The reversal of Charles Keating Jr.'s conviction on California fraud charges won't free the infamous financier from his federal prison cell in Tucson. But it could boost his chances with a federal appeals court, Keating's attorney says.
Keating's federal appeal, under consideration by the 9th Circuit Court of Appeals, claims that a 1993 federal-court verdict was tainted because several jurors had learned outside the courtroom about Keating's earlier conviction on California charges."Obviously, the determination that the state-court conviction was unconstitutional means the prejudicial impact of that is all the greater," said Stephen Neal, who defended Keating at both trials.
U.S. District Judge John Davies on Wednesday overturned the California conviction, ruling it was based on "non-existent and erroneous legal theory" and flawed instructions to the jury by Superior Court Judge Lance Ito.
The ruling stunned prosecutor William Hodgman of the Los Angeles County District Attorney's Office.
Hodgman was lead prosecutor in the 1991 case in which Keating was convicted on 17 counts of fraud stemming from sales of junk bonds issued by American Continental Corp., of which Keating was chief executive officer.
"It will certainly be appealed to the 9th Circuit," said Hodgman, who portrayed Keating to jurors as a predatory pusher of junk bonds even as American Continental lurched to bankruptcy in 1989.
At the California trial, Hodgman acknowledged that Keating had no direct contact with any of the 17,000 bond buyers. Many of the bonds were sold at branches of American Continental's subsidiary, Lincoln Savings, and buyers said they were led to believe the bonds were federally insured.
Hodgman argued that Keating had "aided and abetted"' fraudulent sales by keeping the sales force ignorant of American Continental's deepening desperation.
But in his ruling, Judge Davies said Keating, 72, could not be convicted for aiding and abetting because prosecutors had not proved criminal intent on the part of bond sellers. "It has never been a crime to aid and abet an innocent act," Davies said.
The ruling brings together key figures in two other notorious Los Angeles criminal cases.
Ito presided over the O.J. Simpson murder trial, and Hodgman was a member of the prosecution team. Davies presided over the federal trial at which Los Angeles police officers were convicted on charges stemming from the beating of Rodney King.
The Keating case also involved attorney Michael Manning, now the attorney for the pension funds that are Gov. Fife Symington's largest creditor in U.S. Bankruptcy Court in Phoenix.