Ex-J. David Attorney Tells of Helping in Applications

An attorney who once represented fraud-ridden J. David & Co. helped at least two friends and business associates complete applications for J. David investment accounts under fictitious names, it was revealed in court Tuesday.

The attorney, Michael A. Clark, also did legal work for a local financial firm that raised funds for J. David’s “interbank” foreign currency trading, months after J. David was warned by the Rogers & Wells law firm in early 1983 that the accounts were illegal because they weren’t registered as securities with the government, according to testimony Tuesday.

Lawyers representing former J. David investors--who have sued Clark and his former law firm, Wiles, Circuit & Tremblay--contend that Clark’s work for Reid Financial proves that Clark knew that large sums of money were being raised for J. David’s interbank even after the firm had been advised to stop peddling the accounts.

Reid Financial raised nearly $4 million from its clients and later invested it in J. David. Clark did legal work for the firm between early 1983 and 1984.

The one-time J. David investors allege that Clark and his former law firm participated in J. David (Jerry) Dominelli’s fraudulent Ponzi scheme, in which new investors’ funds were used to pay off existing clients. J. David raised $200 million from 1,500 clients; actual losses totaled $82 million.

Serving Prison Term

Dominelli is serving a 20-year prison sentence for fraud and income tax evasion. A federal grand jury is continuing its investigation of the company and several of its former employees and lawyers.

The investors’ attorneys have suggested during the three-month trial--before Superior Court Judge James A. Malkus in El Cajon--that Clark’s knowledge of fictitious name accounts are indicative of a money-laundering and tax-evasion scheme.

Clark has denied the allegations.

Three IRS criminal investigators and an assistant U.S. attorney have been in attendance during Clark’s nine days of testimony.

Clark assisted at least three investors--Dan Rich, Mary Kushner and Joe Casali--fill out J. David foreign currency trading account applications, Clark and Jack Samet, his attorney, said Tuesday.

Rich, a friend of Clark, and Casali, a business associate, each used fictitious names for their J. David interbank accounts--Yellowfin and Sailfish, respectively.

Rich’s Yellowfin account was opened on Aug. 25, 1983, when he deposited 13 cashier’s checks totaling $55,000.

The checks, copies of which have been obtained by The Times, were issued by Westlands Bank on Aug. 23, 1983. Eleven checks were for $4,500 each; one was for $1,000.

It was not revealed in court why there were so many checks and why Rich needed cashier’s checks for the deposit.

Reporting Requirement

Federal law requires any single cash transaction for more than $10,000 to be reported to the U.S. Treasury Department.

Copies of Rich’s Yellowfin account statements were mailed to a post office box in La Jolla rented by Clark and his wife, Clark said in court Tuesday. Clark did not say why the statements were mailed to his post office box.

Rich could not be reached for comment Tuesday.

Previously, Clark testified that the post office box was used only by himself, his wife and his business partnership.

Just because Clark helped J. David investors by filling out application forms doesn’t mean that he did anything illegal, according to Samet. “The fact that he assisted isn’t an indication of wrongdoing--it’s an indication and confirmation he believed the investments were legal.”

Samet called the plaintiff attorneys’ suggestions of money laundering and tax evasion a “continuation of what’s gone on for three months--they put on things that they say are exciting and tantalizing and . . . suspicious. But, when examined, they are legitimate and prove nothing regarding the charges in this case.”

Last week, Clark testified that he had opened J. David accounts in mid-1982 under fictitious names--Blackstone and later J.B. Scotch--both to prevent some J. David salesmen from pestering him to invest in the company and to ensure privacy.

Accounts Revealed

But on Tuesday, it was revealed that, in 1983, Clark opened at least two J. David accounts under his own name--one for his law practice and another for his pension plan.

Attorneys for the plaintiffs said they intend to prove that Clark solicited funds for J. David interbank accounts after he became aware of Rogers & Wells’ opinion that such accounts were illegal.

Former J. David general counsel Fred Storm previously testified that he had told Clark--on an airplane trip from San Diego to Washington--of Rogers & Wells’ opinion.

Samet said Tuesday that Clark disagreed with Storm’s account. “We have independent evidence,” Samet said outside of court, “that disputes numerous statements made by Storm. . . .”

Clark’s law firm received nearly $500,000 in legal fees from J. David, about $200,000 of which was unpaid when J. David was forced into bankruptcy in February, 1984, Clark said in court.