The two principal owners of the now defunct Boss & Phelps real estate company, pleaded guilty in federal court here yesterday to charges stemming from a bank fraud scheme in which they obtained nearly $1 million from two of Washington's leading banks by writing millions of dollars in worthless checks.

Owen N. Cummins, 50, of Vienna, and Edward B. Ballow Jr., 44, of Gaithersburg, admitted in U.S. District Court that for nearly three years they pulled off a complex financial manuever in which they overdrew Boss & Phelps checking accounts at three banks but hid those overdrafts with worthless checks drawn on "paper balances" at the other banks.

The two men pleaded guilty specifically to two counts each of giving worthless checks of about $20,000 apiece. Each man could receive up to four years in prison and fines of up to $10,000 when they are sentenced Oct. 19.

The scheme, known in financial circles as "check kiting," required the two men to obtain their checking account balances daily from the three banks and then personally deliver to the banks as many as 75 checks a day to cover the accounts in pyramid-like fashion, said assistant U.S. Attorney Raymond Banoun.

The National Bank of Washington lost $609,000 through the scheme, and First American Bank lost $302,469, according to prosecutors. A third bank, Riggs National, discovered the scheme and alerted the other two and the FBI, which investigated the case. Riggs has not reported any losses.

Boss & Phelps, founded in 1907, went out of business shortly after the investigation began last July.