Keating Trial Opens With a Confrontation : * Court: Bondholder grabs former owner of Lincoln S&L; and screams for her money back. He faces charges of fraud in thrift’s collapse.

LOS ANGELES —  An elderly woman, who allegedly lost thousands of dollars because of the failure of Lincoln Savings & Loan, provided sparks on the first day of a fraud trial of former owner Charles H. Keating Jr. when she grabbed the executive by the lapels and screamed at him to return her money.

“Mr. Keating, you took all my money away!” the woman yelled. “What happened to my money? I can’t work anymore!”

Keating was taken aback by the confrontation with the bondholder, who identified herself later as Sarah Mandrell of Hollywood. She said she is 90 and has lost $100,000 in bonds.

But a neighbor who brought her to court identified the woman as Sarah Solomon, a bondholder who is about 80 years old and has lost a $5,000 investment.

Bailiffs, who pulled the woman away from Keating, said no charges will be brought against her.

The confrontation occurred just after proceedings recessed in Superior Court in the securities fraud trial against Keating, who was chairman of Lincoln’s parent company, American Continental Corp. in Phoenix.

Abbe David Lowell--attorney for co-defendant Judy J. Wischer, former president of American Continental--said the tiny, bespectacled woman “threw a right jab to my stomach” as she pushed the lawyer out of the way to get at Keating.

After the incident, Superior Court Judge Lance A. Ito returned to the bench and said that because of concern for the safety of the defendants and their attorneys, he was ordering increased security, possibly including electronic searches.

Keating is accused defrauding 20 small investors of $1.8 million by misleading them about the safety of American Continental bonds and the financial health of the company and its Irvine thrift. If convicted on any of six counts, he would face 10 years in prison.

The victims represent thousands of Lincoln depositors who bought nearly $200 million in bonds at the S&L;’s Southern California branches. They lost their money in April, 1989, after the company went bankrupt and regulators seized Lincoln, the biggest thrift failure to date in U.S. history, with an estimated taxpayer cost of $2.6 billion.

In the hallway outside the courtroom, some of the elderly bondholders who sat in court enlisted the help of young bystanders to jeer Keating as he walked out of the courtroom, with taunts of “Give her back her money!”

Opening statements and testimony in the first criminal trial stemming from the Lincoln scandal will not start before the last week of August. Attorneys must first review 300 to 500 prospective jurors to select 18 or 20 deemed impartial and able to remain for a trial of up to six months.

Judge Ito must still rule on a major issue that he said continues to perplex him. He said he needs more time to determine what standard prosecutors should be held to in trying to prove Keating’s guilt.

William W. Hodgman, the lead deputy Los Angeles County district attorney, acknowledged after the court session that there is “a certain vagueness in California law” about the standard, so the prosecution’s theory of the case would depend on how Ito rules.

The prosecution contends that Keating could be criminally liable from his “failure to control corporate misconduct” in the sale of bonds. By his very position and ability to control how bonds were sold, prosecutors contend, he would be liable for what the sales force did.

But defense attorneys contend that such a standard is a disguise for the so-called vicarious liability standard that Ito has already rejected. Under vicarious liability, an employer can be held responsible for the acts of an employee, even though he did not know what the employee had done.

Wischer will be tried separately. Ito tentatively scheduled her trial for Jan. 13.

He also dismissed, at Hodgman’s request, one of the counts in the state court’s indictment against Keating and Wischer, leaving the prosecution with 20 counts of making false statements or omitting material information in the sale of the bonds.

In addition to the state case, several federal grand juries have been investigating allegations that Keating and his top aides looted Lincoln.

Keating is also fighting dozens of civil suits stemming from his running of Lincoln.