Will End U.S. Criminal Case : Dominelli to Plead Guilty Thursday, Prosecutor Says
Jailed financier J. David (Jerry) Dominelli will plead guilty on Thursday to an undisclosed number of federal criminal charges, bringing to an end the U.S. government’s case against the founder of the once-mighty J. David & Co. investment firm, a prosecutor said Monday.
The guilty pleas, connected to crimes allegedly committed before and after the collapse of the investment company, will “dispose of the case” against the 43-year-old financier, according to Assistant U.S. Atty. Robert D. Rose. In 1982 and 1983, Dominelli lured nearly 1,000 investors and $100 million to his foreign currency trading firm with promises of 40% annual returns.
Rose, who has led the federal grand jury probe of Dominelli and his failed La Jolla firm, would not disclose the nature or the number of charges included in Dominelli’s guilty pleas.
A hearing for Dominelli to enter the pleas was set for Thursday before U.S. District Judge William B. Enright.
Faces 25 Counts
Dominelli faces a 25-count federal grand jury indictment charging him with perjury and fraud. Those charges deal only with events immediately preceding and following the Feb. 13, 1984, bankruptcy of J. David & Co., which was forced by a group of disgruntled investors.
However, a federal grand jury has for the past year been investigating possible charges of mail, securities and tax fraud within the company before its collapse. The panel was expected to eventually indict Dominelli on those counts.
Although Dominelli--in federal custody since May 1--will no longer be the focus of the grand jury probe, others once connected with J. David & Co. will continue to be investigation targets, according to a source familiar with the case.
Rose would not discuss pending grand jury matters. However, sources close to the case have said that the other possible targets may include former J. David executives Nancy Hoover and Mark Yarry, as well as one or more attorneys with the local office of Rogers & Wells, the law firm that handled much of the legal work for J. David’s foreign currency trading.
No Comment
Hoover’s attorney, Dwight Warden, would not confirm or deny on Monday any negotiations between his client and federal prosecutors.
Last month, Rose mailed former J. David investors a two-page survey that asked about the extent of involvement at the firm of outside parties, including attorneys, accountants, bankers and brokerage firms.
The 14 questions implied that prosecutors are at least exploring the legal culpability of third parties who advised either J. David officials or clients.
Speculation of a Dominelli plea bargain settlement has increased in the past two weeks, since Enright’s Feb. 25 ruling that Dominelli was competent to stand trial on the 25-count indictment. A trial had been set for April 2, six months after Dominelli suffered a stroke that left him unable to speak or write fluently.
Asked for Ruling
On Thursday, Rose filed a five-page legal brief asking Enright to rule that Dominelli is “competent to plead guilty,” which further fueled rumors that a plea bargain was forthcoming.
It is unknown how long Rose and D. Gilbert Athay, Dominelli’s attorney, have been negotiating a settlement. Rose would not discuss it, and Athay was unavailable for comment.
However, an attorney familiar with the case said that a plea bargain likely was negotiated only after Enright’s ruling that Dominelli was competent.
“It is common for a lawyer to make sure the competency issue is resolved before he commits his client to a plea bargain,” the attorney said. “That would be good practice.”
Earlier Offer Rejected
Dominelli and Athay last summer rejected an offer by Rose to negotiate the case. The details of that offer were not disclosed.
Although federal authorities say that they have accounted for nearly all of the $100 million that was poured into J. David by investors, a handful of former clients still harbor hope that some unaccounted-for money will be returned to them.
The guilty plea will “do a great deal to clear the air,” said a source close to J. David bankruptcy trustee Louis Metzger. “Once the truth is revealed (through the guilty plea), it will answer a lot of questions. There are still people who think there’s a dark hole in the ground with gold in it.”
To date, Metzger has retrieved nearly $11 million from the sale of various J. David assets. He has paid out more than $4 million in liabilities and mortgages against those assets, as well as about $2.5 million in legal, accounting and administrative fees.
Dominelli claimed as recently as late January that there may be as much as $2.5 million hidden in an account in an Austrian bank. However, the trustee’s attorneys--tipped to Dominelli’s assertion by Hoover--investigated but found no money.
Most of the $100 million in investors’ funds was is believed to have been spent by Dominelli and Hoover to support their lavish life styles, which included expensive jet planes, sprawling estates and racehorses.
Meanwhile, the legal status of former J. David employee Parin Columna--charged along with Dominelli with eight of the 25 grand jury counts--remains uncertain.
Michael J. McCabe, Columna’s attorney, said Monday that the government has “made an offer and we made a counteroffer. But there’s a lot of room in between.”
Likely Will Wait
Sources familiar with Columna’s case said that McCabe likely will wait until after Dominelli’s pleas are entered before negotiating a deal with the government.
Dominelli still faces state perjury and conspiracy charges in connection with allegations that he, Hoover and political consultant Tom Shepard helped funnel tens of thousands of dollars into San Diego Mayor Roger Hedgecock’s 1983 election campaign.
Hedgecock was charged with conspiracy and perjury. Last month, a jury deadlocked 11 to 1 for conviction of the mayor. A retrial is expected to begin by fall.
