Jailed Arizona developer Charles Keating declared Friday he is innocent of a 42-count criminal indictment alleging fraud in junk bond sales through his failed Lincoln Savings & Loan.

Keating and three co-defendants entered not-guilty pleas to an array of charges that accuse them of bilking investors in American Continental Corp. junk bonds sold through Lincoln branches.He listened quietly as Deputy District Attorney William Hodgman read a summary of the indictment in a packed courtroom.

Then, when asked for his plea, Keating answered in a loud voice: "Absolutely not guilty."

Keating, 66, was chairman of Phoenix-based American Continental, which owned Irvine, Calif.-based Lincoln. The S&L has failed and experts estimate its bailout will cost taxpayers up to $2 billion.

Outside court, defense attorney Stephen Neal said: "Keating is looking forward to defending himself on these charges . . . He is confident of being vindicated."

A hearing was scheduled for Oct. 15 to discuss further motions in the case.

Lawyers indicated they would ask for a preliminary hearing to determine if there is sufficient evidence to hold the defendants for trial.