Ex-McNall Associate Is Charged : Hockey: Chief of horse operations is expected to plead guilty to wire fraud.

C. David Rossen, the executive who ran Bruce McNall’s thoroughbred horse operations, will plead guilty to one count of wire fraud in connection with the ongoing federal investigation into the King president’s banking practices, according to his attorney.

Rossen, 39, was charged Friday by federal prosecutors of defrauding the French bank Credit Lyonnais by creating false documents, inventory lists and invoices surrounding $10 million in loans. The scheme, prosecutors allege, was designed to lull the bank into believing McNall had sufficient collateral to support previous loans and to induce it to grant new loans. In one case, phony appraisals were obtained by a sham company whose purported owner and appraiser was McNall’s personal chauffeur.

Said Rossen’s attorney, Robert L. Corbin: “He is accepting responsibility for his actions and he is cooperating with the investigation.”

Rossen becomes the third former McNall business associate in the last two months to have been formally charged. As many as a dozen are known to be negotiating plea agreements, and McNall has agreed to plead guilty to four counts stemming from the bank fraud investigation, sources said.

The one count filed against Rossen is the smallest case filed by prosecutors against former McNall executives. Responding to the charge filed against Rossen, McNall’s criminal defense attorney Tom Pollack said: “I am pleased to see the government acting with restraint in their charges against Mr. Rossen.”

Rossen’s role in the alleged criminal activity began in December, 1987, and continued to about April, 1994. But Corbin, Rossen’s attorney, said that while Rossen admitted he provided inaccurate information about collateral to McNall’s banks, he was only a minor player in McNall’s empire.

“He really wasn’t part of the inner circle of people who were actively involved with Mr. McNall’s financial affairs,” Corbin said. “The fact that Mr. Rossen’s charges are limited to a single count reflects the fact that he was the lowest-level employee who has been charged or is under active investigation.”

Corbin added that Rossen was led to believe that McNall--who is now in personal bankruptcy proceedings--could pay his bankers.

“Mr. McNall projected great wealth and success to the people with whom he came into contact, including Mr. Rossen,” Corbin said. “Like many of the people with whom Mr. McNall came into contact, Mr. Rossen believed him to be a dynamic businessman.

“It’s obvious to the world now that Mr. McNall was not as wealthy as he appeared to be, and he was not on as solid a financial footing as everyone who knew him--including his employees, investors and lenders--believed.”

Rossen is scheduled for a court appearance on Oct. 17.

The court papers filed Friday portrayed an operation in which elaborate deceptions were used to obtain loans. In 1989, Rossen and others created two sham thoroughbred horse companies, one of them being Nassar Equine Appraisal and Management Company, federal officials alleged. The purported appraiser and owner of the company was McNall’s personal chauffeur, who was not qualified to make thoroughbred horse appraisals.

Then the company produced sham appraisal reports for Credit Lyonnais’ Dutch unit that misrepresented the value and percentage of ownership of the horses purportedly owned by McNall’s Summa Stable, Inc., in order to show the company had enough horses to adequately collateralize the $10-million bank loan. But the horses listed in the appraisal report were not owned by the stable, had been pledged as collateral to other lenders or were inflated in value.

The other sham company, which also had no legitimate assets and performed no legitimate services, was Minerva International Sales Corp. In another alleged scheme, Rossen and others informed Credit Lyonnais in February, 1993, that a $2-million payment would be made on a $10-million loan by the sale of six thoroughbred horses to Minerva. In fact, Minerva was created and owned by McNall.

Less than four months later, Rossen represented to Credit Lyonnais that Minerva did not purchase the six horses from Summa.

Finally, the government alleged that Rossen and others informed Credit Lyonnais that 26 thoroughbred horses pledged as collateral for a $10-million loan had declined in value and had been sold for about $220,000 and said those funds were used for feeding and care. But the horses were not sold because they were not fully owned by Summa, had been pledged as collateral to other lenders and were inflated in value.