Keating In-Law First In Family To Admit Guilt In Plea-Bargain
LOS ANGELES - Charles Keating Jr.'s son-in-law, Robert Wurzelbacher Jr., pleaded guilty today to misusing $13 million from Lincoln Savings, the first of the tightknit family to admit wrongdoing in the case.
Under the plea agreement before U.S. District Judge Mariana Pfaelzer, Wurzelbacher will cooperate with federal authorities. However, he won't have to testify in the federal fraud and racketeering case against Keating and others, said Assistant U.S. Attorney David Sklansky.
In return for his plea on three counts of misapplying funds, other federal charges against Wurzelbacher will be dropped, the prosecutor said. He could be sentenced on July 16 to up to 15 years in prison and a $750,000 fine.
Several former associates of Keating and officials of his companies already have struck plea bargains in the case involving Keating's American Continental Corp., the Phoenix company that owned Irvine-based Lincoln.
Keating, already sentenced to 10 years in state prison on state fraud charges, could receive a federal sentence of 510 years if convicted.
Wurzelbacher, 38, of Phoenix admitted that he, Keating and three others improperly diverted federally insured funds to the Hotel Pontchartrain Limited Partnership, which owned the Hotel Pontchartrain in Detroit.
"The money went in the form of loans and advances to the hotel," said Sklansky. "They did it specifically to benefit themselves, and knowing it was against Lincoln's best interest."
The defendants, who had interests in the partnership, knew there was little chance Lincoln would get the money back because the hotel was losing large sums, Sklansky said. At the same time, the loans propped up their own investment in the hotel, he said.
The money was transferred in 1986 and 1987, when Wurzelbacher was a senior vice president and a director of American Continental.
The transaction is one of many that allegedly sucked money away improperly from Lincoln, whose 1989 collapse prompted a $2.6 billion taxpayer bailout.
Wurzelbacher could have faced hundreds of years in prison if convicted on other counts contained in a 77-count indictment against himself, Keating, Charles Keating III, former American Continental president Judy Wischer and Andrew Ligget, former chief financial officer of American Continental.
Trial for the remaining defendants is set for Aug. 4, Sklansky said.
Keating was convicted in December on 17 state counts of defrauding small investors, many of them elderly Lincoln depositors, by misrepresenting high-risk American Continental junk bonds as safe.