American Financial Corporation
While officially an outside lawyer, Keating functioned as a public face for Carl Lindner and American Financial Corporation and the two were close associates on business as well as legal matters; Lindner would sometimes refer to Keating as a "founder" of American Financial. The company had easy access to credit lines, which allowed it to continually grow. The web of transactions involving the company and its subsidiaries was large and complex, and one stock analyst later said in 1977 that he had "never come across a company that has so much strange paper on its books."
Keating left his law practice in 1972 and formally joined American Financial Corporation, by now a $1 billion enterprise, as executive vice president. Keating became Lindner's hatchet man, in charge of firing employees from newly acquired companies. Within business circles Keating gained a reputation for aggressiveness and arrogance. Keating also took on an operational involvement in The Cincinnati Enquirer, the town's only morning newspaper. To some on the paper, he interfered in editorial decisions, such as adding coverage to high school sports that he or Lindner's sons were involved in. The paper was then sold to a group including his brother William, who had been a Republican congressman from Ohio's 1st congressional district in the early 1970s. Keating was involved in American Financial's 1974 sale of Bantam Books and its decision that year not to enter the investment banking field.
By 1975 and 1976, several stockholder lawsuits were filed against American Financial, and Keating was under fire for aspects involving unsecured loans, stock warrants, and the sale of the Enquirer. The Securities and Exchange Commission launched a major investigation of the company and charged Lindner, Keating, and others with having defrauded investors for their own benefit and filing false SEC reports. At particular issue was a $14 million loan that the SEC said was made on preferential terms.
Keating resigned from American Financial in August 1976, with conflicting stories regarding the reason and whether he remained close to Lindner or had a falling out with him.
Read more about this topic: Charles Keating
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