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.

Keating was a champion swimmer for the University of Cincinnati in the 1940s. From the late 1950s through the 1970s, he was a noted anti-pornography activist, founding the organization Citizens for Decent Literature and serving as a member on the 1969 President's Commission on Obscenity and Pornography.

In the 1980s, Keating ran American Continental Corporation and the Lincoln Savings and Loan Association, and took advantage of loosened restrictions on banking investments. His enterprises began to suffer financial problems and were investigated by federal regulators. His financial contributions to, and requests for regulatory intervention from, five sitting U.S. senators led to those legislators being dubbed the "Keating Five".

When Lincoln failed in 1989 it cost the federal government over $3 billion and about 23,000 customers were left with worthless bonds. In the early 1990s, Keating was convicted in both federal and state courts of many counts of fraud, racketeering and conspiracy. He served four and a half years in prison before those convictions were overturned in 1996. In 1999, he pleaded guilty to a more limited set of wire fraud and bankruptcy fraud counts, and was sentenced to the time he had already served. Keating spent his final years in low-profile real estate activities until his death in 2014.

Early life and military service

Keating was born on December 4, 1923, in Cincinnati, Ohio, into a devout Roman Catholic family. He was the son of Adele (née Kipp) and Charles Humphrey Keating. He grew up in the Avondale and Clifton neighborhoods of that city.

His younger brother William was born in 1927. Their father came from Kentucky and managed a dairy. Charles Keating Sr. lost a leg in a hunting accident, and then fell into a long decline from Parkinson's disease around 1931, and was nursed by his wife until his death in 1964.

In swimming he led the team to three Greater Catholic League championships, set several school records, was named all-state, and was captain of the team in his senior year. Keating graduated from St Xavier in 1941.

After one semester at the University of Cincinnati in fall 1941, Keating left because of poor grades,

During World War II, Keating was stationed in the U.S., sometimes at Banana Creek in Florida, Due to squadron transfers and receiving additional training on new intercept methods, the war ended without his being engaged in combat. then he would take six months of liberal arts courses before entering its law school.

Keating won the 200-yard breaststroke at the Ohio Intercollegiate Conference championship in 1945. In an exciting, back-and-forth contest with Paul Murray of Cornell University and future coaching legend James Counsilman of Ohio State University, he prevailed by a foot to win the championship with a time of 2:26.2. (The event was later reclassified as the butterfly in NCAA records due to a definitional evolution involving the two strokes. Of Keating, Lagaly said, "You could tell even then he was going to be very successful. He was very ambitious. Whatever he did, he did all the way."<!--TODO Trust Me p. 84 says he won a gold at the Pan Am games in 1946, but they didn't begin until 1951!?-->

Keating received his law degree from the University of Cincinnati College of Law in 1948, and would later be named a member of the university's Athletic Hall of Fame.

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. The school's swimming team went on to win many state titles. and donations from the Keating family used to construct it. Charles Keating funded Cincinnati's Marlins swim club; six swimmers on the 1980 Summer Olympics squad were from its roster, including future Olympic champion Mary T. Meagher. When he later moved to Phoenix, Charles Keating built the Phoenix Swim Club, where Olympians also trained. They had six children: daughters Kathleen, Mary, Maureen, Elaine, and Elizabeth, and a son, Charles Keating III.

His daughter Mary married Gary Hall, who would go on to swim in the 1968, 1972, and 1976 Summer Olympics, winning a medal in each one. Charles Keating III swam in the 1976 Summer Olympics, finishing fifth in the 200-meter breaststroke. Keating's grandson Gary Hall Jr. competed in the 1996, 2000, and 2004 Summer Olympics as a swimmer and won ten medals overall.

After law school graduation, Keating did spot legal work for the FBI, then joined a law firm doing corporate law. On the side, he entered the business world where his ventures involved selling life insurance, running a fruit stand, and working for Roto-Rooter. Beginning in the late 1950s they took on Carl Lindner Jr. as a client. Lindner was rapidly accumulating ice cream stores, supermarkets, real estate, and savings and loans, and soon essentially became Keating's sole client. 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. Keating was admitted to the U.S. Supreme Court bar in 1958. Keating was named to the board of directors of the company in 1963.

Anti-pornography activism

In 1956, Keating joined a priest leading a group of Catholics in Cincinnati who were concerned about the dangers of pornography, and he began giving talks on the subject to parents and other groups. In 1958, Keating testified before the House Judiciary Committee on mail-order pornography, saying that it was "capable of poisoning any mind at any age and of perverting our entire younger generation", and that it was closely tied to juvenile delinquency, while also quoting a Senate Committee report that "part of the Communist conspiracy was to print (obscene materials)". Keating mentioned links between pornography and Communism at other times, but distanced himself from the more fervent anti-Communist groups of the early 1960s. It would grow to 300 chapters and 100,000 members nationwide and become the largest anti-pornography organization in the nation. The structure of CDL was initially decentralized, but Keating grew frustrated with some local chapters taking aggressive actions he did not approve of, and so he gave it a more controlled focus with a national magazine, film production, and a greater role in legal actions.

Over the next two decades, CDL mailed some 40 million letters on behalf of its position and filed a series of amicus curiae briefs before the U.S. Supreme Court. Keating gained the nickname "Mr. Clean".

In 1964–65, Keating produced Perversion for Profit, a film featuring announcer George Putnam. It was a survey of then-available prurient and obscene materials, and asserted that pornography led to moral decay. It, along with two lesser-known films produced or distributed by CDL, was screened frequently throughout the country and remained in print for a long time.

In 1969, Keating's national reputation on the issue led President Nixon to appoint him to the President's Commission on Obscenity and Pornography, which had been begun under Nixon's predecessor, Lyndon B. Johnson. The majority on the commission issued a report which concluded that pornography does not degrade the morals of adults or cause crime, and recommended that all federal, state, and local laws preventing consenting adults from obtaining pornographic materials be repealed. Keating, Nixon's only appointee on the 18-person commission, was the leading commission dissenter from the report. Several days later, Keating was given the desired materials and two weeks to write his report by the committee.

Keating filed his dissent, saying, "At a time when the spread of pornography has reached epidemic proportions in our country and when the moral fiber of our nation seems to be rapidly unravelling, the desperate need is for enlightenment and intelligent control of the poisons which threaten us – not the declaration of moral bankruptcy inherent in the repeal of the laws which have been the defense of decent people against the pornographer for profit." 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."

The Nixon administration tacitly supported Keating's legal efforts, The commission's majority report was denounced by congressional leaders of both parties as well as by the administration. In 1969, Keating obtained an injunction preventing the showing in Cincinnati of softcore sexploitation master Russ Meyer's film Vixen!, claiming it was obscene, and the film was seized by the police the first day it opened. Showing of the film was successfully stopped in other parts of Ohio as well, and Meyer spent $250,000 in defense against Keating's legal actions.

In 1970, Keating tried to block a closed-circuit showing of the musical Oh! Calcutta! in Cincinnati, saying that "it appeals to a prurient interest in sex." During 1972, a Keating legal action kept a sex film theater shut as a "public nuisance". The film Perversion for Profit had included a claim that homosexuals had a slogan saying that "today's conquest is tomorrow's competition";

In 1975, Oui magazine gave Keating the top spot on its "Enemies of pornography" list. Local public opinion ran against Flynt. Keating was portrayed by actor James Cromwell. Attempts to show Vixen! in Cincinnati would continue, 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.

American Financial Corporation

While officially an outside lawyer, Keating functioned as a public face for Carl Lindner and American Financial Corporation and the two were close associates on business as well as legal matters;

Keating left his law practice in 1972 and formally joined American Financial Corporation, by now a $1 billion enterprise, as executive vice president. Keating became Lindner's person in charge of firing employees from newly acquired companies. Within business circles Keating gained a reputation for aggressiveness and arrogance. and its decision that year not to enter the investment banking field.

In 1975 and 1976, several stockholder lawsuits were filed against American Financial, and Keating was under fire for aspects involving unsecured loans, stock warrants, and the sale of the Enquirer.

American Continental Corporation

Keating moved to Phoenix, Arizona in 1976 In practice, Keating was blamed for much of the irregular financial practices that had gone on and his reputation was significantly damaged.

Keating reaped benefits from the move to Arizona, a wide-open territory in both a physical and business sense that allowed someone a fresh start. He turned the now-renamed American Continental Corporation around, adding various operations and divisions in a structure somewhat reminiscent of American Financial. As chairman and controlling stockholder, Keating relied heavily upon family members, employing his son and four of his sons-in-law in prominent positions. Connally was a favorite of the business community, but his campaign had difficulty parlaying its fundraising successes into popular support. In early December 1979, Keating was named campaign manager, with the existing manager being demoted to campaign strategist. Connally's campaign ended two weeks later, famously known for having spent $11 million and gaining only one delegate.

Having won the 1980 election, President Reagan contacted Keating about becoming U.S. Ambassador to the Bahamas, where Keating had spent considerable time. Keating said, "There are a lot of people that would say nasty things, I'm sure, about me, but it ain't true that nobody ever liked Charlie Keating." 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. Up through the early 1980s, Lincoln had been a conservatively-run enterprise, with almost half its assets in home loans and only a quarter of its assets considered at risk. It made slow growth at best, and had shown a loss for several years until it made a profit of a few million dollars in 1983. Once he took over, Keating fired the existing management. When Keating later was asked why he got into savings and loans, he said, "I know the business inside out, and I always felt that an S & L, if they'd relax the rules, was the biggest moneymaker in the world." A sales document from this period urges staff to, "always remember the weak, meek and ignorant are always good targets."

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. Lincoln had become burdened with bad debt resulting from its past aggressiveness, and by early 1986 its investment practices were being investigated and audited by the San Francisco office of the FHLBB: Keating took measures to oppose the FHLBB, including recruiting a study from then-private economist Alan Greenspan saying that direct investments were not harmful, Keating had, or would soon make, legal political contributions of about $1.3 million to the senators, and he called on them to help him resist the regulators. Keating became a personal friend of McCain following their initial contacts in 1981, McCain and his family had made several trips at Keating's expense, sometimes aboard American Continental's jet, for vacations at Keating's opulent Bahamas retreat at Cat Cay. McCain initially refused to meet with Keating over the FHLBB matter and Keating called McCain a "wimp" behind his back. (In 1991, the senators would be rebuked to various degrees by the Senate Ethics Committee, with Cranston receiving the harshest verdict and Glenn and McCain the least. McCain later testified against Keating in a civil lawsuit brought by Lincoln bondholders, while the other four refused to testify.)

Failure of Lincoln and American Continental

Lincoln stayed in business; from mid-1987 to April 1989, its assets grew from $3.91 billion to $5.46 billion. Keating was triumphant in having defeated the regulators, whom he despised as useless relics from an outmoded financial past, and defended his high salary and business practices. He spent about $500,000 on radio advertisements in the Phoenix area to improve his public image; the commercials stressed his real estate projects and his family-oriented values. A 1988 Los Angeles Times profile assessed Keating as "a businessman without apparent peer in Arizona in terms of riches, clout and color." 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. His other grand project was Estrella, a mixed-use development outside of Phoenix in Goodyear, Arizona, in the direction of the Sierra Estrella. Lincoln's branch managers and tellers convinced customers to replace their federally insured certificates of deposit with higher-yielding bond certificates of American Continental; the customers later said they were never properly informed that the bonds were uninsured and very risky given the state of American Continental's finances. 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".

American Continental went bankrupt in April 1989, and Lincoln was seized by the FHLBB. The total bondholder loss came to between $250 million and $288 million.

The federal government was eventually liable for $3.4 billion to cover Lincoln's losses when it seized the institution. 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, 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. I want to say in the most forceful way I can: I certainly hope so."

In September 1989, Keating was hit with a $1.1 billion fraud and racketeering action, filed against him by the regulators. He proclaimed that, "We've lost everything in this thing, my wife and I. It's devastating." In November 1989, Keating was subpoenaed to testify before the House Banking Committee, but refused to answer questions, invoking his right against self-incrimination under the Fifth Amendment. Also in November, his Phoenician Resort was seized by the FBI; under their operation it became known as "Club Fed" before later being sold to a Kuwaiti group. The vastly ambitious Estrella project would remain deserted

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. Keating and Lincoln Savings became convenient symbols for arguments about what had gone wrong in America's financial system and society, as well as for 1980s greed in general, A deck of playing cards would be marketed, called "The Savings and Loan Scandal", that featured on their face Charles Keating holding up his hand, with images of the Keating Five senators portrayed as puppets on his fingers. Keating's legal fees were running at $1 million per month. 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." Keating was sent to the medium-security Federal Correctional Institution, Tucson to serve his time. (In December 1993, Wurzelbacher was sentenced to a 40-month prison term.)

In January 1993, a federal conviction followed, on 73 counts of fraud, racketeering and conspiracy. In July 1993, Keating was given a 12 year sentence. A third case filed by the Resolution Trust Corporation resulted in a summary judgment of $4.3 billion against Keating and his wife in 1994, the largest judgment ever against a private person. Throughout his incarceration, Keating maintained his innocence, saying he was a "political prisoner" of the U.S. government and a scapegoat for the largest banking scandal in the nation's history. The conviction was overturned. Keating was freed after 4 years in prison;

In October 2000, the U.S. Supreme Court refused to hear the government's appeal of the overturning of the state conviction. This left Keating without any convictions other than that from his plea bargain. Keating replied that if the government had left him alone, investors "would all be rich." He moved in with his daughter Mary and son-in-law Gary Hall Sr. in the Phoenix suburb of Paradise Valley.

During the 2000s, Keating worked as a business consultant He kept a low profile in his business operations,

Legacy

The Chicago Tribunes lengthy profile of Keating in 1990 said in summary:

<blockquote>To say that Charles Keating is a complex man seems a gross understatement. Some see him as an aggressive man who got desperate when the real estate market bottomed out and crossed the line between "business as usual" and fraud. Others see him as a con artist who finally got caught, a hypocrite who masked his greed with phony piety.</blockquote>

Keating steadfastly maintained that it was not his mistakes or criminal deeds but regulators' actions that were responsible for the major losses.

In the novel Myron, author Gore Vidal uses the names of various anti-pornography crusaders to take the place of swear words. One of the names is "keating", which is used many times throughout the book as a synonym for "shit".

Keating, portrayed by James Cromwell, appeared in Miloš Forman's 1996 film The People vs. Larry Flynt, leading a Citizens for Decent Literature charge against Flynt's Hustler Magazine.

References

Bibliography

  • Charles Keating's federal campaign contributions 1979–1990
  • FDIC bibliography about Keating's involvement in the S&L scandal 1989–1993