Ex-Banker Allegedly Bilked 25 Investors of $2.3 Million

The returns seemed astronomically good: In just 30 to 45 days, a former South Bay banker promised, investment clients could expect to make as much as 25% on their money.

The deal, federal prosecutors say, was too good to be true.

Federal fraud charges have been filed against John Bennett (Whitey) O’Donnell, former president of Republic Bank in Torrance. Prosecutors say O’Donnell bilked at least 25 South Bay residents--including the supervising judge of the Los Angeles Superior Court’s criminal division--of more than $2.3 million by persuading them to invest in a nonexistent stock options mutual fund.

Instead of investing his clients’ money, prosecutors charge, O’Donnell used it to buy a $1.3-million Dallas home and to fill Swiss bank accounts for himself.

O’Donnell did not respond to messages left at his Dallas home and an office he maintained in Gardena. His attorney, James Chalfant, said the allegations against O’Donnell are flawed, but he would not elaborate.

At the alleged scam’s peak last year, a prominent South Bay defense attorney had introduced 20 of his friends and business associates to O’Donnell’s investment pool, including Judge Cecil J. Mills, who supervises the handling of criminal cases in Los Angeles Superior Courts.

The biggest single investor was a Manhattan Beach woman who wired $160,000 into O’Donnell’s bank account after he told her a deadline was nearing for the deal, officials allege.

O’Donnell appeared last Friday in Dallas federal court, where a magistrate set bail at $100,000. A court clerk said O’Donnell posted $5,000 bond and was released pending a federal court hearing in Los Angeles this week.

O’Donnell’s lawyer said he believes the investors will be paid.

“The government has put its case together in a big hurry and they’ve made a lot of mistakes,” Chalfant said.

FBI special agents searched O’Donnell’s home and offices last Thursday, Assistant U.S. Atty. John Libby said. Results of the searches were not disclosed.

O’Donnell, a former official with the Federal Deposit Insurance Corp., was president and chief executive of Torrance-based American Republic Bancorp and its Republic Bank unit until May, 1990. He resigned, saying in a letter that he “may have inadvertently engaged in activities which appear to be inconsistent with company policy,” company officials said. They would not elaborate.