Hoover Denies Any Personal Gain : Attorney Claims J. David Funds Spent on Firm’s Expenses
Much of the J. David & Co. money received and spent by former executive Nancy Hoover was for company expenses, not for her personal use, Hoover’s attorney told a federal judge in a letter filed in court Wednesday.
Funds distributed to Hoover were “in large measure expended by her for company-related expenses,” attorney D. Dwight Worden said in a letter to U.S. District Judge J. Lawrence Irving.
The letter was the first time that either Hoover or her attorneys have publicly discussed her financial involvement in the collapsed La Jolla investment firm. Hoover was J. David & Co.’s second in command and the live-in companion of J. David (Jerry) Dominelli, the company’s founder.
Dominelli pleaded guilty in March to four federal charges of fraud and tax evasion and faces as many as 20 years in prison when he is sentenced next month.
The listing created “a completely erroneous impression that large sums of money were distributed by and to Nancy Hoover, her family and friends,” Worden said in his letter. Instead, he said, her family “all lost substantial amounts of money along with the other investors when J. David collapsed.”
In addition, Worden criticized the trustee’s report for implying that “Hoover took this money home in her pocket. This is not the case.”
Money paid by Hoover to Tom Shepard & Associates, the political consulting firm that was in charge of Roger Hedgecock’s 1983 mayoral campaign, was an investment and should not have been listed under the “Politics and Community Relations” category in the trustee’s report, Worden wrote.
Irving had asked Metzger in March to list payments made to Hoover and four others connected to J. David & Co.--top executive Mark Yarry, salesman Ted Pulaski, private attorney Robert Harlan and Norman Nouskajian, who handled much of J. David’s legal work for the Rogers & Wells law firm. Jointly, the four received nearly $2.5 million between January, 1983, and February, 1984.
Harlan also responded to the trustee’s list, which showed he received $55,000. In a letter to Irving, also filed Wednesday, Harlan said the money was a reimbursement from Dominelli for financing a real estate investment.
Irving did not explain why he requested the disbursement lists from Metzger. However, most of the people named by Irving have been identified by sources close to the case as targets of the federal grand jury that is investigating J. David & Co.
Much of Metzger’s job as trustee has entailed untangling the complicated financial web that was J. David & Co. The investment firm received about $200 million from 1,500 investors with promises of annual returns of 40% and more through the foreign currency trading market.
In truth, Dominelli did little if any trading, and about $80 million was actually lost to investors, according to government prosecutors.
Commingling of funds was so pervasive, authorities have said, that an exact accounting of investors’ monies may never be completed.
Metzger has recouped only about $11.4 million by selling various J. David assets and an additional $5.3 million is expected to be obtained soon. After deducting legal fees, mortgages and administrative fees, the estate will net less than $10 million of that amount.
The Internal Revenue Service may have a claim to much of that money, following Dominelli’s admission last month that he paid only $294,507 of the $10.7 million he owed in federal income taxes in 1982.
The status of an additional $25 million in “preference” payments--funds paid out in the 90 days prior to J. David’s Feb. 13, 1984, bankruptcy--remains uncertain. The trustee is suing investors who have refused to return those funds.
Irving will rule tomorrow on Metzger’s interim request to pay his lawyers and accountants $206,507 in fees and expenses from December through February.
