Judge Throws Out Keating Fraud Conviction

The man convicted in both state and federal courts for his role in perhaps the worst savings and loan failures in US history has won a new trial. In Los Angeles earlier this week, US District Judge Mariana Pfaelzer set aside Charles Keating Jr's 1993 conviction for fraud and racketeering. Judge Pfaelzer ruled the jury, which heard the federal case, was prejudiced by knowledge of Mr. Keating's prior fraud conviction in a state court.

If the decision survives an appeal, California prosecutors promise a hasty retrial.

The ruling means Keating is once again presumed innocent. That is not, however, how many bilked investors see it. Many of them are elderly and lost their life savings.

"A lot of elderly Americans lost money, unfortunately, they will not get another chance." says Janice Shields, research director at US Public Interest Group, a Washington consumer advocacy group. Technicalities relating to jury instruction, and not the evidence itself, have sprung Keating from jail, Ms. Shields says, where he has served four years and nine months of his 22-year sentence. Keating is now free on bail.

Federal investigators estimate the collapse of Lincoln Savings and Loan, which Keating directed, cost taxpayers close to $3.5 billion.