Judge Sentences Dominelli to 20 Years in Fraud Case
J. David (Jerry) Dominelli, whose fraudulent investment firm lured hundreds of clients to financial disaster and soured the promising political career of San Diego Mayor Roger Hedgecock, was sentenced Monday to 20 years in federal prison.
Dominelli, who pleaded guilty to four counts of fraud and income tax evasion in March, stood expressionless as U.S. District Judge William B. Enright meted out the maximum prison term and ordered that Dominelli pay more than $82 million to the J. David investors he defrauded.
“There must have been nights that you lay awake knowing that it would all come crumbling down and that someday you’d be facing a judge,” said Enright. At its peak, Dominelli’s firm, J. David & Co. in fashionable La Jolla, counted 1,500 clients--including well-known political, entertainment and sports figures. They poured about $200 million into the firm in the belief that the money was being invested in foreign currency exchanges. Actually, Dominelli was spending millions on himself and recycling some of the money back to the investors as phony profits.
The scheme began to unravel in February, 1984, when J. David & Co. was forced into bankruptcy by disgruntled investors unable to withdraw their funds.
Typically, federal prisoners serve a minimum of one-third and a maximum of two-thirds of their sentences. The exact length of Dominelli’s sentence, however, will be determined by the federal parole board, Enright ruled in court Monday.
The matter-of-fact, 30-minute proceeding was in stark contrast to dramatic courtroom appearances in early 1984 when Dominelli and his battery of attorneys managed to fend off demands for J. David & Co. financial information from both a bankruptcy trustee and federal prosecutors. And the sentencing seemed anticlimactic to Dominelli’s admission in March that he had indeed fabricated his record as a successful commodities trader, and that he had intentionally defrauded his clients.
The 44-year-old Dominelli, still suffering speech problems from a stroke suffered in October, declined to make a statement when offered the chance by Enright.
Dominelli has been in custody since April, 1984, when federal agents arrested him in Miami following a two-week stay on the Caribbean island of Montserrat, where he fled to escape certain imprisonment for his failure to cooperate with the bankruptcy trustee in charge of his fallen investment firm.
Time served in custody since last Aug. 22 will count toward his 20-year sentence, authorities said. That was the date that Dominelli purged the civil contempt charges against him by admitting that none of the money invested in his firm was available to reimburse investors.
Dominelli, acted out of an acute “desire for wealth, prestige and power,” Assistant U.S. Atty. Robert D. Rose said Monday in court, arguing for the 20-year prison stint. A federal probation report also recommended the maximum 20 years in custody.
“He would have you believe that he was just a poor manager who grew too fast and that the market turned,” said Rose. “But his word is worthless. His lies are voluminous and if he’s caught he just tells another one.”
Rose said that Dominelli is “obsessed with making money as soon as he’s out of jail,” and said Dominelli told a federal probation officer that he “intends to earn between $15 million and $20 million” upon his release by becoming a wholesaler for oil, wheat and “hard goods.”
While in custody last January, Dominelli unfurled a scheme to sell untaxed domestic cigarettes abroad. Part of the plan involved his false claim that there may be as much as $2.3 million hidden in an account at Bankhaus Deak & Co. in Vienna, Austria, Rose said.
Authorities were tipped to the new scheme by Nancy Hoover, the former J. David & Co. executive who was Dominelli’s former live-in companion. Bank officials later confirmed that no such money existed.
Dominelli’s brother reportedly was prepared to lend him up to $100,000 and two former J. David & Co. investors also were “willing to lend him money,” said Rose.
Dominelli’s continued desire to make money is a symbol that he “hasn’t given up,” according to his attorney, D. Gilbert Athay. “He at least has the concern for (the investors).”
Athay called the restitution order an “exercise in futility. The chances of him making substantial money are practically nil.”
Where Dominelli will serve his sentence remains uncertain. Dominelli could be held in San Diego County Jail until a resolution of state charges that he, Hoover and San Diego political consultant Tom Shepard illegally funneled hundreds of thousands of dollars into the 1983 mayoral campaign of Roger Hedgecock. A preliminary hearing on the charges is scheduled for November.