Looking Back

Charles Keating died this week, at 90. If you can, check out the New York Times article about him. Note that nothing has changed, just the names of the players. Here’s a link to the Times article.

My column about him, written in 1999, was the first of my “Installment Biker” columns. Read it below.

PHOENIX. Ahead of me there is a line of stretch limos, all working their way toward the portico where the passengers can step out, watch the attentive staff gather their bags, and admire the abundant sculpture and marble of the Phoenician Resort. We have arrived at one of the most luxurious resorts in Arizona, a place so busy at this time of year that you have to cancel a reservation seven days in advance if you want to avoid a room charge.

And, trust me, you want to avoid a room charge if you aren’t there to enjoy it.

When I called to reserve I was told that their least expensive room was $405 a night. At that rate, just the tax on the room, $42.81, was greater than the $34.45, tax included, I had spent at a Super 8 Motel the night before. Casita Suites here go for up to $1,600 a night and a Villa Suite goes for $3,500 a night.

My own arrival is a bit more modest: I have just ridden from Santa Fe, by way of Flagstaff and Sedona, on a motorcycle. (For bikers: it’s a restored 1978 BMW R100RS, Motorsport edition.) While the bike ran smooth and fast on I-40, mainlining into Arizona against miles of thrown tire casings and caravans of trucks, the protective gear that kept me warm at 75 miles an hour has become a personal sauna since slowing down at the Phoenix city limit.

Now, waiting in line, I feel like a bilge rat attending a coronation.

But I am here for a reason.

Charles Keating built the Phoenician Resort. While most people now associate that name with a popular day-time soap actor whose fans want him back in Another World, the Charles Keating people were talking about ten years ago was a financier.

It was in April 1989 that Mr. Keatings’ empire officially unraveled. Although most assets were seized in April, his two Phoenix hotels, the Crescent and the Phoenician Resort, were taken over in November. By then he had become the best known figure in the mega-billions of the Savings and Loan crisis.

What is the Phoenician Resort like?

Amazing. The hotel is set like a pyramid against Camelback Mountain and cascades down in terraces and pools to a ring of plush casitas that are, in turn, ringed by a luscious golf course. The air is sweetness itself: not overly so, just fresh with a light scent of bougainvillea, hibiscus, and an unexpected hint of anise. Here, the manic possibilities of the senses stir.

In the lobby bar, which overlooks the city of Phoenix, the snack menu offers “Beluga caviar with potato crisps and lemon” for $250. To be sure, the Beluga is the most expensive item on the menu. But it sets the tone.

Described in a 1990 article as “a hotel that would make even Donald Trump blush”, the Phoenician occupies 130 acres and has 604 rooms. The marble in the lobby was taken from the same quarry in Italy that Michelangelo used for the Pieta. The chandeliers are gold leafed. The 22,000 square foot spa includes a Meditation Center and a menu of treatments that runs from 110 minutes of “Serenity Seaweed Scrub and Wrap” for $180 to pre and post plastic surgery treatments, Tarot card readings ($100 for 90 minutes), and consultations on Lifestyle Management.

Mr. Keating was well positioned to contemplate taking luxury to this level. With six relatives as top executives at the company he controlled, American Continental, as well as his wife on the payroll, the Keating family made $34 million between 1984 and 1989. Against that background, spending $150 million of government insured money on the Phoenician seems modest.

And, if fact, it is. Ironically, the Phoenician Resort could have disappeared as accountants rounding error when the full size of the lending and deal-making debacle was revealed. In addition to the more than $200 million investors lost in American Continental junk bonds, authorities estimated that it would cost somewhere between $2 and $2.5 billion to clean up the mess at Lincoln Savings, a subsidiary of American Continental.

The $2 billion, or whatever, came from taxpayers like you and me.

Charles Keating has been tried, convicted, and jailed. He was also released after 4 ½ years in prison when his convictions were overturned. His financial empire is gone. His house was taken in foreclosure. His corporate possessions were sold at auction: artwork and rugs can be found here and there in offices and homes throughout Phoenix.

The Phoenician, however, remains— although it is now part of the Luxury Collection of ITT Sheraton. It is getting ready for the Millennium. Rooms, I learned, start at $490 a night, and some are still available (five night minimum) for the Millennium Celebration.

Sorry, there is no discount for taxpayers.