.

McCain said the controversy has been worse than the nearly six years he spent as a prisoner of war in North Vietnam.

''Even the Vietnamese didn't question my ethics,'' McCain said.

''I don't seek sympathy, but it's been a terrible experience. And, again, it's something I could have avoided by not going to that (second) meeting. No one came and put a gun to my head and marched me into that room. I went of my own free will.''

The business ties and travel involving Keating and members of McCain's family are the latest disclosures showing close personal and financial relationships between Keating and politicians who aided him.

Keating's attorney, A. Melvin McDonald, said Saturday that Keating admired McCain, a fellow Navy veteran, and considered him a friend.

''Keating supported a lot of politicians he respected. McCain couldn't be bought even if Keating wanted to,'' McDonald said.

McCain's assistance to Keating included attending the two April 1987 meetings and supporting a House resolution in 1985, the year before he was elected to the Senate. The unsuccessful resolution, signed by 220 representatives, tried to delay a Federal Home Loan Bank Board regulation curbing risky investments by state-chartered savings and loan associations.

Lincoln Savings, which moved heavily into speculative investments after Keating's firm purchased it, had a stake in such a regulation.

McCain's family invested in the Keating-led shopping-center partnership about the same time that Keating's employees and their spouses contributed $52,000 to McCain's first campaign for the Senate, according to state and federal public records. Keating has raised $112,000 for McCain since McCain first sought public office in 1982.

Keating, chairman of Phoenix-based American Continental, the former parent company of California's Lincoln Savings, had generated large contributions to the four other senators at the second April 1987 meeting: Democrats Dennis DeConcini of Arizona, Alan Cranston of California, John Glenn of Ohio and Donald Riegle of Michigan.

Like McCain, the four contend they were helping a constituent.

McCain distanced himself from Keating immediately after the second meeting, in which regulators warned the senators of possible lawbreaking by Lincoln executives.

DeConcini, Cranston waited

Although McCain severed his ties to Keating, DeConcini and Cranston continued to defend Keating until recent weeks, when federal regulators filed a $1.1 billion civil racketeering and fraud suit accusing him of siphoning Lincoln's federally insured deposits to his family and to political campaigns, among other things.

Links between Keating and the senators who have helped him include The Republic's recent disclosure that two key DeConcini campaign aides amassed more than $50 million in loans from Keating. In addition, other reports have disclosed that Keating contributed heavily to two voter-registration groups allied with Cranston and to a political-action committee tied to Glenn.

Ed Gray, the lone federal regulator invited to the first 1987 meeting with the senators, said he saw McCain's efforts in Lincoln's behalf as far less significant than those of DeConcini, who played a major role in organizing both meetings.

''I think there are real degrees here,'' Gray said, adding that while DeConcini pressed him to loosen the regulatory reins on Lincoln, McCain ''didn't say very much'' and stressed that he wanted to avoid any appearance of impropriety.

Still, Gray said, neither McCain nor any of the other senators sought to dissociate themselves from a call by DeConcini for regulatory leniency, a request DeConcini denies making.

Gray also said that after the second meeting, in which San Francisco-based regulators called Lincoln ''a ticking time bomb'' and said they intended to seek a criminal investigation of the thrift, McCain distanced himself from Keating.

McCain said the regulators convinced him that they were treating Keating fairly. The next day, he met with Keating and told him he would do nothing more in his behalf.

Word later filtered back to McCain that Keating, a longtime friend, had called him a ''wimp.''

''Yes, the appearance of the meeting was bad and improper,'' McCain said while insisting his conduct was proper.

''I have maintained all along, and I have documentary evidence,'' McCain said, ''that when people come to me with sufficient reason to say that they are being mistreated by the federal government, whether it be the IRS, the U.S. Postal Service, Social Security or whatever it is, I go to bat for them in order to see that they are fairly treated.''

Keating will always be followed by scandal

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Keating will always be followed by scandal

Charles H Keating Jr., a banker and financier whose name became the moniker for a group of senators who intervened on his behalf with regulators during the 1980s savings-and-loan scandal, died Monday night. The Valley resident was 90.

Editorial board, The Republic | azcentral.com 6:58 a.m. MST April 2, 2014

Our View: Predators of the 1980s savings and loan scandal seem a different, less threatening breed

"One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause. I want to say in the most forceful way I can: I certainly hope so."

— Charles H. Keating Jr., April 1989

So many Wall Street wolves having followed in their tracks, the predators of the savings and loan scandal of the late 1980s seem a different, less threatening breed.

But among them all, Charles H. Keating Jr. stood apart.

Keating, who died Tuesday at age 90, personified his tumultuous era.

He was the wild, Southwestern home-building surge of the mid-1980s. Keating in the early 1980s transformed a nearly bankrupt American Continental Corp. into the largest builder of single-family homes in the Valley. The company grew to $6 billion in assets and over 2,500 employees.

He was one of the great philathropists of his time, donating millions to mostly Catholic charities, including Mother Teresa. He was the founder of one of the most effective anti-pornography organizations ever created, Citizens for Decency through Law.

At the same time, he was the Lincoln Savings scandal, which pried over $250 million from the pockets of retirees, transforming their life savings into worthless junk bonds invested in his Arizona-based savings-and-loan.

And he was the "Keating Five" scandal, in which five U.S. senators — including both of Arizona's senators — became enmeshed in Keating's uninhibited attempt to force the Federal Home Loan Bank Board to back off its attempt to restrain the enormous direct investments of Lincoln Savings under Keating.

Keating saw himself as an angel of a free-market God, destined to smite the lesser demons of government that sought to constrain him. He was committed to using whatever weapons, including the power of his financial contributions to politicians, to bend them to his will. With some, he succeeded.

With others, not so much. Sen. John McCain famously parted ways with Keating when the financier reportedly called him a "wimp" for refusing to meet with him on the bank board issue.

McCain declared he had not spent all those years in a North Vietnamese prison camp to have the likes of Charles Keating challenge his integrity. The confrontation set McCain apart in the Keating influence-peddling scandal and saved the senator's career.

In just four years after Keating bought Lincoln Savings in 1984 for $50 million, he increased its assets to over $5 billion. They were paper assets that blew away in the real-estate collapse of the late 1980s, taking the hard assets of thousands of retirees with them.

Keating never apologized. Never accepted culpability or guilt. He was convicted of fraud and racketeering in California and federal courts. But by 1996, all the charges were thrown out on appeal. If the government had just left him alone, he said, all his investors would have been rich.

In an era in which nameless, faceless organizations have taken over so much of the financing of elections, the bald-faced power-grabbing of a Charles Keating seems almost quaint.

Sadly, Keating set the tone for much of what we see in politics today: A lust for power and control that knew no bounds. And fervent desire to use that power to bend others to his will.

Keating: Chutzpah defined, but not in a good way

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Keating: Chutzpah defined, but not in a good way

EJ Montini, The Republic | azcentral.com 5:35 p.m. MST April 1, 2014

I was in the room full of reporters years ago when Charlie Keating, then accused of racketeering, fraud and conspiracy, as well as influence-peddling, was asked by a reporter if his political donations to five U.S. senators, including our own Sen. John McCain and then-Sen. Dennis DeConcini, had spurred the politicians to intervene on his behalf.

"I want to say in the most forceful way I can, I certainly hope so," Keating said.

If nothing else, you had to admire the guy's chutzpah.

Although, maybe admire isn't quite the right word.

Charles H Keating Jr., top man at the failed Lincoln Savings and Loan, would spend 4 1/2 years in prison before both his state and federal convictions were overturned on technical grounds. [That's a polite way of saying the government violated his Constitutional rights, didn't give him a fair trial and railroaded him to prison. While I suspect Keating was a big time crook and scumbag, everybody, even crooks and scumbags deserves a fair trial, where the government proves beyond a doubt that they are crooks and scum bags] (The state conviction was reversed because the judge was said to have issued improper jury instructions. The federal conviction was overturned because jurors in the case knew about and discussed Keating's state conviction.)

Keating also had a $2.7 billion civil court judgment against him.

When he got out of jail he went on the radio and told KTAR's Pat McMahon, ''I am innocent of everything. I'm not going to lie and say I'm guilty to get out of something.''

Chutzpah.

In 1991, the day he was convicted in California of 17 counts of fraud, enough to put him behind bars for 10 years, enough to cost him $250,000 in fines, Keating smiled.

It was his 68th birthday.

Chutzpah.

A probation officer evaluating Keating once wrote, ''To the degree defendant was capable of generous and heroic action, he was also capable of a ruthless, reckless and wanton disregard for those who put their faith and trust in him.''

A young, ambitious politician named John McCain put his faith in Keating and trusted him.

Keating help to make McCain's career, then helped to almost destroy it.

The failure of Keating's Lincoln Savings and Loan cost taxpayers $3.4 billion and bankrupt many, many innocent investors.

Still, Keating's family loved him, stuck by him, and steadfastly believed in his innocence.

I don't begrudge them any of that.

But if I have an enduring image of Keating it would be after his California conviction. An elderly investor named Sarah Mandell, 4 feet 10 inches tall, approached Keating. He was a tall man, well over six feet, but little Sarah managed to reach up and grab his lapels.

''Mr. Keating," she said, "you got all my money. You took all my money.''

The tables were turned.

It was the little old lady, in the end, who had chutzpah.

Reach Montini at 602-444-8978 or ed.montini@arizonarepublic.com.

Sadly many of the people who are associates of Keating and his criminal enterprise are still with us in government. Of course none of them take bribes in exchange for government pork, honest!!! Oh, sure they will take "campaign contributions", but certainly not bribes. At least they tell us they are "campaign contributions", not bribes.

Andy McCain named Fiesta Bowl chairman

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Andy McCain named Fiesta Bowl chairman

Craig Harris, The Republic | azcentral.com 10:38 p.m. MST April 1, 2014

Andy McCain, chief operating officer of Hensley Beverage Co., has been elected the 2014-15 Fiesta Bowl board chairman.

McCain, the son of U.S. Sen. John McCain, joined the Fiesta Bowl organization as a member of the board of directors in 2007.

As chairman, McCain will oversee the Fiesta Bowl organization, which operates the Tostitos Fiesta Bowl, the Buffalo Wild Wings Bowl and more than 40 related statewide events.

"It is an honor to be this year's chairman," McCain said in a prepared statement. "I look forward to continuing the legacy started by our founders more than 40 years ago by hosting great games and events with unmatched hospitality, promoting Arizona and giving back to the community."

McCain has previously chaired several Fiesta Bowl subcommittees, including Team Selection, Budget and Finance, and Audit and Compliance. He will continue to serve on the Executive Committee in his role as chairman.

McCain also is a member on the Arizona Super Bowl XLIX Host Committee and is a past director and chairman of the Greater Phoenix Chamber of Commerce.

At Hensley, McCain serves as COO and chief financial officer.

His mother, Cindy McCain, is chairman of Hensley Beverage and is the daughter of the company's founder.

Charles Keating, 90, Key Figure in ’80s Savings and Loan Crisis, Dies

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Charles Keating, 90, Key Figure in ’80s Savings and Loan Crisis, Dies

By ROBERT D. McFADDENAPRIL 2, 2014

Charles H. Keating Jr., who went to prison and came to symbolize the $150 billion savings-and-loan crisis a generation ago after fleecing thousands of depositors with regulatory help from a group of United States senators known as the Keating Five, has died. He was 90.

The death was confirmed by his son-in-law, Gary Hall.

The S. & L. debacle of the 1980s and 90s, when a thousand institutions collapsed in an implosion of reckless investments, may be a distant echo in a nation stricken by economic turmoil. But to millions old enough to have been dragged through the mess, Mr. Keating is remembered, perhaps unjustly, as the pre-eminent villain of an era when depositors, many of them older Americans and naïve investors, lost life savings they had squirreled away in hometown thrifts they thought were safe.

Mr. Keating, who pleaded guilty to fraud charges, had been a young man of promise — a Navy flier during World War II, an All-American swimmer in college, the leader of a national campaign against pornography, a blustery Cincinnati lawyer and businessman whose brother was an Ohio Congressman.

But in 1984, Mr. Keating, then a 61-year-old Phoenix real estate millionaire, bought Lincoln Savings & Loan, of Irvine, Calif., for $51 million, double its net worth. Lincoln, with 26 branches, made small profits on home loans, but under new state and federal rules it could make riskier investments, and Mr. Keating began pouring depositors’ savings into real estate ventures, stocks, junk bonds and other high-yield flings.

In three years, Lincoln’s assets soared from $1 billion to $3.9 billion, and Mr. Keating was using the business as his personal cash machine, taking $34 million for himself and his family and $1.3 million more for political contributions, prosecutors said.

The Federal Home Loan Bank Board, fearing wide collapses in a shaky industry, finally imposed a 10 percent limit on risky S. & L. investments. By 1987, its investigators found that Lincoln had $135 million in unreported losses and was more than $600 million over the risky-investment ceiling. Soon, the F.B.I., the Securities and Exchange Commission and other agencies were homing in.

Mr. Keating hired Alan Greenspan, soon to be chairman of the Federal Reserve, who compiled a report saying Lincoln’s depositors faced “no foreseeable risk” and praising a “seasoned and expert” management. And Mr. Keating called on Senators Alan Cranston of California, Donald W. Riegle Jr. of Michigan, John Glenn of Ohio and Dennis DeConcini and John McCain of Arizona, all recipients of his campaign largess, to pressure the bank board to relax its rules and kill its investigation.

All five met with regulators, and Edwin J. Gray, then the board chairman, said four senators — all but Mr. Riegle — “came to me like lawyers arguing for a client.” He resisted, but was replaced by a chairman more sympathetic to Mr. Keating, and the board backed off, with disastrous results for depositors and investors.

For two more years, Lincoln survived. On the books, assets ballooned to $5.46 billion, but billions were in speculative investments and hidden losses soared. Meanwhile, Lincoln talked many customers into replacing federally insured deposits with high-yielding bonds from Lincoln’s parent, American Continental, a Keating corporation that was drowning in losses.

Bond buyers were not told the condition of American Continental, or that its bonds were uninsured, prosecutors said. A witness in a lawsuit years later produced a Lincoln memo, telling its bond salesmen to “remember [that] the weak, meek and ignorant are always good targets.”

In 1989, American Continental went bankrupt and an insolvent Lincoln was seized by the government. Some 23,000 customers were left holding $250 million in worthless bonds, the life savings of many, and taxpayers paid $3.4 billion to cover Lincoln’s losses. It was the largest of 1,043 S. & L. failures between 1986 and 1995 that, authoritative studies show, cost taxpayers $124 billion and the savings and loan industry $29 billion. The government sued Mr. Keating for $1.1 billion, but he said he was broke.

Convicted of fraud, racketeering and conspiracy in state and federal trials, Mr. Keating went to prison for four and a half years. Both verdicts were overturned on appeals in 1996. California dropped its case, and on the eve of a federal retrial in 1999, Mr. Keating, who always insisted he had done nothing wrong, pleaded guilty to four counts of wire and bankruptcy fraud and was sentenced to time already served.

The Keating Five — all Democrats except Mr. McCain — also insisted they had done nothing improper. The Senate Ethics Committee concluded in 1991 that none had violated laws, but said Senators Cranston, DeConcini and Riegle had interfered with the bank board’s inquiry and rebuked them, Mr. Cranston in the harshest terms. Senators Glenn and McCain were cleared, but criticized for “poor judgment.”

Mr. Keating, a 6-foot-5-inch beanpole who walked with a swagger, never minced words about buying political influence. Asked once whether his payments to politicians had worked, he told reporters, “I want to say in the most forceful way I can: I certainly hope so.”

Charles Humphrey Keating Jr. was born in Cincinnati on Dec. 4, 1923. He attended Catholic schools and became an accomplished swimmer. He joined the Navy in World War II and became a fighter pilot, but was never deployed to a combat theater. After the war, he enrolled in law school at the University of Cincinnati, won various collegiate swimming championships and was named an All-American. In 1948, he received a law degree and began practice in Cincinnati.

In 1949, he married the former Mary Elaine Fette. They had five daughters and a son. In the 1950s, Mr. Keating organized Catholic men’s groups to fight pornography and founded Citizens for Decent Literature, which under various names grew to 300 chapters and 100,000 members nationally. He became known as a stern moralist, and in 1969 was named by Richard M. Nixon to the President’s Commission on Obscenity and Pornography.

With his brother, William, he founded a law firm in 1952. (William was a congressman from 1971 to 1974 and later chairman of The Cincinnati Enquirer.) By the late 1950s, the law firm’s principal client was Carl H. Lindner Jr., a businessman who formed American Financial Corporation in 1960 as a sprawling conglomerate. Mr. Keating left law practice in 1972 to become American Financial’s executive vice president.

In the 1970s, the S.E.C. accused American Financial of irregularities; Mr. Lindner and Mr. Keating admitted no wrongdoing but agreed to violate no fraud statutes. After a falling out with Mr. Lindner, Mr. Keating moved to Phoenix in 1976 to run American Continental, a real estate spinoff he acquired from American Financial. By the early 1980s, it was a major home builder in Phoenix and Denver.

Mr. Keating thus acquired millions just as the government lifted rules that had long limited the scope of investments S. & L.’s could make with depositors’ money. Lincoln became a cash cow for Mr. Keating’s investments, prosectors said, and its failure a metaphor for an age of excess.

In recent years, he had lived in Phoenix, working occasionally as a real estate consultant. In their book, “Trust Me: Charles Keating and the Missing Billions,” (Random House, 1993), Michael Binstein and Charles Bowden said: “He did not simply rob a bank. He broke a bank with his dream

Charles Keating Jr. dies at 90; key figure in S&L collapse

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Charles Keating Jr. dies at 90; key figure in S&L collapse

The former owner of Lincoln Savings & Loan spent 4 1/2 years in prison for looting the thrift, whose failure cost taxpayers $3.1 billion, although his conviction was later overturned.

By E. Scott Reckard

April 1, 2014, 9:52 p.m.

Willful and self-assured, Charles H. Keating Jr. strode through a life of outsized public roles — anti-pornography crusader, luxury hotel developer, political kingmaker — on his way to becoming one of the nation's most notorious corporate rogues.

The harshest spotlight arrived in 1989 when regulators seized his Lincoln Savings & Loan after years of battles. The failure of the Irvine thrift, which had bankrolled Keating's high-rolling investments, cost the government $3.1 billion, then the costliest bank collapse in U.S. history.

Keating became a national emblem of the fast-buck 1980s, and Lincoln became the poster child of the S&L crisis. In the early 1990s, state and federal juries in Los Angeles convicted Keating of looting Lincoln and swindling thousands of its customers — convictions that were later overturned. Many of them were elderly Southern Californians, who cashed out federally insured deposits to buy $265 million of uninsured American Continental junk bonds pushed by the S&L.

"He took their life savings and spent them on mansions, pleasure boats, private airports, indulgences of virtually every whim he and his family had," Alice Hill, one of the federal prosecutors on the case, said at the time.

Keating, 90, died late Monday in a Phoenix hospital, according to his son-in-law, Bradley Boland, and a family friend. The cause of death was not released. He had moved to Phoenix in 1976 to run American Continental Corp., a land developer that bought Lincoln in 1984.

Before Lincoln blew up in scandal, Keating tarnished the reputations of five U.S. senators, including Arizona's John McCain, who would later run for president. The "Keating Five" they were called, amid accusations that they interceded on Keating's behalf to block an investigation by regulators.

In 1989, Keating addressed the intentions behind his massive political donations to the senators, delivering one of his trademark outrageous comments.

"One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause," he said. "I want to say in the most forceful way I can: I certainly hope so."

Keating became a symbol for corporate malfeasance in the era of deregulation. In the 1980s, Congress and California's Legislature lifted nearly all limits on investments by inflation-ravaged S&Ls. Billions of dollars poured from bank vaults into land development, corporate takeovers, foreign currency trading.

But no thrift operator rivaled Keating's blend of arrogance, risk taking, political influence and multimillion-dollar payments to family and friends, said Michael Manning, a Phoenix attorney whom the government hired to spearhead a civil suit against Keating and his associates.

Deregulation "stoked Charlie's coals and allowed him to fill Lincoln's vault with federally insured cash," Manning said. "He could gamble for those fast bucks with other people's money."

Under attack publicly, Keating once tried to burnish his image with a $500,000 radio campaign in Phoenix. Yet he had his share of supporters too, who saw him as passionate about his work, family and charitable causes.

A lifelong Roman Catholic, Keating donated $1 million to Mother Teresa through his corporation and whisked her around in a private plane when she visited the United States. Before his sentencing in L.A. County Superior Court, Mother Teresa was among 120 people who wrote letters pleading that Keating get probation.

"He was a deeply religious man. People often wonder if that was genuine, and it was," said his lead defense lawyer, Stephen C. Neal, who spoke with him frequently. "He thought everything happened for a reason."

Keating was born Dec. 4, 1923, to Charles Humphrey Keating, a dairy manager from Kentucky, and his wife, Adelle. He was raised in Cincinnati during the Depression. His father, who lost a leg in a hunting mishap, battled Parkinson's disease in a wheelchair as Keating grew up with his younger brother William, who later became a congressman and newspaper publisher.

He graduated from St. Xavier High School in 1941. After struggling through a year at the University of Cincinnati, he joined the Navy, becoming a pilot with a reckless streak.

Stationed in the U.S. during World War II, Keating brought his Hellcat fighter in for a landing one evening in Vero Beach, Fla., his thoughts focused on a date and his radio blaring a Harry James trumpet solo. There was just one problem: He forgot to lower the landing gear. He had to leap from the plane as it skidded down the runway and crashed in flames.

"The tower was telling me, 'Your wheels are up,' but all I could hear was old Harry," Keating told The Times in a 1988 interview.

Keating was on a fast track when he returned to the University of Cincinnati in 1945, receiving academic credit for his Navy service, earning undergraduate and law degrees in three years. A lifelong swimmer, he won the 200-yard breast stroke in the 1946 NCAA men's championship.

That started a family tradition: His son and namesake, Charles Keating III; son-in-law, Gary Hall Sr.; and grandson, Gary Hall Jr. all competed as swimmers in the Olympics, where the senior Hall won three medals and the younger 10, including five gold medals.

Keating and his brother helped start a law firm that soon found itself with one major client: Carl Lindner, a wealthy Cincinnati financier. Keating ultimately went to work full time with Lindner, becoming a vice president and director at Lindner's American Financial Corp.

A political conservative, Keating headed a drive to purge sexually explicit material from Cincinnati newsstands in the 1950s. His Citizens for Decent Literature grew to 300 chapters, and President Nixon appointed him to head an anti-pornography commission.

Keating's prodigious political donations included a total of $1.3 million to the senators who became notorious as the Keating Five: McCain, California's Alan Cranston, Ohio's John Glenn, Arizona's Dennis DeConcini and Michigan's Donald W. Riegle Jr. All were Democrats except McCain, who had been especially close to Keating, visiting his Bahamas vacation compound at Cat Cay.

It was a measure of Keating's influence that he persuaded all five senators to meet on his behalf with regulators who were conducting an unusually long audit of his S&L in 1987. Lincoln had been under investigation by the Federal Home Loan Bank Board, which subsequently took no action; the senators were accused of helping him improperly.

The Senate Ethics Committee found in 1991 that Cranston, DeConcini, and Riegle had substantially and improperly interfered with the probe, and Cranston received a formal reprimand. Glenn and McCain were cleared of acting improperly but criticized for "poor judgment."

Like many S&L operators of the 1980s, Keating was a client of Michael Milken, the onetime junk bond king who wound up spending 22 months in federal prison for violations of securities laws. When Milken declined to provide further financing for Lincoln, Keating sold junk bonds directly to the elderly Lincoln investors — holdings rendered worthless when the savings and loan melted down.

Keating's state court convictions for securities fraud, conspiracy and racketeering were eventually reversed after he served 4 1/2 years of a 10-year prison term. Jurors had convicted Keating on 17 counts of securities fraud. But the conviction was overturned by a federal judge who ruled that Superior Court Judge Lance Ito's jury instructions had allowed Keating to be convicted without sufficient evidence that he intended to defraud investors.

His federal conviction was tossed out when it turned out the jury in that case improperly discussed his conviction in Ito's court. He later pleaded guilty to federal bankruptcy fraud charges filed in Arizona, and was sentenced to time served.

Despite the overturned convictions, Keating's reputation as the biggest villain of the S&L debacle's endured.

"Charlie used his brilliance and charisma in all the wrong ways," said lawyer Michael Manning, a fellow Arizonan who recouped most of the bondholder losses by suing law firms, accountants, investment banks and others that worked on Keating's deals.

By the time Keating went on trial, he had an enormous family — many of them on his payroll. Keating had married Mary Elaine Fette in 1949. They had a son, five daughters and 24 grandchildren. One daughter, Maureen Hubbard, preceded him in death.

An audit showed that Keating family members had been paid $34 million in the three years before American Continental went bankrupt and Lincoln was seized.

They had three private planes and a helicopter at their disposal. Once, while planning the $300-million Phoenician Resort, Keating loaded more than 20 family members onto two corporate jets for a three-week jaunt in Europe. It was a business expense, he said, enabling the flock to research the finest hotels in France, Italy, Switzerland, Britain, Ireland and Germany.

Keating's first trial, on state charges of securities fraud, took place in 1992. At the end of the trial's first day, a 5-foot-tall elderly woman rushed to the front of the court. The tiny woman grabbed Keating by the lapels, screaming that Lincoln's failure had cost her thousand of dollars.

"Mr. Keating, you took all my money away," she yelled as bailiffs pulled her away from defendant. "What happened to my money? I can't work anymore."

scott.reckard@latimes.com

Savings and loan figure Charles Keating dies at 90

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Savings and loan figure Charles Keating dies at 90

By Associated Press, Published: April 1

PHOENIX — Charles H. Keating Jr., the notorious financier who served prison time and was disgraced for his role in the costliest savings and loan failure of the 1980s, has died. He was 90.

A person with direct knowledge of the death confirmed on Tuesday that Keating had died but didn’t provide further details. The person wasn’t authorized to release the information and spoke on condition of anonymity. Charles Keating is sworn in before the House Banking Committee on Capitol Hill, Tuesday, Nov. 21, 1989, Washington, D.C. Keating invoked his constitutional protection against self-incrimination and refused to testify before the committee holding hearings on the collapse of Lincoln Savings and Loan. (AP Photo/J. Scott Applewhite)

When Keating’s Phoenix-based home construction company, American Continental Corp., bought Lincoln Savings & Loan in 1984, the multimillionaire elevated its worth from $1.1 billion to $5.5 billion in a four-year period.

But his financial empire crumbled with state and federal convictions for defrauding investors. Keating allegedly bilked Lincoln customers by selling them $200 million of unsecured “junk” bonds. They became worthless when Keating’s company became bankrupt.

The thrift’s collapse cost taxpayers $2.6 billion and tarnished the reputations of five senators who became known as the “Keating Five.” One of them was Republican U.S Sen. John McCain of Arizona, and the scandal re-entered the spotlight during the 2008 presidential campaign.

As the public heard testimony of elderly bondholders who had lost their life savings, Keating became a national poster boy for corporate greed. Keating was convicted in both state and federal court, but the convictions were thrown out and he agreed to a federal plea deal that freed him after nearly five years in prison.

Though Keating insisted he was a symbol of the common man, he was known more for an extravagant lifestyle. Keating received $19.4 million in salary, stock purchases and other compensation over five years, ending in 1988. His company provided luxuries like the use of a $5 million refurbished Florida estate. The corporation picked up the tab for lavish events like a 1986 Christmas party at which nearly $2,000 was spent on Silly String alone.

American Continental also paid to maintain three corporate jets. Keating was known to take long trips to Africa, Europe and elsewhere.

As the savings and loan institution’s profits rose, the Federal Home Loan Bank in San Francisco began looking into investment activity in 1986. The examination was the beginning of numerous conflicts between Keating and federal regulators.

By April 1989, American Continental filed for bankruptcy protection — one day before federal regulators seized Lincoln for alleged bad business practice. The government claimed Keating made land swap deals to fabricate real estate profits.

Through a tax-sharing agreement, American Continental was then able to siphon off $94 million of federally insured deposits in the form of deferred taxes never actually paid to the Internal Revenue Service.

The financial fallout triggered investigations and multiple lawsuits from all sides.

Keating filed a lawsuit, accusing the government of illegal seizure. In turn, the government slapped Keating, as well as several family members and associates, with a $1.1 billion fraud and racketeering civil lawsuit.

Several of the 23,000 investors who purchased junk bonds also filed suit against Keating.

The scandal also shook the political world. Five senators who received campaign donations from Keating — McCain, Democrat Alan Cranston of California, Democrat John Glenn of Ohio, Democrat Donald W. Riegel Jr. of Michigan and Democrat Dennis DeConcini of Arizona — were accused of impropriety for appealing to regulators on Keating’s behalf in 1987.

In 1991, the Senate Ethics Committee formally reprimanded Cranston for “improper and repugnant” dealings with Keating. DeConcini and Riegle received rebukes from the committee but no further punishment for creating the appearance of impropriety. Glenn and McCain were criticized less severely; the panel said they “exercised poor judgment.”

McCain later called his involvement with Keating “the worst mistake of my life” and said having his honor questioned was in some ways worse than the torture he endured in Vietnam. During the 2008 presidential campaign, then-Sen. Barack Obama revisited McCain’s role in the scandal in a campaign Web video.

McCain said in an emailed statement Tuesday, “My thoughts and prayers are with the family of Charles Keating, a loving father and grandfather.”

Throughout Keating’s 1991 trial in California on state securities fraud charges, he stuck to his claim that he was an innocent target of a power-hungry federal government.

The four-month trial ended with a jury finding Keating guilty of 17 of 18 charges. Two years later, Keating and his son, Charles Keating III, were convicted of multiple federal charges of racketeering, fraud, conspiracy and transporting stolen property. He started serving a 12-year federal and 10-year state prison sentence concurrently in 1993.

In all, Keating served nearly five years in prison. His state convictions were overturned a second time in 1998 when a federal court judge ruled the trial judge, Lance Ito, had not properly instructed the jury.

That same year, an appeals court judge threw out Keating’s federal securities charges. The judge said jurors had improperly learned of his state convictions. Keating then made a plea deal with federal prosecutors, pleading guilty to three counts of wire fraud and one count of bankruptcy fraud in exchange for time served, with no fines or restitution. Charges were also dismissed against his son.

State prosecutors decided in 2000 not to retry Keating.

“I had the honor to represent him over many years, and I got to see a side of him many others did not,” Stephen C. Neal, chairman of Cooley LLP and Keating’s longtime attorney, said in a statement Tuesday night. “Though his controversies were many, he faced adversity with great dignity, wit and courage. Charlie never wavered in his faith.”

Post-prison, Keating moved into his daughter’s home in the wealthy Phoenix enclave of Paradise Valley. In 2006, he quietly began work as a business consultant in Phoenix.

Born in 1923, in Cincinnati, Ohio, Keating had a middle class upbringing as the son of Charles Sr., a dairy company worker, and Adele, a homemaker. His family had financial difficulties when the senior Keating was diagnosed with Parkinson’s disease.

Educated in Roman Catholic schools, Keating studied business at the University of Cincinnati. After the first quarter, he enlisted in the Naval Air Corps and trained to fly in combat. Keating was honorably discharged in 1945.

He later returned to the university, where he achieved an NCAA gold medal in swimming. Keating then attended law school and joined a law firm in 1947.

He is survived by wife Mary Elaine, daughter Mary, son Charles and grandson Gary Hall Jr., who was an Olympic swimming champion.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Financier Behind The Costliest Savings And Loan Failure Of The 1980s Dies At 90

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Charles Keating Jr. Dead: Financier Behind The Costliest Savings And Loan Failure Of The 1980s Dies At 90

AP | by BOB CHRISTIE

Posted: 04/01/2014 10:50 pm EDT Updated: 04/02/2014 12:59 am EDT

PHOENIX (AP) — Charles H. Keating Jr., the notorious financier who served prison time and was disgraced for his role in the costliest savings and loan failure of the 1980s, has died. He was 90.

A person with direct knowledge of the death confirmed on Tuesday that Keating had died but didn't provide further details. The person wasn't authorized to release the information and spoke on condition of anonymity.

When Keating's Phoenix-based home construction company, American Continental Corp., bought Lincoln Savings & Loan in 1984, the multimillionaire elevated its worth from $1.1 billion to $5.5 billion in a four-year period.

But his financial empire crumbled with state and federal convictions for defrauding investors. Keating allegedly bilked Lincoln customers by selling them $200 million of unsecured "junk" bonds. They became worthless when Keating's company became bankrupt.

The thrift's collapse cost taxpayers $2.6 billion and tarnished the reputations of five senators who became known as the "Keating Five." One of them was Republican U.S Sen. John McCain of Arizona, and the scandal re-entered the spotlight during the 2008 presidential campaign.

As the public heard testimony of elderly bondholders who had lost their life savings, Keating became a national poster boy for corporate greed. Keating was convicted in both state and federal court, but the convictions were thrown out and he agreed to a federal plea deal that freed him after nearly five years in prison.

Though Keating insisted he was a symbol of the common man, he was known more for an extravagant lifestyle. Keating received $19.4 million in salary, stock purchases and other compensation over five years, ending in 1988. His company provided luxuries like the use of a $5 million refurbished Florida estate. The corporation picked up the tab for lavish events like a 1986 Christmas party at which nearly $2,000 was spent on Silly String alone.

American Continental also paid to maintain three corporate jets. Keating was known to take long trips to Africa, Europe and elsewhere.

As the savings and loan institution's profits rose, the Federal Home Loan Bank in San Francisco began looking into investment activity in 1986. The examination was the beginning of numerous conflicts between Keating and federal regulators.

By April 1989, American Continental filed for bankruptcy protection — one day before federal regulators seized Lincoln for alleged bad business practice. The government claimed Keating made land swap deals to fabricate real estate profits.

Through a tax-sharing agreement, American Continental was then able to siphon off $94 million of federally insured deposits in the form of deferred taxes never actually paid to the Internal Revenue Service.

The financial fallout triggered investigations and multiple lawsuits from all sides.

Keating filed a lawsuit, accusing the government of illegal seizure. In turn, the government slapped Keating, as well as several family members and associates, with a $1.1 billion fraud and racketeering civil lawsuit.

Several of the 23,000 investors who purchased junk bonds also filed suit against Keating.

The scandal also shook the political world. Five senators who received campaign donations from Keating — McCain, Democrat Alan Cranston of California, Democrat John Glenn of Ohio, Democrat Donald W. Riegel Jr. of Michigan and Democrat Dennis DeConcini of Arizona — were accused of impropriety for appealing to regulators on Keating's behalf in 1987.

In 1991, the Senate Ethics Committee formally reprimanded Cranston for "improper and repugnant" dealings with Keating. DeConcini and Riegle received rebukes from the committee but no further punishment for creating the appearance of impropriety. Glenn and McCain were criticized less severely; the panel said they "exercised poor judgment."

McCain later called his involvement with Keating "the worst mistake of my life" and said having his honor questioned was in some ways worse than the torture he endured in Vietnam. During the 2008 presidential campaign, then-Sen. Barack Obama revisited McCain's role in the scandal in a campaign Web video.

McCain said in an emailed statement Tuesday, "My thoughts and prayers are with the family of Charles Keating, a loving father and grandfather."

Throughout Keating's 1991 trial in California on state securities fraud charges, he stuck to his claim that he was an innocent target of a power-hungry federal government.

The four-month trial ended with a jury finding Keating guilty of 17 of 18 charges. Two years later, Keating and his son, Charles Keating III, were convicted of multiple federal charges of racketeering, fraud, conspiracy and transporting stolen property. He started serving a 12-year federal and 10-year state prison sentence concurrently in 1993.

In all, Keating served nearly five years in prison. His state convictions were overturned a second time in 1998 when a federal court judge ruled the trial judge, Lance Ito, had not properly instructed the jury.

That same year, an appeals court judge threw out Keating's federal securities charges. The judge said jurors had improperly learned of his state convictions. Keating then made a plea deal with federal prosecutors, pleading guilty to three counts of wire fraud and one count of bankruptcy fraud in exchange for time served, with no fines or restitution. Charges were also dismissed against his son.

State prosecutors decided in 2000 not to retry Keating.

"I had the honor to represent him over many years, and I got to see a side of him many others did not," Stephen C. Neal, chairman of Cooley LLP and Keating's longtime attorney, said in a statement Tuesday night. "Though his controversies were many, he faced adversity with great dignity, wit and courage. Charlie never wavered in his faith."

Post-prison, Keating moved into his daughter's home in the wealthy Phoenix enclave of Paradise Valley. In 2006, he quietly began work as a business consultant in Phoenix.

Born in 1923, in Cincinnati, Ohio, Keating had a middle class upbringing as the son of Charles Sr., a dairy company worker, and Adele, a homemaker. His family had financial difficulties when the senior Keating was diagnosed with Parkinson's disease.

Educated in Roman Catholic schools, Keating studied business at the University of Cincinnati. After the first quarter, he enlisted in the Naval Air Corps and trained to fly in combat. Keating was honorably discharged in 1945.

He later returned to the university, where he achieved an NCAA gold medal in swimming. Keating then attended law school and joined a law firm in 1947.

He is survived by wife Mary Elaine, daughter Mary, son Charles and grandson Gary Hall Jr., who was an Olympic swimming champion.