Charles Humphrey Keating Jr. (December 4, 1923 – March 31, 2014) was an American sportsman, lawyer, real estate developer, banker, financier, conservative activist, and convicted felon best known for his role in the savings and loan scandal of the late 1980s.
[5] After one semester at the University of Cincinnati in fall 1941, Keating left because of poor grades,[2][4] although he advanced to the NCAA Men's Swimming and Diving Championships in 1942, finishing sixth in the 200 yard breaststroke.
[10] He cut a deal with the University of Cincinnati wherein it would accept for academic credit much of his Navy service,[11] then he would take six months of liberal arts courses before entering its law school.
[6] Charles Keating was a long-time supporter of U.S. swimming and beginning in 1969 he and his brother William donated $600,000 to St. Xavier High School in Cincinnati to build a state-of-the-art competition pool.
[25] In 1956, he filed requests for Q clearances on behalf of a small company of former Los Alamos Scientific Laboratory scientists with an office in Newtown, Ohio; unknown to Keating, the FBI suspected the application was fraudulent and launched an investigation of him, but no charges were made.
"[42] Keating wrote, "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.
"[43] The Nixon administration tacitly supported Keating's legal efforts,[39] and counsellor to the President John Ehrlichman assigned White House speechwriter Pat Buchanan to help draft the dissenting report.
[36] Other local actions involving shutting stores and removing books from public libraries were attributed by civil liberties advocates to the "oppressive" trend that Keating had set.
[45] Such was Keating and his organization's effectiveness that when the U.S. Supreme Court handed down the 1973 Miller v. California decision establishing that obscenity definitions be based upon local community standards, every adult bookstore and movie house in Cincinnati was closed within hours.
[50] Hamilton County prosecutor Simon L. Leis Jr. put Ohio pornographer Larry Flynt on trial in 1976 for pandering obscenity and for engaging in a form of organized crime.
[56] However, when in 1990, the Cincinnati Contemporary Arts Center and its director Dennis Barrie were prosecuted for obscenity for exhibiting Robert Mapplethorpe's traveling solo show The Perfect Moment, they were found not guilty by a jury.
[63] In 1979 the SEC case with American Financial was settled,[30] with Keating signing a consent agreement where he neither admitted nor denied guilt but agreed not to violate federal fraud and securities statutes.
"[9] In 1983, Keating and his companies made legal but unusually large campaign donations in races for the Phoenix City Council, who were responsible for approving his building projects[9][16] including water usage for residential developments built around artificial ponds.
[72] The scale of donations represented a change from past practice in local Phoenix politics; some council figures opposed the trend, while others readily asked for the funds.
"[77] Beginning in 1985 the Federal Home Loan Bank Board (FHLBB) feared that the savings industry's risky investment practices were exposing the government's insurance funds to huge losses.
[76] It instituted a rule whereby savings associations could hold no more than 10 percent of their assets in "direct investments",[76] and were thus prohibited from taking ownership positions in certain financial entities and instruments.
[84] The two had a heated, contentious meeting in which McCain said he had not spent years in North Vietnamese prisoner-of-war camps to have his courage or integrity questioned; the friendship ended and they would not speak again.
[76] Following Keating's past practices with Lindner, American Continental amassed a large collection of confusingly connected subsidiaries in real estate, banking, and insurance businesses; these numbered at least 54, and there were some overseas ones that auditors were not aware of.
[16][92] Its construction cost $300 million, included many opulent, imported features, and saw a number of instances of Keating or his decorator wife making wholesale late design changes at great expense.
[9][16][30] American Continental wrote rules saying that Estrella homeowners could not "intentionally terminat[e] a human pregnancy" or possess "adult material", but removed them once Keating was informed that such covenants were unconstitutional.
[95] Federal Deposit Insurance Corporation chair L. William Seidman would later write that Lincoln's push to get depositors to switch was "one of the most heartless and cruel frauds in modern memory".
[95] In late 1988, Keating began desperate attempts to sell Lincoln; regulators rejected one $50 million potential sale due to the buyers not meeting federal requirements.
[87] The following month they ordered Keating to stop transferring cash from Lincoln to American Continental, which imperiled the latter's survival strategy and caused its stock price to nosedive.
[30][87] Keating tried to arrange junk bond deals with Michael Milken and place bets in the global currency markets to generate cash, but the moves failed and he lost $11 million in one month alone.
[97] Many investors, often ones living in California retirement communities, lost their life savings, and later claimed to have suffered emotional trauma for having been duped on top of their financial devastation.
[100] In talking to reporters in April 1989, Keating maintained that he was the victim of a federal government that had spent years trying to destroy him,[101] and then said, "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.
[107] By November 1989, the estimated cost of the overall savings and loan crisis had reached $500 billion, and the media's coverage often highlighted Keating's role as part of what became a feeding frenzy.
[108] Keating and Lincoln Savings became convenient symbols for arguments about what had gone wrong in America's financial system and society,[109] as well as for 1980s greed in general,[15] and were featured in popular culture references.
[16] In September 1990, Keating and his associates were indicted by the State of California on 42 counts related to having duped Lincoln's customers into buying worthless junk bonds of American Continental Corporation.
[113] In April 1992, California Superior Court Judge Lance Ito gave Keating the maximum 10-year prison sentence, quoting Woody Guthrie, to wit "More people have suffered from the point of a fountain pen than from a gun.