Prosecutor in J. David Case to Join San Diego Law Firm
Robert D. Rose, the assistant U.S. attorney who led the 2-year federal grand jury investigation into the J. David & Co. swindle, will resign as chief of the federal fraud division in San Diego and join a private law practice.
Rose said Wednesday he will become a partner next month in Duckor & Spradling, a 12-lawyer San Diego firm that specializes in business planning and commercial disputes.
The J. David investigation will not be adversely affected by his departure, Rose said in an interview. “The attorneys who replace me will continue on the case,” he said. “They’ll resolve it however it gets resolved--either by filing charges, closing the books, or anything in between.”
For nearly two years, Rose has been the sole prosecutor on the complicated, far-flung and slow-moving J. David case.
Attorneys representing former J. David investors and even a federal judge have openly expressed frustration that the case has yielded only one major indictment. Founder J. David (Jerry) Dominelli was indicted in 1984 for mail fraud, bankruptcy fraud and income tax evasion. He was sentenced in June to 20 years in federal prison.
Last month, Assistant U.S. Atty. Gay Hugo started working on the grand jury investigation, and the probe has since stepped up its pace, sources close to the case claim.
Hugo will continue on the case and Assistant U.S. Atty. George Hardy will also join the investigation, Rose said. In addition, Rose said he will remain on the job for the rest of the month to “assist them as much as I can.”
One of the clients at Rose’s new firm is a former J. David & Co. accountant who has been sued by investors in the fraudulent La Jolla investment firm and who testified last year before the federal grand jury investigating J. David. Rose questioned the San Diego accountant at that time.
Because of that relationship, Rose said Wednesday that he will have “nothing to do” with the client, Eric Johnson, who is also an attorney.
Rose will establish what in legal circles is called a “Chinese Wall,” meaning that he is prevented from taking part in representing the client and from discussing the civil litigation against Johnson with anyone else in the firm.
Law firm principal Mike Duckor said Wednesday that there was “concern over (our representation of) Eric Johnson--and we discussed the issue” both among the partners and with the client.
The “Chinese Wall” will adequately address the issue, Duckor said.
Federal law prohibits former prosecutors from “switching sides,” or going into private practice and representing a former adversary.
Rose would not fall into that category, according to an attorney who specializes in attorneys’ ethics, because Johnson was only a witness and never a target of the grand jury investigating J. David.
Nonetheless, Rose’s new position has drawn the criticism of attorney Michael Aguirre, who has filed suit against Johnson and other former J. David executives, lawyers and accountants alleging fraud for their roles in the investment scheme.
“This is inadvisable and I’m deeply disappointed that he would consider (joining the law firm) that actively represents Eric Johnson,” Aguirre said.
“I feel badly that he’s doing that, and I think it’s poor judgment to leave the U.S. attorney’s office without seeing the case through.”
Dominelli was tried and sentenced for his role in attracting $200 million from about 1,500 investors with false promises of up to 40% annual returns. Investors actually lost about $82 million.
Dominelli pleaded guilty to three counts of fraud and one income tax evasion charge.
Rose and the U.S. attorney’s office have been criticized by attorneys for J. David investors for not indicting other key executives of J. David & Co.
And, during a J. David bankruptcy hearing in November, U.S. District Judge J. Lawrence Irving expressed his frustration that prosecutors have only charged Dominelli.
Potential targets of the grand jury probe, according to sources, include former J. David executives Nancy Hoover and Mark Yarry, as well as Norman Nouskajian, a former attorney with Rogers & Wells, J. David’s law firm.
U.S. Atty. Peter K. Nunez, asked how Rose’s departure will affect the J. David case, said that “I hope it will affect the case positively. The case will move forward quickly now.”
Nunez would not comment further on Rose’s move.
Rose, 35 and a UCLA law school graduate, has long been an advocate for additional federal prosecutors to fight white-collar crime. He has been a federal prosecutor for 11 years in San Diego, Chicago and Washington.
Rose’s quick wit often provided a lighter side to the otherwise serious, complex and fast-paced J. David imbroglio in the first half of 1984.
The new position “will afford me a good deal of variety in clients and subject matter,” he said.
According to Duckor, Rose was recommended to his new partners late last year by Fred Wirtz, attorney for J. David bankruptcy trustee Louis Metzger.
