Kings’ McNall Reportedly Will Plead Guilty to Fraud : Business: Sources say agreement stems from U.S. bank probe. Cooperation with authorities may shorten term.

Los Angeles Kings President Bruce P. McNall, the sports entrepreneur credited with turning Southern California on to professional ice hockey, has agreed to plead guilty to four criminal counts stemming from a federal bank fraud investigation, sources close to the case confirmed Tuesday.

McNall, hailed as recently as a year ago as one of the nation’s most successful and innovative sports executives, has signed a draft agreement negotiated by his lawyers and federal prosecutors. That agreement calls for guilty pleas to one count of bank fraud, two counts of mail fraud and one count of conspiracy, the sources said. A federal grand jury has been investigating McNall for allegedly falsifying loan documents.

Although it is possible for McNall to receive probation from a judge, sources with knowledge of the agreement said that was unlikely, adding that under federal sentencing guidelines and the current plea, McNall probably would face a maximum prison sentence of six to nine years.

That sentencing ceiling could be lowered, however. It would depend on such factors as assistance he provides authorities in investigating his business associates and lenders, repayments made to creditors and his degree of culpability for certain losses from his business operations.

Asked about the agreement, Tom Pollack, McNall’s criminal defense lawyer, said: “We have had discussions with the government. At an appropriate time, there will be more information.” McNall has been making no public statements on his situation, allowing Pollack to speak for him.

Authorities with the U.S. attorney’s office declined to comment.

McNall would most likely enter a formal plea no earlier than mid-September, with sentencing sometime next year, the sources said. For the moment, McNall has no plans to leave his post as Kings’ president, the sources said.

McNall, 44, was sole owner of the Kings from 1988 until May, when he was forced to sell a 72% interest in the team to investors Jeffrey Sudikoff and Joseph Cohen because of severe financial problems that eventually led to his filing for protection from creditors in U.S. Bankruptcy Court. McNall remains a minority partner in the team.

Once a brash, free-spending executive, McNall brought glitz to the Kings. He boldly acquired superstar Wayne Gretzky from the Edmonton Oilers in 1988 in what remains the sport’s most significant trade ever. Celebrities were drawn to the team, and soon McNall was mingling at games with actors, actresses and former presidents. Such film stars as Kevin Costner were known to show up in the Kings’ dressing room to meet the players.

His Canadian football team, the Toronto Argonauts, became trendy, too, after McNall signed former Notre Dame star Raghib (Rocket) Ismail. The Argonauts won the Canadian Football League’s Grey Cup the first year McNall owned the team and the Kings nearly won the Stanley Cup, losing the 1993 finals in five games to the Montreal Canadiens.

McNall swiftly moved into a position of power in the National Hockey League, and was elected in June, 1992, to the post of chairman of the league’s board of governors. He then personally courted such prominent executives as Walt Disney Co. Chairman Michael D. Eisner of Anaheim’s Mighty Ducks and Blockbuster Video mogul H. Wayne Huizenga of the Florida Panthers, helping to bring both teams into the league last season.

The gregarious and quotable McNall became a celebrity, lauded as one of the country’s most accessible sports team owners. He became an adept public speaker and turned his gift of gab into yet another business venture, lecturing audiences a little more than three years ago for $48 a head on “Turning Your Passions Into Profits.”

Even before venturing into the high-profile world of sports, McNall was one of the most important figures in the business of ancient coin trading. He put himself on the map by spending a then-world record of $420,000 on an ancient coin called the Athena decadrachm at a Swiss auction in 1974.

McNall also became a partner in a movie production business that produced such hits as “The Fabulous Baker Boys” and “Weekend at Bernie’s.”

In a separate development Tuesday, securities giant Merrill Lynch, moving to distance itself from McNall’s legal problems, confirmed that it has settled lawsuits filed on behalf of 3,500 investors in three ill-fated partnerships it organized with McNall that invested in rare coins and ancient art.

A Merrill Lynch spokesman said that the company expects to eventually pay between $20 million and $30 million. A source familiar with the agreement put the settlement amount at around $35 million. Merrill Lynch said that it is “extremely concerned” that McNall’s problems could hurt investors in the funds. McNall is the former managing general partner of the funds.

For Merrill Lynch, the coin funds case has mushroomed into a public relations problem in the past six weeks. The Times disclosed in early July that 399 coins bought for $3.3 million are mysteriously missing from the funds and that investors are suing over the matter. Merrill Lynch has reported the incident to Los Angeles police and the FBI. In addition, Florida authorities have confirmed that they have started an informal investigation into sales pitches made for the funds.

In yet another development Tuesday, Joanna Orehek, former vice president and controller of McNall’s chief holding company, McNall Sports and Entertainment, pleaded guilty to one count of conspiracy and one count of wire fraud in connection with a scheme to defraud four financial institutions--Bank of America, Credit Lyonnais, the Bank of California and First Los Angeles Bank--of more than $138 million in loan proceeds.

The government’s investigation has been bolstered by the continuing cooperation of Orehek, 46. She was visibly shaken before she entered the courtroom of U.S. District Judge Richard Paez, and about midway through the arraignment Orehek began crying.

“She’s a woman from a small town in middle America who was caught up in McNall’s web,” said William Greysen, a Century City attorney representing Orehek. “ . . . She made a misjudgment against her better judgment.

“She feels the pain and the hurt. It goes back to her basic fundamental values of honesty. She had the option to fight the case. She said, ‘Why make a bad thing worse? I want to come forward.’ ”

Greysen asserted that Orehek was “charmed and manipulated” by McNall to change her lifelong values, saying: “He kept on persuading her: ‘We really need your help.’ She constantly needed reassurance.”

Responded McNall lawyer Pollack: “I am sympathetic to the position Miss Orehek finds herself in, but her lawyer’s effort to minimize her role by pointing to others is refuted by the very charges to which she pleaded guilty.”

Orehek will be sentenced Jan. 30 by Paez. She faces a maximum of 10 years in prison, a fine of $500,000 and supervised release of three years as a result of her guilty pleas, but is cooperating with the government in hopes of receiving a reduced sentence.

Orehek is one of about a dozen former McNall employees who have been negotiating pleas with the government.