Jailed financier J. David (Jerry) Dominelli will plead guilty Thursday to an undisclosed number of federal criminal charges, bringing to an end the government's case against the founder of the once-mighty J. David & Co. investment firm, a prosecutor said Monday.
Assistant U.S. Atty. Robert D. Rose said the guilty pleas are connected to crimes committed before and after the collapse of J. David & Co. and will "dispose of the case" against the 43-year-old financier, whose promises of 40% annual returns lured about $100 million and nearly 1,000 investors to his foreign currency trading firm.
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 plea.
A hearing for Dominelli to enter his guilty pleas is scheduled Thursday before U.S. District Judge William B. Enright.
Dominelli faces a 25-count federal grand jury indictment charging him with perjury and fraud. The charges deal with events immediately preceding and following the forced bankruptcy of his company on Feb. 13, 1984, by a group of disgruntled investors.
Although Dominelli, who has been in federal custody since May 1, will no longer be the focus of the grand jury probe, other people once connected to J. David & Co. will remain under investigation, according to a source familiar with the case.
Last month, Rose mailed former J. David investors a two-page, 14-question survey seeking information about attorneys, accountants, bankers and brokerage firms that were involved with J. David.
The questions implied that prosecutors are at least exploring the legal culpability of so-called third parties who advised either J. David officials or clients.
Dominelli and his attorney, D. Gilbert Athay, last summer rejected an offer by Rose to negotiate the case. Athay was unavailable for comment Monday.
Speculation of a plea bargain increased after Enright's Feb. 25 ruling that Dominelli is competent to stand trial on the 25-count indictment. A trial had been set for April 2, six months after a stroke felled Dominelli, leaving him unable to write or speak fluently.
On Thursday, Rose filed a five-page legal brief asking Enright to rule that Dominelli is "competent to plead guilty," further fueling rumors that a plea bargain was forthcoming.
Federal authorities say they have accounted for nearly all of the $100 million that was poured into J. David by investors. Most of the money was spent by Dominelli and his former associate, Nancy Hoover, to support their lavish life styles, which included jet planes, sprawling estates, expensive sports cars and thoroughbred racehorses, court documents showed.
Nevertheless, a handful of investors still harbor hope that some as-yet-unaccounted-for money will be returned to them.
The guilty plea will "do a great deal to clear the air," according to a source close to J. David bankruptcy trustee Louis Metzger.
"Once the truth is revealed, 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," he said.
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.
Meanwhile, the legal status of former J. David employee Parin Columna, charged with Dominelli in eight of the 25 grand jury charges, 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."
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's trial ended in a hung jury last month.