J. David Attorney Had Account in Fictitious Name, Court Told

Using a fictitious name and saying he lived in Monaco, an attorney for J. David & Co. had a secret account at the failed La Jolla investment firm containing $100,000 transferred from a Mexican bank account, it was revealed in court Tuesday.

But the attorney, Michael A. Clark, denied allegations by lawyers representing former J. David investors that the funds were laundered through the Mexican bank. Instead, he said, the money came from profits he earned in a real estate deal.

Clark opened a secret J. David & Co. account on July 7, 1982, attorneys representing former J. David investors disclosed in court. They claimed that Clark had “laundered” money by transferring $100,000 from an account at Banco Nacional de Mexico on July 29, 1982. Earlier in the day, Clark had denied ever having a bank account outside the United States.

Funds in the account, called “Blackstone,” were transferred to another J. David “interbank” or foreign currency trading account belonging to Clark on Aug. 10, 1982, attorneys revealed in court. At its maximum, the Blackstone account contained nearly $130,000.

But attorneys representing investors who have sued Clark and his former law firm, Wiles, Circuit & Tremblay, said they will show during today’s trial session that Clark transferred only between $5,000 and $10,000 to the other account, called J.B. Scotch.

In the liveliest day of the three-month-old trial, plaintiff attorneys unwrapped large posters of enlarged J. David & Co. account statements to reveal Clark’s Blackstone account. Clark signed the account application form with that name while his wife signed as “Mrs. Blackstone.”

Blackstone listed his residence as Monaco and his nationality as Monacan.

Clark said in court, however, that the application information about Monaco was completed by former J. David fund-raising executive Mark Yarry, now living in London in self-imposed exile. He left San Diego a few weeks after J. David & Co. collapsed in bankruptcy on Feb. 13, 1984.

Yarry, said Clark, often used fictitious names to establish J. David investor accounts. Blackstone, for example, referred to Sir William Blackstone, the famous 18th-Century English jurist who specialized in common law.

Clark’s other account, J.B. Scotch, was named for his favorite brand of liquor, while Yarry’s foreign currency trading account was called Sebastian, after his cat.

J. David attracted $200 million from about 1,500 investors; actual losses totaled about $82 million. J. David (Jerry) Dominelli pleaded guilty last year to four counts of fraud and income tax evasion and is serving a 20-year prison sentence.

A federal grand jury is still investigating several other former J. David executives as well as lawyers and other professionals who worked for the firm. Assistant U.S. Atty. Gay Hugo, who is leading the federal grand jury probe into J. David, and three IRS investigators--David Chell, Paul Perry and Robert Meyer--attended Monday’s trial session.

Former J. David investors have already settled lawsuits against several other professional firms that once represented the La Jolla concern. The law firms of Rogers & Wells and Abramsom & Fox settled out of court for $40 million and $7 million, respectively. The Laventhol & Horwath accounting firm settled for $6.5 million.

Plaintiff attorneys suggested that the funds in Clark’s accounts had been laundered from secret sources, including cash payments from Dominelli.

Attorney Pat Frega asked Clark if he “ever reported to the IRS that you had laundered $100,000?”

And attorney Joe Cotchette said that the plaintiffs intend to show “how $190,000 in cash flowed into Mr. Clark” between 1982 and just before the J. David collapse in early 1984.

While not explaining why the funds were in a Mexican bank, Clark said that the money was garnered from a profitable real estate deal he shared with Ray Twigg, president of San Diego-based Sym-Tek Systems, a publicly held company that makes automatic environmental test-handling equipment for the semiconductor industry.

Twigg was also a J. David investor who had a fictitious account called Cambridge, which he said he established for his parents in England. He claims he lost more than $100,000 in the Cambridge account and his other J. David account.

Clark serves as a Sym-Tek director and as corporate secretary. In 1983, J. David was going to underwrite a public offering of a Sym-Tek subsidiary, General Thermionics, but the deal was never completed.

Twigg and Clark bought 3.3 acres of land in Kearny Mesa in 1975 for about $960,000, Twigg said in an interview Tuesday.

They later built a 57,000-square-foot office building on the site and sold the land and the building in 1980 at a profit of about $800,000, Twigg said. The building now serves as corporate headquarters for Sym-Tek.

Twigg said that after the sale, they decided to give one-third of the profits to Sym-Tek, even though the company had no equity in the land or the building. Using figures supplied by Twigg, Sym-Tek’s one-third would amount to $266,667.

In court Tuesday, however, Clark said that his one-third share totaled between $340,000 and $390,000. Later, Clark said in an interview that he had paid his full share of income tax on the profits.

Jack Samet, Clark’s attorney, called the plaintiff’s laundering charges “another accusation without proof.”