Houston, Ex-McNall Accountant, Will Plead Guilty, Attorney Says

Robert J. Houston, a former accountant for King president Bruce McNall, will plead guilty to single counts of conspiracy, bank fraud and wire fraud, according to his attorney, David Reed.

Houston, who sources said has been cooperating with the government investigation, is accused of filing false tax returns and financial statements to help McNall obtain more than $150 million in loans. Appearing on Monday before U.S. Magistrate Judge George King, Houston pleaded not guilty, but Reed told King that his client is “going to enter a guilty plea.”

King set a trial date of Nov. 22 before U.S. District Judge J. Spencer Letts. However, Reed indicated that the plea would come before then. Houston is the second McNall business associate charged in a federal bank loan fraud investigation, one of about a dozen former McNall business associates known to have been negotiating pleas.

Assistant U.S. Attorney Peter G. Spivack will ask that the Houston case be transferred to U.S. District Judge Richard Paez, who already has heard the guilty plea of Joanna Orehek. Orehek, former vice president and controller of McNall’s chief holding company, pleaded guilty last month to conspiracy, wire fraud and aiding and abetting. Her sentencing is scheduled for Jan. 30.

Houston was accused in court papers of being part of a group of McNall officials who, for the past eight years, fraudulently obtained loans by inflating McNall’s income, overstating his assets and understating or omitting previous loans.

Federal officials allege that the fraudulent documents, as well as a group of sham companies, enabled McNall officials to get money for horse and coin operations as well as a $60-million business loan and a $20-million personal loan from Bank of America. Among the financial institutions prosecutors named as victims were Bank of America, Bank of California, First Los Angeles Bank, Union Bank and the French bank Credit Lyonnais.