Hedgecock Guilty, Faces Ouster as San Diego Mayor

Mayor Roger Hedgecock, who never lost an election during nine years in public life, was convicted Wednesday on 13 felony conspiracy and perjury counts, most charging that he accepted illegal donations in his 1983 mayoral race and falsified financial disclosure statements to conceal the scheme.

The decision by the eight-woman, four-man Superior Court jury apparently will cost Hedgecock the office that prosecutors charged he broke the law to win 2 1/2 years ago. To become mayor, the jury found, Hedgecock conspired with former J. David & Co. principals Nancy Hoover and J. David (Jerry) Dominelli to funnel tens of thousands of dollars in illegal contributions to his 1983 campaign through a political consulting firm owned by Tom Shepard, a close friend of the mayor.

City Atty. John W. Witt has said that Hedgecock would be forced to resign his office when Judge William L. Todd Jr. sentences him on Nov. 6--even if the mayor appeals the verdict, returned early Wednesday afternoon after 6 1/2 days of deliberations by the jury. Some lawyers, however, said Wednesday that they believe that Hedgecock might be able to challenge, on constitutional grounds, any effort to force him from office before conclusion of his appeals.

Hedgecock, who was acquitted on two felony perjury charges and a misdemeanor conflict-of-interest count, was generally impassive as the verdicts were read, though at one point he closed his eyes and gently shook his head. Hedgecock’s wife and parents stared vacantly ahead while the verdicts were announced. One of the mayor’s closest aides sobbed into his hands.

Each felony conviction carries a maximum penalty of four years’ imprisonment, but with multiple counts the maximum sentence is eight years, according to prosecutors. The mayor was released on his own recognizance after the verdicts.

At a brief news conference in his City Hall office shortly after the verdict was announced, Hedgecock, a 39-year-old moderate Republican first elected to succeed Pete Wilson after Wilson’s election to the U.S. Senate, thanked his family and friends for being “so supportive during this anguish in this time of our lives.”

“There are no words that can express the sense of disappointment,” said Hedgecock, whose first trial on the charges ended in a mistrial last February with the jury deadlocked 11-1 in favor of conviction. Saying that he needed time to “regroup my thoughts,” Hedgecock, who also could lose his law license as a result of his conviction, promised to make “a more extensive statement on a lot of very obvious questions in a day or two.”

One of the most obvious questions is whether Hedgecock will fight to retain his office or, as some San Diego politicians suggested after hearing the verdict, resign. Among those calling for Hedgecock’s immediate resignation was Deputy Mayor Bill Mitchell, who would become acting mayor if Hedgecock stepped down.

Hedgecock’s legal misfortune also activated the political ambitions of a handful of other local public figures. Within hours of the verdict, Police Chief William Kolender, Assemblyman Larry Stirling (R-San Diego) and City Councilman Bill Cleator expressed interest in running for mayor if Hedgecock is removed from office and the City Council decides to schedule a special election instead of filling the vacancy through an appointment.

Deputy Dist. Atty. Charles Wickersham, whose job it was to prosecute one of the most publicized cases in local legal and political history, described the jury’s verdict as “an excellent result . . . that delighted me.”

“I do feel sorry for (Hedgecock),” Wickersham said. “But I feel in my heart it was a just, fair, true result.”

Dist. Atty. Edwin Miller, whom Hedgecock accused of treating the case as a “political vendetta,” admitted that he felt “vindicated” by the verdict, but added: “It’s not easy to prosecute a popular elected public official. There’s a certain amount of distaste in doing that. But . . . I was convinced at a certain point in time that it was necessary, come what may.”

The mayor’s attorney, Oscar Goodman, who presented no defense witnesses in the case, was unavailable for comment after the verdicts.

As the verdicts were read in court, most of the jurors sat solemnly with their eyes cast downward. One female juror quietly wept, wiping her eyes with a handerchief handed to her by an alternate jurors. Another juror’s hands shook in her lap as she verbally affirmed, in a barely audible voice, her votes on the 16 counts facing Hedgecock.

“It was a painful experience,” said juror Karon Dyer, a project manager for a computer systems house. “It was nothing anyone enjoyed. But we did our job.”

Jury foreman Richard Stark, asked to explain what convinced the jury, said: “The tremendous cash flow; his house and everything.” Stark, a vice president of Security Pacific Bank, added that the jurors were determined not to deadlock as the first jury had.

“We were not going to have a hung jury--we didn’t want that,” Stark said. Stark explained that when the jurors cast their first straw vote on the conspiracy charge on Sunday night--four days after they were sequestered--several jurors voted for the mayor’s acquittal. By Tuesday night, however, the jurors who initially sided with Hedgecock had switched their votes to guilty, Stark said.

The controversy over Hedgecock’s personal and campaign finances, which has dominated local news for 18 months, was ignited by his admission in early 1984 that, the year before, he made an oral agreement with Hoover to borrow $130,000 to renovate his South Mission Hills house.

While Hedgecock insisted that there was nothing improper about the loan, the unorthodox transaction brought to light related transactions that forced the mayor to amend earlier financial disclosure statements to correct omissions and errors. Those amendments, combined with the inconsistencies and inaccuracies in Hedgecock’s initial explanations of his financial dealings, attracted the scrutiny of Dist. Atty. Miller and the California Fair Political Practices Commission.

On Sept. 19, 1984, the San Diego County Grand Jury indicted Hedgecock, Hoover, Dominelli and Shepard, charging that they used Shepard’s firm as a political laundry for tens of thousands of dollars in allegedly illegal contributions to Hedgecock’s 1983 race. The perjury charges filed against Hedgecock alleged that he intentionally falsified financial disclosure statements to conceal that scheme and other purportedly illegal personal financial aid from the two former J. David executives.

About a month later, the state Fair Political Practices Commission filed a $1.2-million civil lawsuit against Hedgecock on similar charges. FPPC Chairman Dan Stanford said Wednesday that his agency will continue to press the civil case against the mayor, but added that it is “possible” that the suit could be dropped, depending on the “ultimate penalty imposed in the criminal case against the mayor.”

Although Hedgecock was reelected by a convincing 58%-42% margin over La Jolla millionaire Dick Carlson only seven weeks after his indictment, the mayor then was forced to battle in the courtroom to preserve what he had won at the polls. However, the mayor’s seven-week first trial, highlighted by his three days of testimony, ended inconclusively with a hung jury.

Saying that the district attorney’s office “had its shot and missed,” Hedgecock argued that the case should not be retried.

However, then-Assistant Dist. Atty. Richard D. Huffman, noting that Hedgecock had escaped conviction “by the skin of his teeth,” pledged to retry the case. Huffman was appointed to the Superior Court bench in the spring, putting the retrial in the hands of Wickersham, who assisted Huffman in the first case.

The case against Hedgecock turned on one major question: Was the more than $360,000 that Hoover and Dominelli invested in Tom Shepard & Associates in 1982 and 1983 a legitimate business investment or an illegal subsidy of Hedgecock’s campaign designed to circumvent the city’s $250-per-person contribution limit?

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. would become a major behind-the-scenes political power broker in San Diego.

Because Hedgecock’s mayoral campaign was Tom Shepard & Associates’ major client during most of the period in which Hoover and Dominelli pumped money into the firm, Wickersham argued that those investments were tantamount to illegal campaign donations that helped prop up an integral element of Hedgecock’s 1983 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, primarily to help Shepard start his own business. The firm was founded in January, 1982--10 months before a mayoral race became a certainty when then-Mayor Pete Wilson was elected to the U.S. Senate. In a special May, 1983, election to replace Wilson, then-County Supervisor Hedgecock narrowly defeated former City Councilwoman Maureen F. O’Connor.

The defense also pointed out that $189,000 of Hoover’s and Dominelli’s investments were made before and after Hedgecock’s race.

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 that month that Dominelli “was like putty in Nancy Hoover’s hands, and anything that Nancy wanted, Jerry would do.”

In a case built on circumstantial evidence, that assertion by Schuster, arguably the major witness in the case, was the only direct evidence linking Hedgecock to the alleged conspiracy.

Seeking to refute the damaging testimony, Goodman denounced Schuster in his closing argument, characterizing him as “a liar (and) a sleazebag” who lied because of his anger over not receiving a 1982 contract to develop the county’s bayfront parking lots. That contract was awarded while Hedgecock was a county supervisor. Even though Hedgecock voted against Schuster’s bid, his failure to disqualify himself from the vote led to the misdemeanor conflict-of-interest charge, because Schuster had earlier paid a $500 legal bill for Hedgecock. He was acquitted of that charge Wednesday.

The contract between Hedgecock’s campaign and Shepard’s firm was another major point of contention in the trial. Although Hedgecock’s campaign committee paid Shepard’s firm a fee of about $30,000, mostly through a 15% commission on television and radio ads, prosecutors contended that the contract was a cut-rate one that caused the firm to lose more than $135,000 in the form of staff and overhead costs.

The defense’s overriding argument was that Shepard viewed the Hedgecock campaign as a “loss leader” that could significantly enhance his young firm’s reputation and attract other clients--which, in fact, proved to be the case. In addition, Goodman contended 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.

Beyond the allegedly unreported financial aid that prosecutors argue that Hedgecock received through Shepard’s firm, the perjury charges in the case focused on two major areas: the $130,000 oral-agreement loan that Hedgecock used to renovate his house and a $16,000 promissory note that the mayor sold to Hoover.

From the beginning of the investigation into his finances, Hedgecock insisted that the $130,000 loan came from Hoover and had been repaid, with interest, in early 1984. Checks introduced as evidence, however, showed that much of the money did, in fact, come from J. David & Co., not Hoover--a disclosure to which Hedgecock responded by conceding that Hoover and Dominelli may have “commingled their funds” without his knowledge.

Wickersham, though, described the $130,000 loan as “a figure of convenience” arrived at because that was as much as Hedgecock could afford to repay in the wake of J. David’s collapse. Arguing that the home renovation project actually cost much more than that, Wickersham also suggested that the money originally was intended to be a gift that likely would never have come to light were it not for J. David’s demise in February, 1984.

The $16,000 promissory note at issue in the trial was acquired by Hedgecock upon the dissolution of an unsuccessful condominium development partnership with local 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, 1983--a delay that prosecutors argued was designed to conceal his financial ties to Hoover until after the special May, 1983, mayoral election. The mayor, however, said he delayed the recording of the sale for tax reasons.

Although the second trial featured a handful of new witnesses and several revelations, the evidence presented in the retrial was largely similar to that heard in the first case.

Goodman, however, ensured that the retrial would not be perceived as simply a replica of the earlier case by providing the most dramatic moment in either trial when he stunned courtroom observers by resting his case without presenting a single witness.

Describing the prosecution’s case as a “sand castle . . . that crumbled,” Goodman argued that “there was no need to present a defense” because he had already built his case through his cross-examination of prosecution witnesses.

While Goodman characterized his bold decision as a sign of strength, prosecutors suggested that his tactic actually may have reflected his reluctance to have Hedgecock testify. Most of the jurors in Hedgecock’s first trial said afterward that they believed that the mayor’s testimony was unpersuasive and damaging.