Charles Keating fleeced thousands out of their life savings. He has died aged 90.
CHARLES KEATING, 1923-2014
Charles Keating, who has died aged 90, was proof of the adage that the louder a man boasts of his own honour, the faster you should count your spoons.
Until he was found guilty in 1992 of fleecing thousands of elderly American investors of their life savings (not to mention taxpayers, who had to stump up $3.4 billion to cover the losses of his savings and loan empire), to all outward appearances Keating led an exemplary life.
As a lawyer in Cincinnati, he had handled poor clients for free; he donated millions of dollars to Mother Teresa and lent her his private jet when she visited the US; he had led a campaign against pornography and paid for thousands of children from New York's ghettos to attend good schools. But there was always a darker side.
In the late 1970s he bought American Continental Homes, an under-performing house-building company based in Arizona and turned it from a loss-maker into America's sixth largest house-builder. In 1983, he dropped "Homes" and turned American Continental into an investment firm. The following year he bought a small savings and loan association called Lincoln.
The acquisition coincided with the removal by Congress of nearly all regulations on savings and loan associations, and Keating took advantage to turn Lincoln into a massive property and financing vehicle that channelled billions of depositors' dollars into hotels, undeveloped land, risky housing developments and junk bonds.
The jewel in his crown was the Phoenician, a $295 million luxury hotel in Scottsdale, Arizona, which featured 23-carat gold-leaf ceilings and seven swimming pools. Keating's own lifestyle was similarly glitzy. There were estates in Arizona, the Bahamas and Florida, an apartment in Monte Carlo and jets and helicopters to ferry his family around the world.
But in the late 1980s the government reimposed regulation, catching Keating in a bind. He had billions of dollars tied up in long-term projects, and liquidating them to satisfy the regulators would incur huge losses. He decided to juggle the books until his investments paid off.
His main method of declaring false profits was to sell property he owned in the Arizona desert for a large profit to small investors who would borrow the entire (inflated) purchase price from Keating. To cover his tracks, Keating arranged for a web of different companies to lend the money and sell the land. But federal examiners launched an audit of Keating's business empire which uncovered the deceit. Finally, in April 1989, he filed for bankruptcy protection. About 23,000 customers were left with worthless bonds. Many lost their life savings.
In 1990 Keating and dozens of associates were indicted in a Los Angeles court on 42 counts of fraud, racketeering and conspiracy. Keating was convicted on 17 counts the following year. He produced a message from Mother Teresa testifying to his good character and brought in an army of family members but the judge announced that he was sending him down for the maximum 10 years.
Charles Humphrey Keating was raised in poverty in Cincinnati after his father succumbed to Parkinson's disease. He briefly attended the University of Cincinnati but dropped out and enlisted in the Navy in 1941. Trained as a night fighter pilot, Keating never saw combat and returned to the University of Cincinnati, where he took a degree in law and married Mary Elaine Fette.
In the mid-1950s Keating and his brother established a law firm that soon acquired a major client, the takeover expert Carl Lindner. In 1959 Keating helped Lindner to found his American Financial Corp, which grew into a multibillion-dollar company, with Keating as a vice-president.
At the same time Keating won a reputation as a crusader against pornography, winning victories against the Hustler publisher Larry Flynt and against stores selling "adult" magazines. In 1957 he founded Citizens for Decent Literature, and in 1969 President Nixon appointed him to the US Commission on Obscenity and Pornography.
When Keating's empire began to unravel in the late 1980s, he called in favours from influential Washington politicians, notably "the Keating Five", a group of senators including John Glenn and John McCain, who interceded on his behalf with regulators. In 1991 the Senate Ethics Committee reprimanded one of the five, Democrat Alan Cranston, and criticised the others.
The Telegraph, London