Dominelli Admits Conspiracy to Finance Hedgecock Race

Admitting that he helped former Mayor Roger Hedgecock circumvent local election laws, former financier J. David (Jerry) Dominelli pleaded guilty Monday to conspiring with Hedgecock and two mutual close friends to illegally finance Hedgecock’s 1983 mayoral campaign.

Dominelli’s guilty plea came during a Municipal Court hearing at which the former La Jolla financier, now serving a federal prison sentence for defrauding investors, admitted many of the allegations that Hedgecock and two other co-defendants--former Dominelli business associate Nancy Hoover and political consultant Tom Shepard--have vehemently denied over the past two years.

In a three-page sworn affidavit, Dominelli stated, for example, that at various meetings in 1981 and 1982, he and the three others discussed “the providing of financial assistance . . . to Hedgecock in his campaign for mayor” in excess of the city’s $250-per-person limit. Hedgecock, who resigned Dec. 10 shortly before being sentenced to one year in local custody and three years’ probation on a 13-count felony conviction, has repeatedly insisted that no such meetings occurred.

Dominelli also bolstered prosecutors’ contention that Shepard’s former political consulting firm served as a conduit for illegal donations to Hedgecock’s 1983 campaign from Dominelli’s now-defunct investment firm--J. David & Co.--and Hoover. In Hedgecock’s presence in late 1981, a plan was devised that “included the idea that Nancy Hoover and the J. David company would supply the funding necessary” to enable Shepard’s firm to run Hedgecock’s future mayoral campaign, Dominelli said in his statement.

In exchange for his guilty plea to the conspiracy count, prosecutors agreed to drop perjury charges also facing Dominelli, who is recovering from a stroke that he suffered in prison in October, 1984. Presiding Municipal Judge Frederic Link sentenced Dominelli to a two-year prison sentence, to run concurrently with his 20-year federal sentence on income tax evasion and fraud charges.

Hedgecock and Shepard’s attorneys immediately disputed Dominelli’s claims, noting in particular that his plea Monday will not lengthen his stay in prison.

“Mr. Dominelli’s plea today should be recognized solely for what it was--a plea entered solely for purposes of expediency by a broken man in very poor health that will not cause him one iota of additional punishment,” said Shepard attorney Doug Brown. Asked whether he believed that Dominelli lied in his sworn admission in court, Brown added, “Yes.”

Hedgecock, meanwhile, repeated his oft-stated argument that Dominelli could not have contributed to his 1983 mayoral campaign in 1981 and 1982, because that race did not become a certainty until after then-Mayor Pete Wilson was elected to the U.S. Senate in November, 1982.

“I found it curious that, in effect, Mr. Dominelli claims psychic powers,” Hedgecock said at a news conference. “I find it contradictory that he would admit that he was making contributions in 1981 for an election that was not yet called or scheduled to be held, and a campaign that didn’t exist.” Hedgecock is free pending the outcome of his appeal.

Deputy Dist. Atty. Charles Wickersham, however, said he believes that Dominelli was “very truthful” in his statement Monday.

“His statement comports with the facts,” Wickersham said. “I’m satisfied that he’s come clean.”

Earlier Monday, Link refused to further delay Shepard’s and Hoover’s preliminary hearing, which will determine whether they will be forced to stand trial in Superior Court on charges that they, too, provided illegal financial aid to Hedgecock. That hearing had been delayed several times last year, and defense attorneys on Monday requested another postponement until transcripts from Hedgecock’s trial are completed, probably in March.

Link, however, emphasized that the facts of the case have been widely publicized for more than one year, adding, “The court feels that what you want from the Hedgecock (trial transcripts) has been available to you.”

Hoover’s and Shepard’s preliminary hearing began later Monday before Judge Robert J. Stahl Jr. Arguing that Dominelli’s guilty plea does not undermine their legal positions, Shepard attorney Brown said, “Mr. Dominelli’s plea does not affect these proceedings in the slightest.”

Monday’s court hearing marked Dominelli’s first public appearance since he pleaded guilty last year to the federal charges stemming from collapse of his La Jolla-based investment firm. Wearing designer blue jeans and a blue zip-up jacket, Dominelli, whose speech was impaired by the stroke, stood between his two attorneys and provided one-word answers to a series of questions from Link.

In his sworn statement, Dominelli said that he, Hedgecock, Hoover and Shepard met several times in late 1981 to discuss the possibility of Shepard leaving his position on then-County Supervisor Hedgecock’s staff to form a political consulting firm.

“The plan as discussed at these meetings included the idea that Shepard’s firm would handle, in addition to other business, the campaign of Roger Hedgecock for mayor,” the statement said. “The plan also included the idea that Nancy Hoover and the J. David company would supply the funding necessary to make the firm viable.”

Shepard’s firm, founded in January, 1982, was kept afloat primarily through more than $350,000 in investments from Dominelli, Hoover and the J. David firm in 1982 and 1983. Because Hedgecock’s campaign was Tom Shepard & Associates’ major client during most of that period, prosecutors regard those funds as laundered contributions that helped prop up an integral element of Hedgecock’s campaign. Hedgecock, however, has said that the money from Dominelli and Hoover was “a routine business investment” designed primarily to help Shepard start his own business, not to get Hedgecock elected mayor.

Dominelli Monday detailed several incidents in which he claimed that his investments were targeted to benefit Hedgecock’s campaign.

Dominelli stated that in December, 1981, for example, Shepard told him that Hedgecock needed $3,000 to cover payments on a computerized voter list “that was being prepared for use in his campaign.”

“To help out Roger Hedgecock, I signed a J. David & Co. check dated Dec. 22, 1981, for $3,000 made payable to Roger Hedgecock,” Dominelli wrote in his statement. “I gave the check to Tom Shepard for Roger Hedgecock.”

During his first trial--which ended in a hung jury last February, prompting the retrial in which he was convicted in October--Hedgecock testified that, while the $3,000 check came from Dominelli, he regarded it as a payment from Shepard for the right to use the computerized list for his firm’s other clients. Shepard explained, Hedgecock added, that the check came from J. David because he was using the investment firm’s checking account during the start-up period for Tom Shepard & Associates.

During the summer of 1982, Dominelli said, he met with Hoover and Hedgecock on several occasions to discuss “the providing of financial assistance by Nancy, myself and others to Hedgecock in his campaign for mayor.”

“It was agreed that we would provide financial support,” Dominelli said.

In June, 1982, the former financier added, he gave Shepard a $15,000 cashier’s check that had been purchased with J. David funds so the political consultant could “beef up his agency” to run Hedgecock’s campaign--then still five months away from being a certainty.

“The reason for giving money to Tom Shepard’s firm was to enable Shepard to hire employees for his agency to work on the Hedgecock campaign,” the statement said. “ . . . No loan documents were ever drawn up and the repayment of the funds was never discussed.”

Hedgecock has argued that because his campaign committee paid Tom Shepard & Associates about $30,000 to run his 1983 race, the internal workings and financing of Shepard’s company were of no concern to him. Prosecutors, however, contend that Shepard’s firm lost tens of thousands of dollars on Hedgecock’s race in the form of overhead that was not reimbursed and staff expenses--a debt paid for by money from Hoover and Dominelli.