It's fitting, probably, that the show-business capital of the world should be the site of the first trial of financier Charles H. Keating Jr. From the start, Keating's trial has been good theater. On the first day of jury selection, an elderly widow accosted Keating in the front of the courtroom, shouting that he had robbed her of her life savings. A few weeks later, another irate investor, cable-TV talk-show host Skip Lowe, bopped Keating on the shoulder with a powdered wig. In the courthouse hallways, angry bondholders chanted: "Mr. Cheating, where's our money?"

The curtain draws near, but only for Act I. The case, where two months of testimony have concluded, tackles a narrow slice of the complex charges against Keating in connection with the 1989 failure of Lincoln Savings & Loan Assn., which will cost taxpayers some $2.6 billion. It's the first step in a legal gauntlet for Keating, who has come to symbolize the nation's massive S&L crisis.

Amid all the uproar, serious issues are at stake. The Los Angeles County criminal trial focuses on whether Keating defrauded 18 of the more than 20,000 buyers of $250 million of bonds sold by Lincoln's parent, Phoenix-based American Continental Corp. Prosecutors have pinned their case on proving that Keating failed to disclose to investors the sorry state of American Continental's finances and its tangles with regulators.

NO SMOKE. Keating's defense is that he wasn't directly involved in bond sales and that he relied on advice from lawyers and accountants about the bonds. Defense lawyer Stephen C. Neal adeptly used his cross-examination to elicit testimony favorable to Keating from some prosecution witnesses. Then the suave, 42-year-old Chicagoan surprised courtroom observers by resting his case on Nov. 7 without calling any defense witnesses. He says he didn't need to: "The prosecution hasn't come close to proving what they have to prove" -- that Keating knowingly and intentionally defrauded the 18 bondholders named in the case.

Prosecutors concede that they found no smoking gun to link Keating with fraud. But they contend that the mosaic they pieced together from the evidence of more than 50 witnesses clearly shows Keating calling the shots for a bond-sales program that relied on deceiving naive investors. Former employees told of trips to Phoenix, where Keating exhorted them to sell more bonds. A parade of elderly investors told how bond salesmen working at Lincoln branches persuaded them to cash out of certificates of deposit and buy uninsured American Continental bonds.

Some of the strongest prosecution testimony came from former Lincoln President Ray C. Fidel, who in March pleaded guilty to six fraud counts. He testified that when he told Keating that regulators insisted on moving bond sales out of Lincoln branches, Keating replied: "Can't we cheat?" If found guilty, Keating could face up to 10 years in prison and fines of $250,000. But his problems will hardly stop there. He faces a host of civil cases in Arizona, the Securities & Exchange Commission may sue, and federal indictments have long been expected.

Keating, resplendent in his expensive suits and silk ties, isn't the only regular in the dingy Los Angeles courtroom. So is Mike Lappin, 76, a retired actor from Sherman Oaks, Calif., who three years ago invested his $35,000 life savings in American Continental bonds. He says the bond fiasco has been "heart-rending." And now, like Keating, Lappin is anxiously awaiting the verdict.

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