Hedgecock Case Footprints Leave Trail of Debate

While questioning prospective jurors in Mayor Roger Hedgecock’s felony retrial last month, Deputy Dist. Atty. Charles Wickersham constantly reminded them that, because the case hinged heavily on circumstantial evidence, their judgment would turn on “what inferences you draw” from certain facts.

To illustrate the task facing jurors, Wickersham often used this analogy: If rabbit footprints were spotted on an otherwise unblemished field of snow, the prosecutor said, “it would be reasonable to assume . . . that a rabbit had been there.”

Through 17 days of testimony from 61 prosecution witnesses, Wickersham believes that he has pointed out enough “footprints” for jurors to conclude that Hedgecock participated in a political conspiracy designed to help him win the 1983 mayoral campaign.

However, Hedgecock’s attorney, Oscar Goodman, who dramatically rested the defense’s case last week without calling a single witness, invoked Wickersham’s analogy to describe what he perceives as the prosecution’s failure to prove its case.

“We’ve seen a lot of footprints, but they aren’t the mayor’s and they don’t lead anywhere,” Goodman said.

The disagreement between the competing attorneys is hardly surprising or unique to Hedgecock’s felony conspiracy and perjury case. Yet it demonstrates how, as the trial approaches an end, it is, in many ways, back where it began.

Indeed, when Hedgecock’s eight-woman, four-man jury returns to Superior Court this week for closing arguments in the much-publicized case, they will confront the challenge that Wickersham outlined for them at the outset--namely, trying to choose between the conflicting interpretations and diametrically opposed theories of the case that have emerged, often from the same set of facts.

“Many of the facts aren’t in dispute,” Goodman explained. “But what they mean, if anything, is.”

From Hedgecock’s perspective, prosecutors have perverted routine political and business behavior into a complex conspiracy theory--seeing intrigue where there is none, finding sinister motives in innocuous actions.

“They came into this case with the assumption that there was some big conspiracy, so even if there’s evidence to show that something might be white, they’ve tried to find a way to make it look black,” Hedgecock said. “They’ve connected things that really weren’t connected. They’ve stretched and twisted facts way beyond common sense trying to make points that just aren’t there. This whole prosecution case is filling in the blanks . . . the way (prosecutors) want you to hear it.”

Wickersham, though, contends that Hedgecock crossed financial paths with his co-conspirators too many times--and inaccurately reported the resulting transactions on too many occasions--for those incidents to be merely unrelated coincidences. Hedgecock’s claim that he was unaware of the sources of money that benefited him, directly or indirectly--an explanation that he offers in regard to several of the key financial deals at issue in the case--is one that, through repetition, grows increasingly less credible, Wickersham argues.

“This case is just one solid string of things that (Hedgecock) didn’t know about,” Wickersham said. “How often can you say that and expect people to believe it?”

Prosecutors charge that, to become mayor, Hedgecock conspired with former J. David & Co. principals Nancy Hoover and J. David (Jerry) Dominelli in a scheme to funnel tens of thousands of dollars in illegal contributions to Hedgecock’s 1983 race through a political consulting firm owned by Tom Shepard, a close friend of the mayor. Hedgecock also relied on Hoover’s and Dominelli’s largess, prosecutors contend, to transform his rundown South Mission Hills house into a mansion. To conceal the transactions, Hedgecock falsified various financial disclosure statements, according to Wickersham.

Hedgecock, Shepard, Hoover and Dominelli are charged with conspiring to sidestep local campaign contribution limits and of concealing various financial transactions relating to the campaign. They are also charged with perjury. Both charges are felonies. The four were indicted at the same time, but Hedgecock asked to have his trial separated from the others’ so it would begin before the November, 1984, elections. That trial ended in a hung jury in February.

An example of how the two sides draw completely opposite conclusions from the same event--occasionally with comic overtones--can be found in the testimony of John Woodard, a former Shepard employee who acted as Hedgecock’s chauffeur during the 1983 campaign.

Woodard testified that, in the spring of 1983, he discussed the amount of work that Tom Shepard & Associates was doing on Hedgecock’s campaign with Robert Meadow, one of the firm’s founding partners, and Shepard staff member Julia (Mo) Whitworth. The discussion occurred in the Shepard firm’s offices, in a La Jolla building that was also occupied by J. David.

When he asked how Shepard’s firm, which then had few other clients, was able to pay for all of the Hedgecock campaign work, Woodard said, Meadow “just looked at the ceiling and said, ‘I don’t know.’ ”

After a brief pause, and a knowing glance at the jury, Deputy Dist. Atty. David Cox, who assisted Wickersham, asked one further question aimed at attaching significance to Meadow’s look toward the office ceiling.

“Whose office was above yours?” Cox asked Woodard.

“J. David & Co.,” Woodard answered.

Similarly, prosecutors find a suggestive wisp of conspiracy in the fact that, the day after Hedgecock qualified for the runoff in the 1983 mayoral race, he visited Hoover and Dominelli and, according to a former J. David lawyer, thanked them “for all they’d done for his campaign.” Goodman, however, notes that Hedgecock made similar remarks to dozens of other supporters after the primary, adding that the comments were nothing more than the type of remarks that he or any other politician would make in the wake of a successful campaign.

To Hedgecock, those vignettes illustrate how prosecutors have sought to draw inferences that, in the mayor’s words, “stretch fact into fantasy.” Prosecutors, though, view such seemingly minor points as the thread from which a conspiracy was woven and argue that their inferences are perfectly plausible in light of the other evidence in the trial.

Although prosecutors allege that Hedgecock committed 57 overt acts to further a conspiracy, the 15 felony charges and one misdemeanor count facing him focus on several overriding questions, including:

- Was the $360,000-plus that Dominelli and Hoover invested in Tom Shepard & Associates a legitimate business investment or an illegal subsidy to Hedgecock’s race?

- Did Hedgecock’s campaign receive free staff time and other services from Shepard’s firm or was the contract between the campaign and the firm a valid one?

- Was the $130,000 loan that Hedgecock received from Hoover (in an oral agreement) to renovate his house an unorthodox, but nevertheless legal, transaction or was the money originally intended to be a gift that probably would not have come to light were it not for J. David’s collapse in early 1984?

- Are errors and omissions on Hedgecock’s financial disclosure statements inadvertent ones, as Hedgecock contends, or intentional falsifications intended to hide his ties to Hoover and Dominelli?

According to the prosecution’s theory, the conspiracy had several purposes: Hedgecock would become mayor, Shepard would have a successful business, and Hoover--and by extension, J. David & Co. itself--would realize her desire to be a major behind-the-scenes political power broker in San Diego.

Wickersham argues that the conspiracy was already in place by the time that Shepard left then-County Supervisor Hedgecock’s staff to start his consulting firm in January, 1982. In an attempt to show that the founding of Tom Shepard & Associates was inextricably linked to Hedgecock’s mayoral aspirations, Wickersham has emphasized that Hedgecock and his partisans were contemplating a mayoral campaign as early as the spring of 1980, shortly after Hedgecock had been reelected to a second supervisorial term.

To Wickersham, the Hedgecock camp’s meetings, which became more frequent in 1981 and 1982, are the foundation on which the conspiracy was constructed. However, Goodman argues, and the mayor’s supporters have testified, that prosecutors are reading too much into those early meetings, which the defense characterizes as the kind of “what-if” brainstorming and speculative long-range planning sessions that are common in politics.

“Well, the prosecution has proved once again that Roger Hedgecock was guilty of running for mayor,” Goodman said sarcastically after one court session. In his cross-examinations, Goodman has repeatedly stressed that the essential question is not when Hedgecock began considering running for mayor, but whether he broke the law to achieve that goal.

J. Michael McDade, Hedgecock’s 1983 campaign manager and former City Hall chief of staff, testified that serious planning for Hedgecock’s mayoral campaign did not begin until then-Mayor Pete Wilson won the Republican nomination for the U.S. Senate race in June, 1982--and that the campaign did not become a certainty until Wilson’s victory in the general election five months later.

“Until (November, 1982) you couldn’t have a campaign, but you sure could have dreams and aspirations,” said McDade, now a partner in a local law firm.

Throughout 1982 and 1983, Dominelli and Hoover invested more than $360,000 in Shepard’s firm. Because Hedgecock’s campaign was the firm’s major client during most of that period, prosecutors argue that the two former J. David executives’ investments were tantamount to illegal donations that helped prop up an integral component of his campaign.

Hedgecock has consistently denied knowing that any J. David money was flowing into Shepard’s firm, saying that he believed that Hoover was underwriting the company, and that she did so primarily to help Shepard start his own business, not to get Hedgecock elected mayor. As a result of the money that she and Dominelli put into Shepard’s firm, Hoover received a six-figure tax write-off--a fact that the defense believes lends credence to its theory that the investments were legitimate business decisions, not illegal campaign donations.

The defense also points out that $189,000 of Hoover’s and Dominelli’s investments were made before and after Hedgecock’s race--$95,000 of which was invested after Hedgecock had already been elected in May, 1983, and, therefore, can hardly be viewed as an illegal campaign donation. That breakdown, Goodman argues, contradicts the prosecution’s contention that Shepard’s firm was, from its inception, intended to be little more than a political laundry to funnel illegal donations to Hedgecock.

A key prosecution witness, however, testified that Hedgecock had boasted to him in November, 1981, that Dominelli planned to bankroll Tom Shepard & Associates so that the firm would be able to run Hedgecock’s 1983 race. Sorrento Valley investment counselor Harvey Schuster said that Hedgecock told him in a conversation that month that Dominelli “was like putty in Nancy Hoover’s hands, and anything that Nancy wanted, Jerry would do.”

That assertion by Schuster, arguably the major witness in the case, is the only direct evidence linking Hedgecock to the alleged plot to circumvent the city’s $250-per-person campaign contribution limit. It also marks one of the few instances in which the two sides in the case disagree, not simply on interpretations, but on the facts themselves.

Seeking to refute the damaging testimony, Goodman argued that Schuster lied in his testimony because of his anger over not receiving a lucrative 1982 contract to develop the county’s bayfront parking lots. Hedgecock and his colleagues on the Board of Supervisors unanimously awarded that contract to another bidder.

Goodman also sought to discredit Schuster’s account through testimony by Meadow and by Gregory Dennis, another of Shepard’s former partners, that Hoover’s name was not discussed as an investor in the political consulting firm until after the date that Schuster claims to have discussed the subject with Hedgecock. There also were other instances in which Schuster’s testimony on key points differed from that of other witnesses.

“Everything that has taken place regarding Schuster has been proved to be either an exaggeration or a lie,” Goodman said. “Schuster is a non-issue in this case. I think Schuster’s history.”

The contract between Hedgecock’s campaign and Shepard’s firm is another major point of contention in the trial. Initially paid a $750 monthly retainer, Shepard’s firm later received a 15% commission on all television and radio advertisements bought on Hedgecock’s behalf--a formula that resulted in a fee of about $30,000. The campaign also paid for all direct expenses such as TV or radio air time, brochures and other miscellaneous campaign materials.

Prosecutors, however, argue that Shepard gave Hedgecock a cut-rate contract that resulted in a heavy financial loss for the consulting firm in the form of unreimbursed staff, overhead costs and other services.

Arthur Brodshatzer, a local accountant who also testified for the prosecution in the mayor’s first trial, claimed that if a prorated portion of Tom Shepard & Associates’ overhead costs had been assigned to the Hedgecock campaign, the firm actually “lost” more than $130,000 on the race.

The defense’s overriding argument, however, is that Shepard viewed the Hedgecock campaign as a “loss leader” that could significantly enhance his young firm’s reputation. In brief, the defense contends that Shepard was willing to absorb a short-term financial loss, realizing that running a successful mayoral campaign could act as a magnet for other clients--which proved to be the case.

Arguing that Hedgecock’s campaign had a valid, market-rate contract with Shepard’s firm, Goodman also contends that the question of whether Shepard’s 15% commission on media ads was sufficient to cover all of his costs was a matter of concern only to the consultant, not to the mayor’s committee.

Other instances in which the prosecution alleges that Hedgecock improperly received free services from Shepard’s firm include:

- A $2,000 bill that the firm paid in early 1982 for lessons that Hedgecock received from a former TV news anchorman on how to improve his deportment on television. As with a $500 legal fee paid for Hedgecock by Schuster, Hedgecock’s explanation is that he forgot about the matter because he never received a bill.

- Work done by Shepard’s employees on Hedgecock’s behalf before the firm even received a contract to run his potential mayoral campaign in August, 1982. Meadow, however, testified that any such work by the firm’s staff members was done voluntarily.

- At least four Shepard employees who Wickersham claims were hired primarily to work on Hedgecock’s race, noting that the workers left the firm shortly after the campaign ended. Meadow and some of the employees in question, however, testified that the workers had duties other than simply working on the race and explained their departure by saying that the firm underwent a reorganization after the 1983 election.

The defense also emphasizes that state election laws specify that a consulting firm’s “overhead or normal operating expenses” cannot be construed as campaign contributions. Wickersham, however, counters that there was nothing “normal” about many of the expenses that Shepard’s firm incurred on Hedgecock’s behalf.

The perjury charges facing Hedgecock allege that he intentionally falsified personal and campaign financial disclosure reports required of public officials--primarily, according to the prosecution, to conceal his links to Hoover and Dominelli. Beyond that, the perjury charges focus on two major areas: the $130,000 oral-agreement loan that Hedgecock used to remodel his house, and a $16,000 promissory note that the mayor sold to Hoover.

From the beginning of the investigation into his finances, Hedgecock has insisted that the $130,000 loan, which he repaid last year with interest, came from Hoover. Wickersham, however, argues that the renovation project cost much more than $130,000 and contends that Hedgecock received additional unreported money from Dominelli and from J. David & Co. Furthermore, the prosecutor has speculated that the money originally was intended to be a gift, not a loan, and likely never would have come to light were it not for J. David’s collapse in early 1984.

Two construction officials who supervised the house renovation project said that the $130,000 figure was accurate. But a carpenter testified that one of the officials had told him that he was “changing numbers and figures” on invoices in an attempt to conceal the fact that the project cost more than $200,000. Outside court, Hedgecock explained that the project cost “$194,000 and change,” but emphasized that he personally paid for all expenses not covered by Hoover’s loan.

Checks introduced as evidence showed that much of the $130,000 loan did, in fact, come from J. David, not Hoover. Hedgecock acknowledged that Hoover and Dominelli may have “commingled their funds” without his knowledge, but added, “My deal was with Nancy. As far as I knew, that’s where the money came from and that’s who I paid.”

The $16,000 promissory note at issue in the trial was acquired by Hedgecock as part of the dissolution of an unsuccessful condominium development partnership with contractor Michael Turk. Hedgecock sold the note, secured by a trust deed on an El Cajon house, to Hoover in late 1982, but asked that her attorney not record the sale until June 23, 1983--a delay that prosecutors argue was designed to conceal his financial ties to Hoover until after the special May, 1983, mayoral election.

The mayor argues that the delay was motivated by tax considerations brought to his attention by Turk--a scenario bolstered by Turk’s own testimony. Turk said that he told the mayor that he would receive a major tax break if he did not sell the note, as well as other assets that Hedgecock received in the break-up of their partnership, for at least one year after a June 22, 1982, modification to the dissolution agreement. To accept the negative connotation that the prosecution tries to attach to the delay, Hedgecock points out, one must assume that it is mere coincidence that the sale was recorded exactly one year and one day after the amendment to the dissolution pact.

Perhaps the most dramatic moment in the trial, however, concerns not the extensive testimony that has been heard, but rather the testimony that will not be delivered. Last week, Goodman, characterizing the prosecution’s case as a “sand castle . . . that crumbled,” stunned courtroom observers by resting his case without presenting a single witness.

“Our feeling was, their witnesses were our witnesses . . . and so there was no need to present a defense,” Goodman said, arguing that he had already built his case through his cross-examination of prosecution witnesses. “It’s very clear to us that the prosecution has not met its burden of proof beyond a reasonable doubt.”

Goodman’s decision precluded a repeat of the dramatic highlight of the mayor’s first trial--Hedgecock’s three days on the witness stand. However, most of the jurors from the first case, which ended in a mistrial in February with the jury deadlocked 11-1 in favor of conviction, said that they believed that Hedgecock’s testimony was unpersuasive and damaged his own case.

Therefore, while Goodman characterizes his bold decision as a sign of strength, prosecutors suggest that the defense attorney’s tactic actually may reflect his reluctance to have Hedgecock testify again.

In his instructions to the jury later this week, Judge William L. Todd Jr. will remind jurors that, because defendants have a constitutional right not to testify, they should not draw any inferences--positive or negative--from Goodman’s decision not to present a defense.

However, both sides in the case concede that, human nature being what it is, individual jurors well may be affected, if only in a subliminal way, by the defense’s strategic gambit.

Appropriately, that will mean that, as with so much else in the case, Hedgecock’s trial will again turn on, to repeat Wickersham’s words, “what inferences you draw.”