Bilked Investors Win Suit Against Law Firm, Attorney
The law firm of Wiles, Circuit & Tremblay and Michael A. Clark, a former partner in the firm, were found by a San Diego County Superior Court judge Thursday to have aided and abetted convicted swindler J. David Dominelli’s fraudulent investment operation, which bilked investors out of $83 million.
The La Jolla law firm and Clark were also found to have been professionally negligent.
In a finding that the plaintiffs’ attorneys hailed as an unqualified victory in the civil suit, Superior Court Judge James A. Malkus awarded actual and punitive damages totaling $580,700 to J. David investors Marnie Ackerman, Anna Pulaski, Helene Reynolds, Thomas Roth and Donald Van Ness.
The plaintiffs’ advanced years--each is over 70--qualified them for a preferential trial date ahead of about 340 other investors who have also filed suit against Clark and the law firm, which represented Dominelli.
The finding buttresses the hundreds of other lawsuits still pending against Wiles Circuit and Clark, the first of which is scheduled to go to trial in October. But J. David bankruptcy trustee Louis Metzger and several attorneys involved in the case said chances are good that the law firm and its insurers will settle the suits out of court in light of the investors’ convincing victory in the suit decided Thursday.
But Los Angeles attorney Jack I. Samet, who represented Wiles Circuit, said his client will appeal Malkus’ finding “promptly.” In a prepared statement Thursday, Samet said the law firm is unfairly being “held accountable” for the crimes of Dominelli, its client.
At its high point, Dominelli’s firm, J. David & Co., had $200 million under management from investors attracted by promises of 2% to 3% monthly profit, based on Dominelli’s purported knack for playing the volatile and unregulated international currency market. He later admitted that J. David operated a Ponzi scheme that used new investor dollars to pay off old obligations and to fund Dominelli’s lavish life style.
The firm was forced into bankruptcy in February, 1984, and Dominelli pleaded guilty in 1985 to fraud and tax-evasion charges. He is serving a 20-year term in federal prison.
Malkus listed 77 “factual findings” to support his contention that Clark and Wiles Circuit advanced the Dominelli fraud, among which were findings that they concealed and later shredded damning investor account records.
Clark and Wiles Circuit were “aware of (Dominelli’s) unlawful conduct . . . and engaged in a systematic course of concerted action . . . to perpetuate and conceal his unlawful activities,” Malkus wrote. Clark, who was Dominelli’s personal attorney, played an active, sometimes daily, role in managing J. David, the judge wrote in his 37-page finding. Clark left Wiles Circuit in September, 1984.
Meanwhile, the U.S. attorney’s office here refused to comment on reports that it has begun a criminal investigation into the roles of Wiles Circuit and Clark in the J. David case. Several plaintiffs’ attorneys said federal investigators have asked them for records related to the case and noted that Assistant U.S. Atty. Gay Hugo attended several sessions of the trial.
Hugo refused to comment Thursday on Wiles Circuit and Clark, confirming only that her office is working in conjunction with a continuing federal grand jury investigation of J. David.
Clark and members of Wiles Circuit could also be subject to disbarment proceedings if Malkus’ finding stands, attorneys said. A State Bar of California spokeswoman in San Francisco said Thursday only that there is no “public record of discipline” against Clark and that the organization does not comment on investigations in progress.
Wiles Circuit was the only professional firm connected to Dominelli that did not settle investor claims out of court. The Rogers & Wells law firm, the Laventhol & Horwath accounting company and other firms have paid settlements totaling about $62 million to investors since J. David collapsed.
Thursday’s finding capped a trial that began in June, 1986.
