Charles Keating Trials: 1991-99

On February 24, 1984, Keating's ACC bought Lincoln Savings and Loan for $55 million. Lincoln S&L was one of the largest S&Ls in southern California, with assets at the time of more than a billion dollars. Keating was attracted to Lincoln S&L not only because of its size, but also because California state S&L regulations were very lax.

Keating and ACC installed their own management team to run Lincoln S&L and began to systematically pillage its assets through thinly disguised accounting gimmicks. Millions were funneled into ACC to cover its losses from real estate projects that had turned sour. In additions, Lincoln S&L was used as a conduit to sell hundreds of millions of dollars of ACC bonds to depositors. More than 20,000 people—many of whom were retired and were investing their pensions:embought ACC junk bonds from salesmen who told them that the bonds were federally insured, when, in fact, they were not.

Keating surrounded himself, Lincoln S&L, and ACC with an army of lawyers and accountants who thwarted the few efforts federal and state authorities made to look at ACC's transactions with Lincoln S&L. Finally, however, the house of cards fell in. On April 14, 1989, the Federal Home Loan Bank Board (FHLBB) exercised its authority and appointed a conservator, who took over Lincoln S&L. Unable to sustain itself on Lincoln S&L's assets any longer, ACC went bankrupt in the same month, and the purchasers of ACC bonds lost all of their money. After the conservator found that Lincoln was insolvent by more than $600 million, the FHLBB (later succeeded by the Office of Thrift Supervision, OTS) put Lincoln S&L into receivership on August 2, 1990. Cleaning up Lincoln S&L would eventually cost the taxpayers $2.6 billion.