McNall Pleads Guilty to Fraud : Jurisprudence: Former King owner admits to four criminal counts in U.S. District Court.

Bruce McNall, who as owner of the Kings lured Wayne Gretzky to Los Angeles and hockey fans to the Forum, pleaded guilty Wednesday in federal court to four criminal counts stemming from a federal bank fraud investigation.

Standing stoically before U.S. District Court Judge Richard A. Paez, McNall repeated the word “guilty” four times, his first public admission that he broke federal banking laws by defrauding financial institutions out of more than $236 million largely by convincing them he was worth much more than he really was.

Leaning on a lectern with his hands folded, McNall stood quietly alongside his lawyer, Tom Pollack, for about 30 minutes as Asst. U.S. Atty. Peter S. Spivack outlined a 10-year history of criminal activity.

Charges included creating phony financial statements for lenders as early as 1984, supplying fake coin inventories to secure loans, diverting millions from a Merrill Lynch coin fund and King ticket proceeds and even listing dead horses as collateral. Allegations also include improperly pledging a horse he owned with Gretzky to a bank without telling the King superstar.

McNall’s plea, the result of a 10-month investigation, was to two counts of bank fraud, and one count each of wire fraud and conspiracy. Paez tentatively set July 6 as McNall’s sentencing date.

Although McNall, 44, faces a maximum sentence of 45 years, he won’t do anywhere near that amount of time. Sources close to the case say his sentence will probably range from three to nine years.

McNall made small talk in the courtroom with reporters before the hearing began. He spoke about hockey’s lockout. Looking at one of the three courtroom artists who were there to sketch him, McNall said: “I hope he gets a good sketch of me. Maybe just full front would be best.”

McNall is free on $100,000 bail, which was put up Dec. 9 by King executive and goalie legend Rogie Vachon.

As expected, McNall officially gave up his title of president of the Kings after his plea, although he will continue to work for the team as a consultant.

Under the terms of his contract, his $650,000 annual salary will be trimmed to $487,500, with payments scheduled to be made until 2001. He technically remains a minority owner in the club, although his 28% stake is now under the control of the trustee in his U.S. Bankruptcy Court case and is expected eventually to be sold.

McNall’s plea further accentuates the dramatic fall of a man who earlier this year was arguably the most powerful owner in professional hockey and an autograph-signing celebrity in his own right, mingling regularly with movie stars and politicians. Since May, McNall has sold a majority interest in the team, sought shelter from creditors in U.S. Bankruptcy Court and pleaded guilty to the four felonies.

McNall declined to discuss his plea with reporters, but released a statement in which he said that he is taking full responsibility for his actions.

“I knew that my actions were wrong,” he said, “but I proceeded anyway, in a misguided effort to try to resolve the increasingly severe financial problems resulting from businesses in which I participated.”

McNall said he intended to repay his debts: “In my own naive thinking, I was hoping to buy enough time to pay back the loans, but it was a race that I ultimately lost.”

McNall said he remains proud of many things he has done, including making hockey popular in parts of the United States, “but that cannot make up for the remorse I feel for the misguided actions that brought me to this point today.”

McNall is said to face about nine years currently, although the amount can be reduced. Sources close to McNall say his lawyers are hoping they can trim his sentence to three to five years. Getting the sentence under five years would be critical to efforts to get McNall into a minimum security prison.

One key to reducing the sentence will be showing that McNall is responsible for less than $80 million in losses suffered by the six banks listed in the criminal charges. In addition, he can reduce that loss figure through prospective business deals that would help pay creditors. He also is expected to argue that the bankers share blame.

The precise amount of losses McNall can be blamed for is difficult to figure at this point, sources say. Creditors--mainly banks--have filed well over $200 million in claims, but McNall disputes some of those. The largest claim is $123 million filed by the Dutch unit of the French bank Credit Lyonnais, an amount McNall has disputed.

In addition, McNall has agreed to fully cooperate with prosecutors, who are expected to ask him about matters including his business dealings with some of his bankers; the operations of companies he invested in, such as film producer Gladden Entertainment, and the activities of the executives who worked for him.

McNall’s stunning fall is unprecedented in hockey circles, as well as in sports. In 1953, Fred Saigh Jr. was forced to sell the St. Louis Cardinals baseball team after he pleaded no contest to two counts of federal tax evasion. The Yankees’ George Steinbrenner was suspended by baseball commissioner Bowie Kuhn in 1974 for two years after Steinbrenner pleaded guilty to a charge of making an illegal campaign contributions to Richard Nixon, but was later pardoned by President Reagan.

Hockey’s image has been tarnished, not only by McNall’s problems but also by a 32-count federal indictment against former union leader R. Alan Eagleson. Previously, the late Toronto Maple Leaf owner Harold Ballard was convicted and served time in prison in Ontario in October, 1972, on charges of income tax evasion, fraud and theft of Maple Leaf Garden funds.

In 1973, lawyer and businessman Thomas K. Scallen, who controlled 70% of the Vancouver Canucks through the Medical Investment Corporation in Minneapolis, served prison time after being convicted of submitting a false prospectus and the theft of $3 million from Northwest Sports Enterprises, Ltd., the corporate title of the Canucks.

After the hourlong hearing, McNall was driven away in Pollack’s car. Before leaving, the normally talkative McNall, who once never passed up an opportunity to be quoted, said: “It’s hard for me not to be able to respond. I’ll have to go along with what my attorney said.”