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Who was Charles H Keating Jr.?

PHOENIX — Who was Charles H Keating Jr.?

The family knew him as the late grandfather of fallen Navy SEAL Charlie Keating IV, killed Tuesday in northern Iraq.

PHOENIX — Who was Charles H Keating Jr.?

The family knew him as the late grandfather of fallen Navy SEAL Charlie Keating IV, killed Tuesday in northern Iraq.

But to many, Keating was the man whose financial empire cost investors their life savings when it crumbled and whose name became the moniker for the "Keating Five," a group of senators, including Arizona's John McCain, who intervened on his behalf with regulators during the 1980s savings-and-loan scandal.

Charles Keating Jr., who died in 2014 at age 90, 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 1980s, 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 $1.1 billion civil racketeering and fraud lawsuit against Keating, accusing him of siphoning Lincoln's deposits to his family and into political campaigns.

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

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

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.

Lincoln's collapse cost taxpayers $3.4 billion, and investors lost an estimated $285 million 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."

Follow Craig Harris, Dennis Wagner, Paul Giblin and Dan Nowicki on Twitter: @charrisazrep, @azrover, @PaulGiblinAriz and @dannowicki

 

 

 

 

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