126/ Corrupt Organizations statute ("RICO") but the real impact of that lawsuit has not been its allegations (which merely rehash further the allegations of the various FHLBB examinations, cast in a new form) but rather the manner in which it was filed and has been prosecuted. Stories began to appear in the media as early as June of 1989 that federal authorities were investigating ACC and its subsidiaries to determine whether ACC executives had made false reports to federal regulators or profited from loans to insiders of Lincoln. By July 1989, the media was reporting that federal regulators had said that they were looking at the possibility that Lincoln and ACC had used fraudulent transfers of funds and fraudulent accounting methods to make Lincoln appear healthier than it really was. The prefiling media campaign intensified in early August 1989 when reports surfaced that the FDIC had reportedly targeted Charles H Keating, Jr. and were contemplating the filing of a RICO lawsuit. Throughout August 1989, those reports intensified as the media continued to quote named and unnamed federal regulatory sources and lawyers representing the RTC. Throughout August and early September media reports of various aspects of the federal investigation of Lincoln and ACC continued to proliferate, culminating in the middle of September when news accounts around the country began to state that federal regulators were shortly expected to file a civil racketeering lawsuit against ACC executives. On September 14, 1989, the day before the RICO action was filed, various newspapers and other media reported that the racketeering suit was imminent and some reports gave factual accounts of the allegations of the as yet unfiled complaint which were accurate enough in their descriptions of the document to lead to the conclusion that advance copies of. the complaint had been leaked to certain select media. Inevitably, the media treatment of the preannouncements of the RICO lawsuit prominently featured the use of the term 'racketeering in describing the conduct ascribed to ACC and its executives by the federal regulators. Public exposure of charges before they are formally made, liberally salted with pejoratives such as "racketeering" can only be viewed as an effort to poison public opinion and to make as inhospitable as possible the public climate surrounding persons who had yet to be sued for anything by the federal regulators. Moreover, the named defendants in the RICO action that was filed on September 15, 1989, were not limited to ACC entities and executives. The federal regulators also named as defendants the spouses of the named defendants, taking care to name as many members of the Keating family as possible without charging any of the spouses with any wrongdoing whatsoever. R 000305 The federal regulators' campaign of harassment reached new depths in the wake of the filing of the RICO complaint. After an agreement had been reached between counsel to avoid the need and expense of personal service of the summons and complaint, the RTC directed that the summons and complaint be served upon the individual defendants on a Thursday evening, apparently calculated to assure that such service could be accomplished openly before the eyes of spouses, children, and neighbors of the defendants who, based on assurances by the federal regulators' lawyers, were to be spared the embarrassment of such intrusive service of process. Thus, since at least midsummer 1989, the RICO action has served the purposes of the federal regulators less as a lawsuit than as a vehicle and excuse for publicly pillorying defendants, humiliating them and their families, and permitting the media to ac. as billboards for the federal regulators' campaign of harassment and innuendo. Not satisfied with the embarrassment imposed on ACC officers' spouses, children and neighbors in connection with the service of the RICO complaint, in contravention of agreements reached with their counsel concerning such service, the regulators repeated this tactic on November 20, 1989, again unnecessarily. As noted above, a series of hearings is scheduled to begin on or about December 7, 1989 in the United States District Court for the District of Columbia in connection with ACC and Lincoln's claims that the FHLBB-imposed conservatorship and receivership were without lawful grounds. At the November 8 and 9 hearings at which these hearings were scheduled, ACC's counsel assured the Court of ACC's cooperation in making witnesses available. Counsel repeated those assurances to the RTC's counsel on November 13, 1989. Inexplicably, RTC counsel stated their intention to serve subpoenas on these individuals nonetheless. What they didn't say was that they intended to do so in a manner and at a time designed to cause the maximum personal embarrassment and discomfort. Subpoenas were in fact served at the individuals' homes between 7:00 a.m. and 9:00 a.a. on Sunday morning, November 20, 1989 and attempts were even made to serve Keating in the midst of his appearance before the House Banking Committee and the public on national television, notwithstanding that Keating's counsel had already agreed to accept service, and in fact, had accepted service on his behalf. CONCLUSION As set forth above, almost since the time ACC acquired Lincoln in 1984, ACC and Lincoln have been the victims of unprecedented regulatory excesses which have severely damaged ACC and Lincoln and led ACC to file the Chapter 11 case in which it 135 now operates. The continued abuses of regulatory process, which, ACC fears, are designed more to justify the enactment and funding of broad legislation restructuring the savings and loan industry than to pursue legitimate regulatory goals, will continue to obstruct ACC's efforts to confirm a plan of reorganization if not checked. ACC continues to be committed to reorganization and, thereby, satisfying the claims of its creditors. To do so, however, it must have the similar commitment of the parties in interest in a climate in which facts, and not innuendo, are the basis for decisions. Dated: December ., 1989 Respectfully submitted, WYMAN BAUTZER KUCHEL & SILBERT By: /a/James J. Feder Ronald L. Fein Marilyn J. Pried William S. Rose, Jr. 213-556-800 R 000307 TABLE OF EXHIBITS Letter from David M. Serxner, Supervisory Agent of the FHLBB, Eleventh District, to the Board of Directors of Lincoln, dated November 8, 1982, concerning Lincoln's declining operating performance prior to ACC's acquisition. Application of ACC on Form H-(e)l to acquire Lincoln (the "Application"), excluding exhibits. Exhibit Number A. The initial Application, dated October 13, B. Amendment #1 to the Application, dated Application of ACC on Form H-(g) for the issuance of debt ("the Debt Application"), A. The initial Debt Application, dated B. Amendment #1 to the Debt Application, Correspondence between counsel for ACC and the ACC's application to acquire Lincoln. Revised Lincoln Operating Plan filed with the with the FHLBB, dated November 16, 1984. Letter from Alan Greenspan to the FHLBB, dated November 1, 1984, concerning the proposed direct investment rule. Declaration of Joseph Kotrys, examiner in charge Minutes of the ERC meetings of February 22, 1988 and March 14, 1988. Memorandum of Conference Call Meeting, dated February 16, 1988, 4:05 p.m. (PST), among Agreement and Memorandum of Understanding among 7 8 9 A. The Memorandum of Understanding. B. C. The Agreement. Letter from Rosemary Stewart, Director Merk randum from the ERC to the FHLBB, dated April 30, 1988, summarizing the findings and recommendations of the ERC with respect to Lincoln. Tax Preparation and Allocation Agreement between Let ers from Darrel W. Dochow, Acting Principal Let ar from the California Department to Lincoln, and Master Sublease between Lincoln and ACC, 10A 108 10C 11 12 13 14 R000309 |