Judge Provided Strong Message in J. David Case

In the corridors and back offices of the U.S. Courthouse in San Diego, it’s remembered simply as The Message.

The date was Nov. 15, 1985. The author and messenger was U.S. District Judge J. Lawrence Irving, who was engaged in what appeared to be innocuous courtroom banter with the bankruptcy trustee in charge of liquidating the fraudulent J. David & Co. Irving told the trustee to turn over all J. David documents in his possession to the U.S. attorney, who was conducting a grand jury probe into J. David.

To the casual observer, the instruction was hardly worth noting.

But to veteran J. David-watchers, The Message was clear, because it was well-known that trustee Louis Metzger had turned over his documents to federal prosecutors months before.

Irving’s message was aimed directly at federal authorities: J. David (Jerry) Dominelli shouldn’t be the only one accused of wrongdoing at the bankrupt La Jolla investment firm. Others should also be charged.

On Tuesday, a second person was charged. Nancy Hoover, J. David’s second in command, was indicted on 234 counts of fraud, conspiracy and income tax evasion.

That a federal judge would thrust himself into the middle of a criminal case so boldly shocked many legal observers. Judges typically don’t do that, lawyers contend.

But those who have watched Irving during the tense, complicated and controversial J. David bankruptcy proceedings know that he is anything but typical.

At every turn, Irving has involved himself, both overtly and behind the scenes, in the J. David fracas.

When the affair first began to unravel in mid-February, 1984, few suspected that Irving would become so deeply involved in the case. At the time, Irving had been on the federal bench for only 18 months.

In fact, when Irving walked into his courtroom one Saturday in February, 1984, and found it packed with attorneys, reporters and investors--it was his first public appearance on the case--he felt a bit weak at the knees.

“I was very nervous,” Irving said in a recent interview, recalling how the crowd had come to see how he would handle Dominelli, who had refused to cooperate with the newly appointed trustee in charge of his failed investment firm.

Irving did his best to hide his jitters, and coolly ordered Dominelli held at the Metropolitan Correctional Center for contempt of court. Dominelli stayed there 11 hours.

There would later be other standing-room-only hearings in Irving’s courtroom--on the J. David case and several others--but the 51-year-old former business lawyer would never again be nervous in court.

“Now, after the J. David experience, nothing bothers me,” he said in a recent interview. “I can’t conceive of a case that would scare me. It was a real baptism.”

Irving, according to attorneys and court observers, handled the J. David civil case with a stern hand, guiding the case’s developments and, in the end, getting what he wanted.

Especially for a new judge, Irving showed unusual aggressiveness in the J. David case. In addition to The Message, Irving’s boldest actions, according to attorneys, prosecutors and court observers, included:

- Sending Dominelli to jail for contempt. Rarely do debtors in bankruptcy cases go to jail, but Irving’s action set the tone early for his hard-line approach to Dominelli.

- Questioning Dominelli from the bench when Dominelli took the stand in August, 1984, to try to persuade Irving that his civil contempt charge should be lifted and that he was now cooperating with trustee Louis Metzger. Irving, who was overseeing the bankruptcy, questioned the self-proclaimed financier about his company’s activities. The action was considered unusual because a federal grand jury was investigating Dominelli and he risked implicating himself criminally by answering Irving’s queries. Equally unusual, Irving used an investigative story from The Times, which detailed J. David’s expenditures, to quiz Dominelli.

- Irving’s demands that federal agents return Dominelli immediately to San Diego after he had been captured in Antigua after a brief exile on the tiny Caribbean island of Montserrat. When Dominelli was taken into custody and flown to Miami, sources claim that Irving insisted that the fugitive be hurried back to San Diego. Typically, it takes about a week to transfer federal prisoners across the country. Irving was angered, sources said, by statements made by Dominelli on Montserrat to The Times that a contempt-of-court citation issued by Irving was akin to a “traffic ticket.”

- Irving’s attendance at the J. David auction. Eyebrows were raised when Irving and U.S. Magistrate Harry McCue, who coordinated the civil lawsuit settlement negotiations, showed up at the bankruptcy auction of J. David’s opulent goods and assets in November, 1984. Irving said he was an interested party, but those close to him maintain that he “wanted to make sure things were done right.”

- The insistence that all information be made public. Few documents filed in the case were sealed and all hearings were open to the press and the public. “I didn’t want anything secret,” Irving said recently. “I wanted everything out in the open.”

Irving is still in charge of the J. David bankruptcy, although the glamour has subsided and the case is being wrapped up.

He said he probably will not handle the criminal case against other J. David figures. That duty will fall to either U.S. District Judge William Enright, who last year sentenced Dominelli to 20 years in federal prison, or to U.S. District Judge Earl Gilliam, who has tentatively been assigned the case.