Lincoln Ex-Counsel Admits Role in Conspiracy : Thrift: Mark S. Sauter pleads guilty to a federal charge of conspiring to deceive regulators by altering loan files.

LOS ANGELES —  Mark S. Sauter, a former attorney for Lincoln Savings & Loan and its parent firm, pleaded guilty Monday to a federal charge of conspiring to deceive regulators by altering the loan files of the Irvine-based thrift.

The plea was entered in U.S. District Court here as part of a bargain agreement with the U.S. attorney’s office in which Sauter is expected to testify against former Lincoln owner Charles H. Keating Jr. and other top officials of the thrift and its parent firm, American Continental Corp. of Phoenix.

American Continental filed for bankruptcy in April, 1989; regulators seized the thrift a day later. The company is being liquidated, and regulators sold Lincoln’s branch system earlier this month. Regulators estimate that Lincoln’s is the nation’s biggest thrift failure, costing taxpayers $2.6 billion.

Sauter, 37, was charged Friday with conspiracy to defraud regulators by helping stuff the thrift’s loan files by adding documents after loans had been made and later “knowingly and willfully” lying to regulators to cover up the conspirators’ actions.

“He is the first Lincoln official to admit to criminal complicity in a scheme to defraud federal examiners,” said David A. Sklansky,) an assistant U.S. attorney.

Sauter faces a maximum penalty of five years in prison, a $250,000 fine and payment of an undetermined amount of restitution.

The charge arose from a continuing federal grand jury investigation whose targets are Keating, the former chairman of American Continental, and others. Sauter is the second high-ranking executive and third defendant to enter into a federal plea bargain.

Earlier, former Lincoln President Ray C. Fidel pleaded guilty to two counts of securities fraud, admitting that he sold risky American Continental bonds to two customers as “safe, conservative” investments when he knew the company was considering filing for bankruptcy. Major Lincoln borrower Ernest C. Garcia II of Tucson has pleaded guilty to bank fraud relating to a complicated deal in which he essentially functioned as a straw man to hide illegal Lincoln activities.

Any information that Sauter provides to the government is likely to cover the actions of Keating and former American Continental President Judy J. Wischer.

Sources said that Wischer is suspected of heading a “SWAT team” of employees who went to Lincoln headquarters in Irvine from Phoenix to alter badly maintained records before regulators could see them.

The charge in the information filed against Sauter says that in March, 1986, he and others learned that regulators were about to examine Lincoln’s loan files, which “did not meet regulatory standards” and were evidence of “unsafe and unsound” practices.

The information alleges that “certain officers and directors . . . deliberately created documents for insertion in the loan files,” undated documents among them.

In normal circumstances, credit reports and other documents are supposed to be reviewed by lenders before a loan is made to ensure that a borrower can and will repay the loan.

Regulators have charged that Lincoln was making huge loans for acquisition, development and construction on raw land with little or no original documentation. Keating has acknowledged in previous testimony in a federal court hearing in Washington that credit reports, for example, were not needed or useful for the types of loans Lincoln was making.