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KEATING BANNED BY OTS ORDER; RULING CAPS THREE-YEAR ACTION

 WASHINGTON, Oct. 26 /PRNewswire/ -- Former savings and loan executive Charles H. Keating Jr. has been banned from the banking industry and ordered to pay $36 million in restitution by the Office of Thrift Supervision (OTS). The decision caps an administrative action that began in August 1990.
 OTS Acting Director Jonathan Fiechter, who issued the prohibition and restitution order, also denied a new hearing requested by Keating. Keating said he would be willing to testify, reversing his position in the original hearing when he invoked his constitutional privilege not to testify. Fiechter said there is insufficient cause to reopen the proceeding because Keating had the opportunity previously to testify.
 The restitution represents the loss to Keating's thrift, Lincoln Savings and Loan Association, Irvine, Calif., from certain transactions initiated by Keating and some of his associates, OTS said. Although recovery in full may not occur, the order represents a government claim to any assets found.
 Fiechter's order follows the recommendations of an administrative law judge who conducted a hearing and submitted his decision last March.
 OTS charged that Keating had a key role in a transaction in which Lincoln subsidiaries provided financing of more than $30 million to the Hotel Ponchartrain Limited Partnership set up for the benefit of Keating and others. Keating also was instrumental in getting the Employee Stock Ownership Plan (ESOP) of Lincoln's parent corporation to borrow $20 million from a third-party lender which, in turn, was used to buy the corporation's stock from insiders, including Keating. Lincoln guaranteed the ESOP's debt in violation of laws and OTS regulations. Both transactions caused Lincoln substantial losses. They violated regulations governing transactions with affiliates and affiliated persons and were unsafe and unsound practices and breaches of Keating's fiduciary duty.
 Lincoln failed and was taken over by the government in April 1989 at an estimated cost to the taxpayers of $2.6 billion, the largest thrift failure in history.
 Six other persons involved in the transactions have entered into settlement agreements with OTS. Keating has the right to appeal the order within 30 days to the U.S. Court of Appeals.
 -0- 10/26/93
 /CONTACT: William Fulwider of the Office of Thrift Supervision, 202-906-6913/


CO: Office of Thrift Supervision; Lincoln Savings and Loan Association ST: California, District of Columbia IN: FIN SU:

KD-MH -- DC014 -- 6835 10/26/93 11:03 EDT
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Publication:PR Newswire
Date:Oct 26, 1993
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