335 Investors in J. David Recoup Portion of Losses

It has taken nearly three years, but investors who lost money in the fraud-ridden J. David & Co. investment scheme began recouping at least part of their losses Thursday, as attorneys began processing about $28 million in payments to about 335 J. David investors.

The payments, authorized Tuesday by San Diego Superior Court Judge Donald W. Smith, are being made to investors who in March won a $40-million settlement with Rogers & Wells, the high-powered New York law firm that provided legal advice to J. David.

The Thursday action represents the first major payment made to investors who lost an estimated $84 million when the J. David firm collapsed in February, 1984.

“The fact of the matter is that these payments represent the first flow of money from the Dominelli litigation,” said Joseph Cotchett, the San Francisco attorney for 275 clients who accumulated 55% of the proven losses suffered by investors in the firm run by J. David (Jerry) Dominelli.

“Anyone saying they don’t believe in Santa Claus ought to start believing after seeing this,” said attorney Michael Aguirre, who on Thursday began delivering checks to his clients.

“I think it will make a nice holiday for everybody involved,” suggested San Diego attorney Patrick Frega, who represents clients who lost about $10 million.

However, payments are not yet being processed for clients represented by San Diego attorney Patrick A. McCormick Jr. and the Los Angeles-based law firm of Loeb & Loeb. Those two investor groups must wait until their attorneys reach a payment agreement with Rogers & Wells.

The $40 million in Rogers & Wells settlement funds, which were provided by the law firm’s insurance companies, had been held by Chase Manhattan Bank in New York. On Wednesday, the bank began wiring funds to trust accounts opened by Cotchett, Frega and Aguirre.

Under the agreement reached in March with Rogers & Wells, investors are to receive roughly 45 cents for each dollar they deposited with J. David, with no consideration for earnings realized while the defunct La Jolla firm held their money--or for profits they might have earned had they invested elsewhere.

Consequently, investors who lost $100,000 in the investment firm will receive about $42,000 after expenses, Aguirre said.

Although some checks probably will total more than $100,000, Aguirre said most of his clients will receive payments in the neighborhood of $50,000.

Cotchett said his firm would begin disbursing payments “as soon as we do the cost accounting, which should be completed within 5 to 10 days.”