Bank Settlement of J. David Suits Near

San Diego County Business Editor

A settlement between former J. David & Co. investors and First National Bank of San Diego, the fraudulent investment firm's lead bank, may be reached this week, according to sources familiar with the litigation.

After a settlement conference with Superior Court Judge G. Dennis Adams on Friday night, the former investors agreed they would settle the case for $7 million, according to attorney Patrick Frega.

More than 360 lawsuits were brought by investors against First National Bank, alleging that the bank allowed unauthorized transfers of J. David funds between various accounts.

J. David bankruptcy trustee Louis Metzger also sued the bank earlier this year for more than $20 million, making many of the same allegations. Metzger would be part of the settlement and the trustee would receive about 20% of the funds, according to sources familiar with the case.

The plaintiffs' attorneys and Metzger had battled about how much the bankruptcy estate would receive, sources said.

The bank reportedly offered to settle for $5 million, according to the sources.

Attorney Jeff Isaacs, representing First National Bank, confirmed that there are "intense settlement negotiations" under way but said there "is no settlement" yet in place.

Negotiations led by Adams are scheduled daily through Thursday. A final settlement should occur then, sources said.

If a settlement isn't forthcoming, "the case is going to trial Dec. 11," Isaacs said.

First National Bank's insurance companies would pay the settlement. The bank's coverage has been valued at more than $10 million.

Interestingly, one of the insurance companies is also involved on the plaintiff's side of the case.

Chubb & Sons Insurance Cos. once insured J. David & Co. and, last year, agreed to settle its $10-million policy by paying the trustee $4.75 million. As part of that settlement, Chubb will receive half of any proceeds--after legal fees--won against "third parties," such as outside law firms, banks and accounting firms.

Chubb is also one of First National Bank's insurance carriers.

The same investor plaintiffs are scheduled to meet Wednesday with Superior Court Presiding Judge Donald W. Smith to discuss settling their lawsuits against the law firm of Wiles, Circuit & Tremblay.

The firm and its former partner, Michael A. Clark, have been sued for allegedly aiding J. David (Jerry) Dominelli's fraud. J. David attracted more than $200 million from 1,500 investors with promises of annual returns as high as 40%. Actual investor losses totaled $82 million.

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