Importance of $2,000 Bill Paid for Hedgecock Becomes Issue at Trial

A former local news anchorman coached San Diego Mayor Roger Hedgecock in late 1981 and early 1982 on how to improve his deportment on television, but the $2,000 bill for the sessions was paid by Tom Shepard & Associates-- months before the firm had a contract to run Hedgecock’s 1983 mayoral campaign, testimony in the mayor’s felony retrial revealed Tuesday.

Prosecutors argued that the testimony by Tom Lawrence, an anchorman at KFMB-TV (Channel 8) from 1973 to 1978 who now fills the same position at KHJ-TV in Los Angeles, is crucial and bolsters their contention that Hedgecock knew that Shepard’s political consulting firm, in violation of local election laws, provided him with free campaign services. Evidence on the subject was not introduced at the mayor’s first trial.

Defense attorney Oscar Goodman, however, called Lawrence’s testimony “irrelevant” because the bill was sent to Shepard, not Hedgecock.

“Who did (Hedgecock) think paid? It didn’t even cross his mind,” Goodman said. “Why should it? The bill was sent to Tom Shepard, and Tom Shepard paid the bill. It would be different if they wrote Roger Hedgecock and said, ‘Pay the bill.’ ”

Hedgecock has said he cannot remember how the bill was paid, adding that he did not pay attention to Shepard’s billing procedures until after his campaign committee signed a contract with the firm in August, 1982.

Deputy Dist. Atty. Charles Wickersham explained Tuesday that the firm’s $2,000 check to Lawrence was only recently brought to his attention by Internal Revenue Service agents who analyzed the financial records of Tom Shepard & Associates, which prosecutors contend served as a political laundry for illegal contributions to Hedgecock’s campaign from former J. David & Co. principals Nancy Hoover and J. David (Jerry) Dominelli.

The check was not included in the financial records that the district attorney’s office received from Shepard’s firm, Wickersham said, adding that it was “carried in the records we received as an overhead expense.”

Last week, Gregory Dennis, one of Tom Shepard & Associates’ original partners, testified that the $2,000 check was listed in the firm’s March, 1982, financial ledger in the “Hedgecock campaign account”--even though the firm did not then have a contract with Hedgecock’s political committee.

Until the IRS agents helped the district attorney’s office to see the potential significance of the $2,000 payment, “it was just one more check . . . of many,” Wickersham said.

However, the prosecutor made it clear that he hopes to link the $2,000 check to a key piece of evidence from the first trial--a $500 legal bill paid for Hedgecock by one of his former supporters--in an attempt to show that the mayor allowed others to pay his personal or campaign expenses and did not properly report such expenditures on financial disclosure statements. The mayor’s first trial ended in a mistrial in February with the jury deadlocked 11-1 in favor of conviction.

Describing documents related to Lawrence’s seminars as “part of a mosaic, an important part,” Wickersham said that the incident shows that Hedgecock “knows that things are being done for him (and that) an inference can be drawn that he knows this is being paid for by Tom Shepard & Associates.”

Hedgecock’s explanation that he was unaware of how Lawrence’s bill was paid is similar to his testimony in his first trial concerning the $500 legal bill, which Sorrento Valley investment counselor Harvey Schuster paid for Hedgecock after taking the then-supervisor to see a Century City lawyer to discuss personal financial problems in November, 1981.

In both instances, Hedgecock contends that, because he did not personally receive invoices, he gave little thought to how the bills were paid--or, in regard to the meeting with the Century City lawyer, as to whether there even was a bill.

Arguing that it would be illogical for anyone to assume that such services would be rendered for free, prosecutors contend that Hedgecock must have realized that someone was paying for the services and should have reported the expenses on his financial reports.

“Was there anything you said that would have caused (Hedgecock) to believe that these were free or gratis services?” Wickersham asked Lawrence, who operates Tom Lawrence Communications, a media consulting firm with offices in La Jolla and Santa Monica.

“Oh, absolutely not,” Lawrence answered.

Lawrence testified that Shepard contacted him in November, 1981--two months before Shepard left Hedgecock’s supervisorial staff to start his consulting firm--about the possibility of helping Hedgecock to improve his appearance and presentation on television.

At two sessions in Del Mar--the first on Dec. 23, 1981, at a dance studio and the second on March 15, 1982, at Hoover’s home--Lawrence videotaped Hedgecock in mock news conference settings and then critiqued his performance, following up the sessions with written reports.

Asked by Wickersham what Shepard perceived as “the problem . . . in (Hedgecock’s) style,” Lawrence replied, “The problem basically (was) to stop Roger shooting from the hip or talking without thinking.”

Shepard also “wanted to do something about the perception of (Hedgecock’s) arrogance and help him to appear more sensitive and caring,” Lawrence added. “These are not end-of-the-world problems. You can do small things to improve.”

The Los Angeles anchorman added that he assumed that Hedgecock wanted to improve his television image in preparation for a potential mayoral campaign, and that Shepard compared Hedgecock’s “media presentation” to that of Police Chief William Kolender, regarded as a possible mayoral contender in the event that then-Mayor Pete Wilson was appointed or elected to higher office. Kolender ultimately chose not to run in the special May, 1983, election won by Hedgecock after Wilson’s November, 1982, election to the U.S. Senate.

Lawrence said that he sent the $2,000 bill for the seminars to Tom Shepard & Associates, because “it was my assumption that Tom Shepard was the intermediary for Roger Hedgecock.” The bill ultimately was paid by a Shepard firm’s check signed by Shepard and Dennis, Dennis said last week.

During cross-examination, Goodman--repeating a line of questioning that he has used throughout the retrial in an attempt to distance the mayor from any possible wrongdoing--emphasized that Lawrence set up the seminars and discussed billing procedures with Shepard, not Hedgecock.

“You don’t even know whether Roger Hedgecock knew that a bill was sent?” Goodman asked.

“I have no knowledge of what Roger knows,” Lawrence responded.

After Tuesday’s court session, Goodman argued that prosecutors “are leaving it up to the imagination of jurors” as to whether Hedgecock discussed Lawrence’s bill with Shepard--a key question that neither Hedgecock nor his attorney answered directly. Asked why he did not address that point in his own questions, Goodman said, “Why should I? The burden’s not on me. I don’t have to prove their case for them.”

Hedgecock added, “He (Lawrence) was asked directly what was my state of mind, what did I think, what did I say? He says, ‘I didn’t talk to him, I don’t know what his state of mind is, I don’t have any idea.’ That’s their burden. That means that that witness is worthless” to prosecutors.

In other testimony Tuesday:

- Jack Kaufman, Hoover’s former lawyer and the person who prepared partnership papers dealing with the formation of Tom Shepard & Associates, said that Hedgecock’s name never came up during those discussions. That testimony, Hedgecock argued, undermines the heart of the prosecution’s case--the contention that a primary purpose behind Hoover’s and Dominelli’s investment of more than $360,000 in Shepard’s firm throughout 1982 and 1983 was to help Hedgecock get elected mayor.

Under the partnership agreement, Hoover received a substantial tax write-off for her investment in the firm, based on a clause that allowed her to deduct 90% of the firm’s losses, Kaufman said. That tax advantage, the defense claims, reinforces Hedgecock’s characterization of Hoover’s and Dominelli’s investments in Tom Shepard & Associates as a legitimate business decision, not a scheme to circumvent the city’s $250-per-person campaign contribution limit.

- Linda Susan Monroe, who formerly lived in an El Cajon house on which the mayor held a controversial promissory note, said that she continued to send monthly interest payments on the note to Hedgecock through April, 1983--about four months after Hedgecock had sold the note to Hoover. Hedgecock never told her that the trust deed had been transferred to Hoover, Monroe said.

Earlier, Kaufman testified that Hedgecock sold the note to Hoover for $16,000 in November, 1982, but asked that public recording of the sale be delayed until June, 1983--a postponement that prosecutors suggest was designed to conceal the ties between Hedgecock and Hoover until after the May, 1983, mayoral race.

However, Hedgecock, who continued collecting the $112 monthly interest payments during that seven-month period, has said the delay was prompted by tax considerations. At the first trial, Hedgecock said he did not realize that those checks were payments that should have been going to Hoover, adding that he repaid Hoover in 1984 after he discovered the error.

Late in 1982, Hedgecock and Hoover considered voiding the initial sale of the promissory note when Hedgecock, because of what turned out to be a misinterpretation of the note’s terms, thought that he might be able to receive as much as $22,500 for the deed from Monroe and her former husband, David Inabinett--an amount that is $6,000 more than Hedgecock received selling the note to Hoover. When that possibility fell through, the original sale was allowed to stand, Kaufman said.

Kaufman conceded that the agreement between Hedgecock and Hoover “would not be normal from a legal standpoint,” but later described the pact as “unusual . . . but not unique.”