WASHINGTON -- The law firm that represented Charles Keating and his failed Lincoln Savings and Loan Association Thursday signed an agreement under which it will pay the government $41 million to settle charges it improperly witheld information from regulators.
The law firm of Kaye, Scholer, Fierman, Hays & Handler, one of the largest in the country, admitted to no wrongdoing but promised to follow a list of government guidelines in future cases involving the thrift industry.
The firm's managing partner, Peter Fishbein, and partner Karen Katzman were prohibited from working on cases involving government- insured thrifts and barred from practicing before the Office of Thrift Supervision.
Another partner, Lynn Fisher, was ordered to 'cease and desist' from improper activities with which the law firm was charged.
The agreement reached between the OTS and the law firm calls for the firm to pay the Resolution Trust Corporation $25 million on March 31 and an additional $16 million in installments of $4 million during the the following four years. The law firm also must pay interest.
The law firm on March 8 agreed in principal to settle the suit after the government moved to freeze its assets, which could have led to the firm's collapse.
The firm insisted it did nothing wrong, saying it was forced into the settlement by the government's move against its assets, a tactic usually reserved for criminal defendants such as drug dealers and tax cheats.
It was the first time the tactic has been used in the government's ongoing prosecution of law and accounting firms linked to the thrift industry scandals.
'We want to make it unmistakably clear that nothing in our agreement to the order should be construed as an admission of any improper conduct,' Paul J. Curran, a member of the Kaye, Scholer's Executive Committee.
'We were fully prepared to defend vigorously our actions and the legal and ethical principles involved. However, the financial constraints that resulted from the OTS action made it impossible to pursue such protracted litigation and made it necessary to settle this matter promptly.'
Kaye, Scholer had represented Lincoln Savings, of Irvine Calif., and its then-chairman Keating. The bank and its former chief have become the most visable symbols of the shakeout, which rocked the once-high flying thrift industry.
The government contended the law firm's lawyers knew of Lincoln's risky underwriting practices and failed to disclose that knowledge to authorities. It also said the lawyers knew Lincoln had illegally overstated its financial position and had purged incriminating documents from its files to hide them from thrift regulators.
The law firm contended it was bound by the legal profession's traditions of attorney-client confidentiality.
Lincoln and its parent company, Phoenix-based American Continental Corp., collapsed April 1989 in the largest thrift failure in U.S. history, costing taxpayers $2 billion.
Keating was convicted of fraud in a California state court last December and faces a prison term when he is sentenced April 10.
