Ex-Banker Is Indicted in Alleged Stock Scam : Fraud: Prosecutors charge John (Whitey) O’Donnell, the former president of a Torrance bank, with selling shares of a nonexistent stock.

A federal grand jury indicted a former Torrance banker on 34 counts of fraud and money laundering Thursday for allegedly bilking at least two dozen South Bay doctors, lawyers and a prominent Superior Court judge of more than $4.3 million.

John (Whitey) O’Donnell, former president of Republic Bank in Torrance and a one-time official with the Federal Deposit Insurance Corp., faces up to 200 years in federal prison and an $18-million fine if convicted on all charges, Assistant U.S. Atty. John F. Libby said.

Federal agents also have seized O’Donnell’s personal bank accounts and his $1.3-million home in Dallas, Tex., which allegedly was purchased with proceeds from the investment scam.

O’Donnell, who is in custody in lieu of $400,000 bail, is scheduled to appear in federal court Monday to enter a plea to the indictments, said deputy federal public defender Drew Edwards.

Edwards was assigned to the case Wednesday and said he could make no further comment until he had a chance to become more familiar with it.

According to an FBI affidavit filed in support of search warrants on O’Donnell’s home and offices, the former banker persuaded investors to put money in a nonexistent stock options mutual fund that promised returns of as much as 25% in 30 to 45 days.

At the alleged scam’s peak last year, a prominent South Bay defense attorney, William MacCabe, had introduced 20 of his friends and business associates to O’Donnell’s investment pool, including Judge Cecil J. Mills, supervising judge of the Los Angeles Superior Court’s criminal division.

Libby said Thursday that O’Donnell also helped MacCabe set up investment pools secured by liens against South Bay real estate worth about $2 million. Homeowners who put up their houses to secure the pool’s investments were paid 2% of the value of their property each month, Libby said.

The liens since have sparked a civil lawsuit between one of the investors and MacCabe, Libby said.

MacCabe did not return telephone calls seeking comment Thursday.

O’Donnell was president and chief executive of Torrance-based American Republic Bancorp and its Republic Bank unit until May, 1990. At that time he abruptly resigned, telling the firms’ boards in a letter of resignation that he “may have inadvertently engaged in activities which appear to be inconsistent with company policy,” officials said at the time. They would not elaborate.

He began soliciting South Bay investment clients in May, 1991, for a stock option fund he said was operated by Dreyfus Management Inc., a well-known investment firm in New York.

Investors did not discover until December, 1992, that no such fund existed and that O’Donnell had never invested any of the money with Dreyfus.

Instead, prosecutors charge, he used money from new investors to pay profits to previous investors, took some of the larger deposits to buy himself a palatial home in Dallas and transferred other investments into Swiss bank accounts for himself.