A Superior Court judge dismissed 12 of 46 criminal fraud counts against former Lincoln Savings and Loan operator Charles H. Keating Jr. and three associates on Friday.
Judge Lance Ito, in his ruling, said prosecutors had failed to present enough evidence to warrant the dozen charges.All the counts in the grand jury indictment will remain in effect, Ito said. He set a trial date of Aug. 2.
Keating and the three associates are accused of scheming to defraud investors by selling them now-worthless junk bonds without telling them that the bonds were risky and uninsured.
Keating, 66, is the former owner of Lincoln Savings and Loan, which was based in Irvine, Calif. Lincoln was seized by regulators in April 1989, one day after its parent, American Continental Corp., declared bankruptcy.
The Lincoln bailout is expected to cost taxpayers more than $2 billion, the most expensive on record.
Keating and his three co-defendants - Judy Wischer, 42; Ray Fidel, 32; and Robin Symes, 37 - were arrested in September. All remain free on bail, although Keating spent more than a month in jail before his bail was cut from $5 million to $500,000.
Ito had agreed with defense attorneys in early November that the language in 22 counts of the original 42-count indictment did not allege a crime, but he did not dismiss the charges. Instead, he gave prosecutors the opportunity to refile the charges.
That amended indictment made the language more specific in the 22 counts and added four new counts to the criminal fraud accusations.