Legal Fate of J. David Aides Is in Limbo : But for Dominelli Himself, Long-Term Custody Appears a Certainty

No matter what happens in any of the complicated legal proceedings involving bankrupt J. David & Co., one thing appears certain: Jerry Dominelli will remain in federal custody for years to come.

Less certain is the fate of other key personnel at the once-prosperous La Jolla investment firm, which was forced into bankruptcy by a group of disgruntled investors last Feb. 13, just a year ago next Wednesday.

Whether Dominelli, 43, actually will stand trial on the 25-count federal indictment he faces will be determined by U.S. District Judge William B. Enright after he reads a competency report submitted by a court-appointed psychiatrist.

If Enright decides that Dominelli --in jail since May 1--is incompetent because of the stroke he suffered in October, Dominelli will be held either in San Diego or at a federal hospital in Springfield, Mo., until he is judged competent.

But if Dominelli is found to be competent--and sources say he is making steady progress from his stroke--the former financier will be tried for fraud and perjury in connection with events that occurred immediately before and after J. David’s involuntary bankruptcy.

Dominelli also probably will be indicted at some later date for mail, tax and securities fraud when the federal grand jury eventually completes its sweeping investigation of J. David & Co.

The grand jury’s 18-month term expires in the summer, but the panel’s tenure can be routinely extended six months if prosecutors request it.

Dominelli’s options include standing trial or making some sort of deal to reduce the charges against him.

Dominelli last summer had a first chance to negotiate his case with prosecutors, but he rejected the government’s plea-bargaining offer, details of which remain undisclosed.

But what of other important figures at J. David & Co.? Will there be criminal charges brought against them?

“It’s the most-asked question I hear,” said one source close to the trustee. “And I just can’t give an answer.”

Officially, the government still is investigating “everything within the scope of J. David,” according to Assistant U.S. Atty. Robert D. Rose, who has been the sole federal prosecutor working on the case.

“Jerry Dominelli has been the target of the grand jury since February, 1984,” said Rose. “And he’s not the only target.”

Last week, for example, former J. David investors received a 2-page, 14-question survey from federal prosecutors on the involvement with J. David of outside parties, including attorneys, accountants, bankers and brokerage firms. The 14 questions imply that the government is exploring the legal culpability of so-called third parties who advised either J. David officials or the investment firm’s clients. (Besides Dominelli, only Parin Columna, a carpenter and Dominelli friend, has been indicted for fraud since the bankruptcy.)

“They have no reason to indict (for events) pre-bankruptcy,” insisted Mark Yarry, the former J. David executive whose knowledge of international financing was a key factor in J. David & Co.’s short-lived success. Yarry left the country less than two months after J. David’s collapse--he says to escape the publicity and the rash of civil lawsuits filed against him --and is now living in southern France.

Yarry and Nancy Hoover, Dominelli’s former second-in-command and live-in companion, are the two people most often mentioned by frustrated former investors demanding a legal pound of flesh as retribution for their losses.

Whether the investors will receive the satisfaction they seek remains uncertain.

Hoover’s attorneys have “no idea” about the status of the federal case against her. According to Dwight D. Worden, one of Hoover’s lawyers, federal prosecutors have not disclosed whether she is a target of the grand jury investigation. “They say only that they are investigating everything concerning J. David,” he said.

Yarry said he and others have not been charged with any crime because “there isn’t a mystery to (the J. David case) anymore.”

The suspense was removed, said Yarry, when Dominelli admitted last summer that he had spent or lost all of his investors’ funds.

“If the government thought I was sitting on a pot of gold, don’t you think they’d be hot on my trail?” asked Yarry, who was once accused by Dominelli of siphoning off about $350,000 of the firm’s funds. Yarry has vehemently denied Dominelli’s assertions.

Meanwhile, Dominelli, Hoover and Tom Shepard, whose political consulting firm was funded by Hoover and Dominelli, face state perjury and conspiracy charges alleging that they illegally funneled money into Mayor Roger Hedgecock’s 1983 campaign.