Keating, Co-Defendants Ordered to Pay $3 Billion

TUCSON — A federal jury Friday ordered Charles Keating Jr. and three others to pay at least $3 billion in damages for cheating thousands of people who invested in his savings and loan company.

The judge had already ruled that Keating had conspired to defraud investors--many of them elderly people who put up their life’s savings--so the jury’s job was to decide how much the defendants owed.

After eight days of deliberations, the jury awarded $600 million in compensatory damages and $1.5 billion in punitive damages against the executive who has come to symbolize the abuses of the S&L; industry.

Keating, 68 and already in prison on California criminal charges stemming from the same investments, appeared only once at the trial. He didn’t send lawyers, saying he couldn’t afford to because of a pending federal criminal case.

The verdict followed a 3 1/2-month trial on lawsuits in which more than 20,000 class-action plaintiffs claimed losses of $288.7 million on investments in Phoenix-based American Continental. Much of the money was spent on American Continental junk bonds sold in the lobbies of the company’s Irvine, Calif.-based subsidiary, Lincoln Savings.

The investments collapsed when American Continental declared bankruptcy and Lincoln was seized by the government in April 1989 in a record $2.6 billion taxpayer bailout.

“When I first heard it, it’s great,” said plaintiff Marguerite Maire, 74, a retired legal secretary from Hacienda Heights, Calif. But she noted, “These people left, as far as I know, don’t have any money.”