Ex-Republic Bank President Pleads Guilty in Fraud Case : Investments: Former Redondo Beach man changes plea to federal charges he ran a bogus securities pool that bilked friends and associates of more than $4 million.

James B. (Whitey) O’Donnell, former president of Republic Bank in Torrance, has pleaded guilty to federal charges that he ran a bogus investment pool that bilked more than $4 million out of 30 friends and associates, including the chief criminal judge of Los Angeles Superior Court.

Dressed in a jail-issued blue T-shirt and slacks, the silver-haired and bespectacled O’Donnell uttered “yes” and “guilty” in a soft, occasionally cracking voice Tuesday as the money laundering and mail, wire, bank and securities fraud charges were read to him in U.S. District Court in Los Angeles.

O’Donnell, 58, formerly of Redondo Beach, faces a maximum sentence of 155 years in prison and a $7.4-million fine, although the prosecutor and O’Donnell’s attorney agreed he would likely receive a sentence significantly less than that. U.S. District Court Judge Dickran Tevrizian set sentencing for July 26.

Posing as an agent for the New York investment house of Dreyfus Management Inc., O’Donnell admitted he set up bogus investment pools that promised investors large returns in short periods.

The investors included Los Angeles Superior Court Judge Cecil Mills, supervising judge for the courts’ criminal division. Mills could not be reached for comment. Other investors included doctors, lawyers and other professionals, mostly from the South Bay.

The scheme allowed O’Donnell to purchase a $1.3-million gated house in Dallas, property which the Justice Department has seized, Assistant U.S. Atty. John F. Libby said.

At the time of his arrest, O’Donnell was making plans to travel to Switzerland, where he held bank accounts, according to an FBI affidavit filed with the case.

The bank fraud charges stemmed from $550,000 in unsecured loans O’Donnell had obtained from Republic Bank between 1986 and May, 1990, while he was still president. Libby said the bank fraud was a scheme separate from the bogus investment pools.

O’Donnell abruptly resigned from the bank in May, 1990. In January, 1992, the Federal Deposit Insurance Corp. barred O’Donnell from “participation in the affairs of Republic Bank or other institutions,” according to court documents.

O’Donnell originally had pleaded not guilty to all of the charges, but prosecutors said he changed his plea Tuesday in the face of the government’s evidence, including affidavits from the victims and a letter to Libby from Dreyfus stating that the firm had no such investment pools.

“He didn’t feel he could win the case,” O’Donnell’s attorney, Richard A. Walton, said outside court in explaining the change of plea.

“His primary objective is to restore (the investments of) the so-called victims,” Walton said.

After O’Donnell completes his sentence, he plans to ensure that the investors “get every penny back,” Walton said.

Walton said he did not know what motivated O’Donnell to concoct the scheme.

At least seven investors have filed civil suits against O’Donnell to recoup lost funds, but neither Walton nor Libby knew for sure how many people had been bilked or for how much. Prosecutors will calculate that sum before sentencing to help persuade the judge to order O’Donnell to pay restitution, Libby said.

Some investors made money from the scheme because O’Donnell returned some investments, plus interest, to persuade others that the pools were legitimate, according to court papers. Libby said it is unclear if they will have to forfeit the earnings.

Federal prosecutors placed the value of the bogus investment pool at $2.3 million, with an additional $2 million in investments secured by liens against real estate.

Investors said this week they were relieved that O’Donnell had pleaded guilty, and some were embarrassed at being duped into the scheme.

“I’m just happy (the federal case) took place. God knows he deserves it,” said D. Pat Slavens, a Torrance dental surgeon who met O’Donnell through their wives. He declined further comment.

The amount of individual investments ranged from $10,000 to $150,000, according to court documents.

O’Donnell told the investors that he had access to non-public “preferred customer option pools” at Dreyfus that could earn a profit of as much as 25% within 30 to 45 days, according to an FBI affidavit filed with the case.

O’Donnell told the investors he would place their money in the pools. Instead, prosecutors said, he used the funds from new investors for his personal use and to pay previous investors interest or capital appreciation.

The scheme began to unravel in December last year when an investor visited New York and met with a Dreyfus associate, who said he knew nothing about the pools. Dreyfus then alerted federal authorities about O’Donnell’s activities.

But O’Donnell continued the pool, the following month urging an investor to get in the pool.

He was arrested in Dallas in February after investigators learned that O’Donnell planned a trip to Zurich, Switzerland. He was indicted in March.