A federal jury Friday ordered Charles Keating 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 31/2-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 Lincoln Savings, the company's subsidiary based in Irvine, Calif.
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."
The lawsuits originally named 99 people and companies as defendants, including national law and accounting firms accused of helping Keating deceive regulators about the health of his financial empire.
But 90 of the defendants agreed to settle out of court before or during the trial for a total that plaintiffs' lawyers estimated could reach $250 million.
The co-defendants remaining at the end of the trial were Saudi European Investment Corp.; Chandler, Ariz., developer Conley Wolfswinkel; and Continental Southern Inc., an Atlanta developer.
The exact amount of the final damage award was unclear because U.S. District Judge Richard Bilby must use a complicated formula that involves tripling part of the award, under racketeering law, and possibly discounting other parts.
Plaintiffs' lawyers said the final total would range from $3.05 billion to $3.95 billion.