LOS ANGELES, NOV. 9 -- A judge dealt a setback today to the prosecution in Charles H. Keating Jr.'s securities-fraud case, ruling the language of half of the counts against the former head of Lincoln Savings and Loan Association failed to specify any crimes.
Superior Court Judge Lance Ito rejected a defense bid to throw out any of the 42 charges contained in an indictment against Keating and three codefendants but did order prosecutors to amend the counts.
The defense had sought dismissal of the entire indictment on grounds that the charges were not specifically defined.
After a day of arguments in court, prosecutors conceded the language in half the charges needed to be rewritten. Ito gave them until Nov. 19.
The judge agreed with the defense that those counts did not allege any specific crimes. The defense can again seek a dismissal of the case after the counts are rewritten.
The judge found the language in the first 20 counts specific enough.
Deputy District Attorney William Hodgman said that when he amends the indictment, it is likely to result in about 10 new counts.
But Steven Neal, Keating's attorney, likened the indictment to "a homicide indictment which doesn't state who the defendant is charged with murdering."
Pushing for dismissal, Abbe Lowell, who represents codefendant Judith Wischer, said allowing the prosecution to amend the language of the 22 charges would "make a mockery of the grand jury process."
The judge disagreed.
Keating, 66, former head of the now-defunct Irvine, Calif.-based Lincoln Savings, and three associates were indicted in September on charges of defrauding 23,000 investors out of $250 million in the sale of worthless "junk" bonds -- high-yielding but risky financial instruments.
The indictment charges the four defendants with 42 state securities- fraud counts for allegedly scheming to sell the junk bonds issued by Lincoln's parents, American Continental Corp., without telling investors the bonds were high-risk and uninsured.