Responsibility for millions in losses suffered by Lincoln Savings & Loan depositors who bought junk bonds in the parent company of the failed thrift can be traced directly to one order given by financier Charles Keating Jr., according to newly unsealed testimony before the Los Angeles County Grand Jury.

Keating and three other top officials of Lincoln and its parent American Continental Corp. were indicted in September on 42 counts of securities fraud after the grand jury heard five months of testimony from 91 witnesses.Testimony from Tammy Bennett, former secretary to the indicted Ray Fidel, a former Lincoln president, said the bonds were sold at Lincoln branches solely because of a direct order from Keating, who was American Continental's chairman.

The $250 million in bonds became worthless when American Continental declared bankruptcy in April 1989. Federal regulars seized Lincoln the following day, inheriting $2 billion in losses in the costliest taxpayer thrift bailout in U.S. history. Lincoln was placed on sale Friday by the federal government, and there were no immediate takers.

Other testimony before the grand jury also revealed that bonds were sold for months after federal examiners concluded in 1988 they could never be repaid and that Keating knew the federal government would be liable for at least $2 billion in losses if it seized Lincoln.

Witnesses also said income from the bond sales facilitated by Lincoln branches was the only thing keeping Phoenix-based American Continental financially afloat in 1988 - months after California thrift regulators ordered bond sales within the branches halted.

And, the testimony revealed, a $400,000 donation from American Continental to a voter registration project headed by Sen. Alan Cranston, D-Calif., came entirely from funds raised via junk bond sales.

Bennett said Fidel told her that Keating instructed him to begin selling the American Continental bonds at Lincoln branches. Asked who issued the order, Bennett said, "Mr. Keating Jr."

Both depositors and regulators testified repeatedly that because the bonds were sold at the S&L branches as many as 23,000 investors were led to believe that they were federally insured.

Depositor Adaliza Whinfield, 83, who lives in a mobile home in Hemet, Calif., east of Los Angeles, testified she bought $50,000 worth of the junk bonds in 1987 in Lincoln's Hemet office. She said she believed the man who sold her the bonds was a Lincoln employee, even though federal rules prohibited S&L employees from selling the unsecured bonds in the parent company.

She said she asked bond salesman Robert Pascual if the bonds were safe.

"He said that - well, he said they were as safe as the United States of America," Whinfield testified.

Depositor Mary Eckerson, 72, who bought $80,000 worth of bonds at the suburban Granada Hills branch of Lincoln, said bond salesman Emerson Fersch assured her the bonds were safe.

"He told me there was no risk at all," she said. "He said, `Yes, they are 100 percent safe.' "

It was no accident such depositors believed their money was safe in the bonds. Regulators said the mere fact that the bonds were sold in banks with Federal Savings & Loan Insurance Corp. emblems on their doors was enough to convey the impression the bonds were insured.

"The very fact that the securities are offered on the premises of Lincoln tends to create the impression that Lincoln, a federally insured institution . . . stands behind them. No amount of advertising and oral advice will remove this impression for some," said a mid-1988 letter from California regulators to the bank. The letter was part of the grand jury testimony.

Branch managers also testified customers were only told the bonds were uninsured if they specifically asked.

Testimony also revealed that duplicity was not limited to customers.

Federal thrift examiner Alex Barabolak testified that on Nov. 7, 1988, Keating told him that "Anyone on my staff (who) lied to you, I would fire them."

Yet testimony from Kathi Richardson, former secretary to ex-Lincoln vice president James Grogan, provided details of how loan documents were created by top company officials, including American Continental president Judy Wischer, on one floor of Lincoln's corporate headquarters at the same time that federal examiners were reading other loan documents on the next floor up.

Richardson also said additions to minutes of the company's loan committee were fabricated for the consumption of the examiners.

The testimony showed Keating repeatedly blamed federal regulators for his problems.

"It was very important to him to put blame on the regulators for closing the place down," Barabolak said of a conversation with Keating in early 1989. "He was insinuating that it (regulation) was stifling their creativity; that they could do these wonderful things if only they weren't being regulated."

The testimony also made it clear bond sales were almost the only income American Continental had in late 1988 and early 1989.

Kajode Kajopaiye, then a California thrift examiner, testified he traveled to American Continental's headquarters in Phoenix in October 1988 and found that bond sales amounted to $500,000 to $750,000 daily.

Asked by prosecutors what the company's income sources were, he said "They were coming in from the sale of sub-debts (another term for the junk bonds)." Asked what percentage of the company's income the bond sales represented, he replied "I think it was about 100 percent."

He also concluded that without the junk bond revenue, Lincoln's parent company would be broke by the end of March 1989.

Other testimony from Barabolak indicated that $400,000 given to Cranston's voter registration project came almost exclusively from junk bond funds.

Cranston, a member of the Senate's so-called "Keating Five," is now under investigation along with four others by the Senate Ethics Committee for allegedly intervening with regulators on behalf of Lincoln.

Asked the source of the money given to Cranston's Center for the Participation in Democracy, Barabolak said "from sub-debt sales."

The testimony also revealed Keating as an overbearing boss who even tried to take control of the investigation of his company.