Sentencing Report Bad for Keating : Courts: Probation officer tells judge that former Lincoln S&L; owner's 'callous' attitude and lack of remorse warrant a long term in prison.

Sentencing Report Bad for Keating : Courts: Probation officer tells judge that former Lincoln S&L; owner’s ‘callous’ attitude and lack of remorse warrant a long term in prison.

By JAMES S. GRANELLI

April 7, 1992 12 AM PT

TIMES STAFF WRITER

Saying that Charles H. Keating Jr. needs to be punished for his “callous disregard and betrayal of trust,” a Los Angeles County probation officer recommended Monday that Keating be sentenced to a long prison term for his conviction last fall on state securities fraud.

Thomas W. Aiken, in a report filed with Los Angeles County Superior Court, dashed any hope that the former operator of Lincoln Savings & Loan might have had for independent support for probation at his sentencing Friday.

Keating faces a maximum of 10 years in prison, a $250,000 fine and a restitution order. He was convicted on 17 counts, but those victims are part of thousands of small investors in the Irvine thrift’s parent company, American Continental Corp. Altogether, investors lost $285 million after Keating’s empire collapsed three years ago.

The probation officer--who works for the court in preparing reports on convicted defendants to be sentenced--said Keating was not suitable for probation because he lacks “a sincere expression of remorse for his wrongdoing . . . or expression of culpability.”

Aiken said that, without those sentiments expressed, “a grant of probation, or an alternative sentencing program, would unduly depreciate the gravity of this offense.”

He said that Keating should be put behind bars “to punish defendant for his callous disregard and betrayal of trust and to send a clear message to others who enjoy a similar responsibility that violations of public trust will be met with the strictest allowable sanctions.”

Aiken did not specify the number of years he thought the former Arizona real estate and thrift tycoon should spend behind bars.

But he said that aggravating factors--such as the sophistication of the fraud scheme, Keating’s position of leadership and trust and the great deal of damage done to a multitude of victims--far outweighed the lone mitigating circumstance--Keating’s lack of a prior record.

Aiken suggested that Judge Lance A. Ito start with a “high-base term” for the first of 17 securities fraud counts on which Keating was convicted and consider imposing consecutive terms for each of the other 16 counts.

The formula would result in a term of at least six years and up to the maximum prison term of 10 years. He also recommended a $10,000 “restitution fine.”

Prosecutors, who are seeking a 10-year term, were elated.

“When the probation officer comes in with a higher recommendation like this, it makes it easier for the judge to give a high sentence,” said Terry Bork, one of the three assistant Los Angeles County district attorneys who prosecuted Keating.

Ronald Rus of Orange, a lawyer for small investors who are suing Keating and his professional advisers, was also gratified.

“If a thief had robbed any one of these bondholders, he’d certainly get 10 years,” Rus said. “Keating, because of an air of legitimacy, should not be given special treatment. The judge should treat him like the common thief he is.”

Ito will sentence Keating after ruling on a defense motion for a new trial and after hearing from seven victims named in the indictment and two bondholders who represent thousands of mainly San Fernando Valley investors who bought their American Continental bonds at Lincoln branches.

The Friday hearing is expected to take most of the day.

The defense motion includes a claim that the jury was tainted after it learned during deliberations that a fellow juror was grazed by a bullet while he was near his home. The effect was particularly strong, the defense maintains, because the prosecutor’s closing argument compared Keating to a drive-by shooter.

Prosecutors point out that the incident occurred near the end of the jury’s deliberations after it had found Keating innocent on one count and guilty on many others.

Meantime, in federal court where Keating and four others face criminal fraud, conspiracy and racketeering charges, U.S. District Court Judge Mariana R. Pfaelzer rejected motions by certain defendants to have themselves separated from the case because, as one said, Keating was the “most reviled man in America.”