Nine Witnesses Open Defense in Hedgecock Trial : Pancer Spends First Day Attempting to Discredit Prosecution's Key Witness

Times Staff Writer

The defense began presenting its case in Mayor Roger Hedgecock's trial Tuesday, and the mayor's attorney focused his initial efforts on seeking to discredit a key prosecution witness who testified that Hedgecock knew that financier J. David (Jerry) Dominelli was going to invest in the political consulting firm that ran his 1983 campaign.

Following 11 days of testimony from 43 witnesses, Assistant Dist. Atty. Richard D. Huffman concluded the prosecution's case Tuesday morning after the last of 121 prosecution documents were admitted as evidence in the mayor's felony perjury and conspiracy trial.

Michael Pancer, the mayor's attorney, called nine witnesses as he began the task of attempting to rebut prosecutors' allegations that Hedgecock conspired with Dominelli and his associate Nancy Hoover to illegally funnel money through the political consulting firm of Tom Shepard & Associates into Hedgecock's 1983 race.

The testimony that Pancer elicited from those witnesses was clearly designed to attempt to persuade the six-man, six-woman jury to accept the defense's viewpoint on several major points of contention in the case, including:

- Hedgecock's and Pancer's charge that investment counselor Harvey Schuster lied when he testified Monday that Hedgecock told him in November, 1981, that Dominelli was "going to invest sufficient funds" in Shepard's firm so that it would be able to run Hedgecock's 1983 campaign.

One witness, architect Gil Ontai, testified Tuesday that Schuster was "very upset" when he was not awarded a 1982 contract to develop the county's bayfront parking lots and spoke about "getting back" at then-Supervisor Hedgecock for not supporting his proposal.

- Hedgecock's overriding argument that Hoover and Dominelli helped fund Shepard's firm primarily because they wanted to help Shepard start his own business, not because they were trying to elect Hedgecock as mayor.

Terry Bianco, a consultant, testified that Dominelli and Hoover considered buying Seacoast Magazine in North County in the fall of 1981 and making Shepard the magazine's publisher. The former La Jolla investment executives ultimately decided not to proceed with that plan, and Shepard opened his consulting business several months later.

That testimony demonstrates, Hedgecock said after Tuesday's court session, that Hoover and Dominelli were "searching for something for Tom to do"--a search that led to the creation of Tom Shepard & Associates.

- The defense's argument that Shepard's firm--contrary to prosecutors' suggestions--did much more than merely work on Hedgecock's campaign in the early months after the consulting business was founded in January, 1982.

Robert Meadow, one of Shepard's former partners, testified that the firm sent out dozens of letters attempting to solicit business during its first six months, characterizing those activities as being "not unlike" those of any new company. Reiterating testimony he gave when called as a prosecution witness last week, Meadow added that the firm's leaders "felt very fortunate" to obtain the Hedgecock campaign contract in August, 1982, believing that the firm's reputation and ability to attract clients would be significantly enhanced if it helped Hedgecock win the mayoral race.

- Pancer's contention that the prosecution inaccurately has charged that Hedgecock has received other allegedly illegal gifts from Hoover or Dominelli, including free limousine trips and a mobile telephone in his automobile. Testimony Tuesday helped Pancer refute or at least undermine some of those charges.

San Diego Police Chief William Kolender told the jury that Hedgecock did not, as a chauffeur testified last week, travel to Los Angeles to attend a 1982 dinner honoring President Reagan in a limousine paid for by Hoover. Kolender was one of about 10 guests on that trip. On a related matter, Claire Felson, who said that she and Hoover have been friends since college, testified that Hedgecock was one of the passengers in an August, 1982, limousine trip to the Del Mar Race Track, but emphasized that she, not Hedgecock, organized the trip.

And John Woodward, a former Shepard employee who acted as Hedgecock's driver during the 1983 campaign, testified that he paid for the installation and repair of the mobile phone, and was later reimbursed by Shepard's firm. Hedgecock argues that Hoover loaned him the telephone and that he returned it after the campaign.

Following the opening day of his side of the case, Hedgecock said he felt "terrific," adding that he believes the testimony shows that "a lot of this stuff has been blown way out of proportion."

Huffman 'Unimpressed'

Huffman countered, "Respectfully, I'm greatly unimpressed by this testimony." The prosecutor also noted that Tuesday's Superior Court session began with Judge William L. Todd Jr. denying Pancer's motion to dismiss the charges against Hedgecock--a routine motion filed at the conclusion of the prosecution's case that is rarely granted in major trials.

Investment executive Schuster's testimony Monday that Hedgecock was aware that Dominelli was pumping money into Shepard's firm was perhaps the most damaging against the mayor, who has consistently denied knowing that the now-jailed financier was an investor in Shepard's firm. For that reason, attempting to discredit Schuster was one of Pancer's major goals Tuesday.

Architect Ontai, who had worked with Schuster and his associate Jean Kauth on the proposed county parking lot development, said that Schuster and Kauth "felt they had a special relationship" with Hedgecock that would help them win the lucrative contract.

When another firm was selected, Schuster and Kauth "were very upset and very angry, and indicated in some degree, in so many words, of getting back" at Hedgecock, Ontai said. That contrasts with Schuster's testimony that he was disappointed to not receive the contract but that he harbored no grudge toward Hedgecock.

Ontai added that Kauth, knowing he would be a witness, called him last weekend to give "her version" of the facts. "She (said) to me, 'As you recall, Harvey and I were not upset in the final analysis about not getting the contract,"' Ontai said. Ontai's experience, Hedgecock argued, shows that Schuster and Kauth tried to "school" other witnesses to conform to their own testimony.

During cross-examination, Huffman suggested that there was enmity between Ontai and Schuster. Because of disagreements during work on the county project, Ontai's former firm wrote a letter of apology to Schuster, who is president of California Investment Counsel Inc., a Sorrento Valley real estate management and investment firm.

Pancer also used the testimony of Meadow and Bianco to try to demonstrate that Hedgecock did not, as Schuster said, remark in November, 1981, that Dominelli was "like putty in the hands" of Hoover and would, if she asked him to, invest heavily in Shepard's firm. Evidence introduced in the trial shows that Hoover and Dominelli invested more than $360,000 in Shepard's firm--money that the district attorney's office alleges was tantamount to an illegal donation to Hedgecock's campaign, which was the firm's major client during its first 18 months.

Bianco, Seacoast Magazine's former advertising coordinator, said that Hoover and Dominelli considered buying the magazine and installing Shepard as a publisher or writer because they "both felt Tom could be doing more . . . for his own personal growth . . . than working" on Hedgecock's supervisorial staff. Those plans were dropped, however, in late November, 1981, Bianco said.

"Up through Nov. 24, did they ever say they were going to start a political consulting firm (for Shepard)?" Pancer asked.

"No," Bianco replied.

Dates Disputed

Meadow added that while Shepard first mentioned the possibility of forming a consulting firm in September or October of 1981, he did not hear Hoover's name mentioned as a possible investor until "between Thanksgiving and . . . Christmas."

The time periods specified by Bianco and Meadow are critical, because they occurred after the date that Schuster said Hedgecock discussed Dominelli's financial role in Shepard's firm with him.

"This shows that . . . Mr. Schuster is flat lying," Hedgecock said.

Huffman, however, stressed that neither Meadow nor Bianco "were privy to any private discussions among Shepard, Dominelli and Hoover."

"There was a lot about the financial side (of Shepard's firm) that Meadow didn't know," Huffman said. "And illegally funneling money into a campaign . . . is not something you're going to sit down with a consultant for a magazine and tell her about. To say that this damages Mr. Schuster's testimony . . . is an extremely specious argument."

Solicitation Letters Cited

Much of Meadow's lengthy testimony was devoted to his recitation of numerous letters of solicitation that he, Shepard and the firm's other partners mailed to various potential political and corporate clients before August, 1982, when the firm was retained by Hedgecock's campaign.

"We spent most of our time trying to solicit business," Meadow said, referring to the first half of 1982--a period when the prosecution alleges that the firm's efforts were already focused on Hedgecock's possible mayoral campaign.

Meadow and other former officials of Shepard's firm concede that they spent most of their time between August, 1982, and the special May, 1983, mayoral election won by Hedgecock on his race, but argue, in Hedgecock's words, that there is "nothing unusual much less sinister" about that.

The Hedgecock campaign was the young firm's first major client, and the firm's partners hoped that running a successful mayoral campaign would be the first step toward becoming "the premier political consulting firm in California . . . and one of the best known in the country," Meadow said.

Also Tuesday, Todd indefinitely postponed a decision on Pancer's request for the unpublished notes of a dozen current or former reporters for the Los Angeles Times, the San Diego Union and Tribune and the San Diego Daily Transcript.

Pancer argued that the notes were necessary for him to know whether published quotes attributed to Hedgecock in stories dealing with his financial dealings were taken out of context or misleading. Attorneys for the newspapers, however, told Todd that the California Constitution protects the reporters' right to preserve the privacy of their notes and that Pancer had not proved that the notes were necessary for Hedgecock's defense.

Saying it would be "premature" to approve Pancer's request at this point in the trial, Todd explained that he would reconsider the matter if Hedgecock testifies and is questioned about newspaper stories concerning his finances.

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