A judge on Friday ordered the dismissal of more than half the securities fraud charges against Lincoln Savings and Loan mogul Charles H. Keating Jr. unless prosecutors can amend them to his satisfaction.
Defense attorneys had urged Superior Court Judge Lance Ito to dismiss all 42 counts, contending in a dismissal motion that they were flawed by vagueness and technical problems.Ito agreed that 22 of the 42 counts were flawed. But he gave prosecutors until Nov. 19 to submit a revised indictment.
Keating, the former head of American Continental Corp., was jailed for 33 days on a 42-count indictment. He posted a reduced bond of $300,000 last month.
The next hearing in the case was set for Dec. 3.
American Continental controlled the Irvine-based Lincoln Savings and Loan Association. Experts have estimated Lincoln's failure may cost taxpayers $2 billion, making it the costliest thrift failure yet.
Keating and three of his executives are accused of deceiving investors about the safety of $250 million in now worthless "junk bonds" sold at Lincoln branches. Many elderly bond buyers lost their life savings.
If convicted, the defendants each could receive a maximum prison term of 10 years.
Prosecutors and defense attorneys disagreed over how severe a blow the government suffered in its case.