U.S. Indicts Hoover, 5 Others in J. David Fraud Investigation
Six people, including Nancy Hoover, the former live-in companion of convicted financier J. David (Jerry) Dominelli and vice president of the defunct La Jolla investment firm, have been charged with securities violations in the culmination of a four-year investigation into the J. David & Co. investment fraud.
U.S. Atty. Peter K. Nunez announced the indictments Thursday, calling them the “bulk of the charges against the principal players” in a scheme that cost investors an estimated $82 million.
Among those indicted were Mark R. Yarry, once a top money-raiser for J. David, who has moved to Europe and may fight extradition, and Norman Nouskajian, 40, a former partner in the law firm of Rogers & Wells who represented Dominelli and various J. David corporate entities. The firm, based in New York, has since closed its San Diego office.
Three salesman who solicited investors for J. David also were named in the indictment. They are Edward J. Pulaski Jr., 47; Robert G. Smith, 46, and Robert Kritzik, 60.
Also Charged in 1986
It was the second round of federal indictments for Nancy Hoover Hunter, the former mayor of Del Mar and once the second-in-command at J. David. She was charged in November, 1986, with 234 counts of fraud, conspiracy and income tax evasion stemming from her work at the once-glamorous firm. That case is pending.
The new indictment charges Hoover with 56 counts of conspiracy and using the mails to sell unregistered securities.
In April, 1986, Hoover pleaded guilty to state charges of conspiring to funnel thousands of dollars into Roger Hedgecock’s 1983 mayoral campaign. She was sentenced to three years’ probation, ordered to perform 350 hours of community service, and fined $10,000.
Hoover, 49, lived with Dominelli, the founder of J. David & Co., who has confessed that he did little, if any, trading for his 1,500 investors, some of whom lost hundreds of thousands of dollars in the swindle. Dominelli is serving a 20-year sentence for his role in the fraud.
Hoover Style Cited
Hoover’s political connections and social style are credited with helping to attract the $200 million that J. David received from Southern California investors, many of them prominent San Diegans. Much of that money was allegedly spent by Hoover and Dominelli to support their extravagant life style. Large amounts were spent on charitable contributions.
Yarry was charged with mail fraud and foreign transportation of money taken by fraud in a separate 26-count indictment returned last summer but unsealed Thursday.
Nunez described Yarry as one of “three principal people” at J. David, along with Hoover and Dominelli. Nunez said prosecutors are working with the State Department to have Yarry extradited from England, where he now lives, but said it is impossible to predict when that might occur.
“It looks like they are going to fight the extradition,” Nunez said.
Surrender Effort Claimed
However, Michael Pancer, Yarry’s lawyer, said Thursday that no decision has been made about whether to fight extradition. Pancer said Yarry had tried some months ago to make arrangements with the U.S. attorney’s office to turn himself in, but had been rebuffed.
“Instead, they chose to try to extradite him,” Pancer said. “Very often the government likes to make an arrest in order to have the media attention that goes along with the arrest. Other than that, I don’t know why the government didn’t accept our offer.”
J. David & Co. has been under investigation by federal prosecutors since February, 1984, the same month that a group of investors forced the firm into bankruptcy after its checks began to bounce.
Asked by reporters Thursday why the investigation has taken four years, Nunez said it was not a particularly long time for a complex securities case.
“The nut of this case was Jerry Dominelli,” Nunez said. “Jerry Dominelli was convicted in record time . . . within a year of the collapse of his empire.”
Dominelli pleaded guilty in 1985 to four counts of fraud and income tax evasion and is serving his sentence at the federal prison at Pleasanton in Northern California.
Nunez and Assistant U.S. Attorney Gay Hugo said that more indictments could be sought if additional information emerges as witnesses are interviewed for trials, but that the bulk of the investigation has been done.
“I don’t think you can ever say it’s over,” Nunez said.
Foreign Currency Trade
The securities indictments involved the trading of foreign currencies on the Interbank Currency Market, an international network of commercial financial institutions that creates 24-hour markets for foreign currencies. Investors make profits by buying and selling, taking advantage of fluctuations in exchange rates.
Many investors were persuaded by the defendants and others to open Interbank accounts through J. David, according to the indictment. The accounts should have been registered with the Securities and Exchange Commission, but were not, the indictment says.
By failing to register with the SEC, J. David officials avoided auditing and scrutiny that would have made such a large-scale fraud highly unlikely, Hugo said.
J. David officials knew they were under an obligation to register with the SEC and had even been advised to register by the Rogers & Wells law firm, Hugo said.
Nevertheless, J. David officials told investors that the accounts did not need to be registered with the SEC.
The defendants, except Yarry and Pulaski, will be arraigned today before U.S. Magistrate Roger Curtis McKee. Pulaksi is out of the country and is to arraigned Monday.
