Hunter’s J. David Fraud Trial Opens : Was It a Case of Love or Love of Money?
Nancy Hoover Hunter was deeply in love with J. David (Jerry) Dominelli, believed he was a financial “genius,” and trusted so completely in his honesty that she allowed her sister to invest $60,000 in his firm, J. David & Co., a month before it collapsed, Hunter’s lawyer said Tuesday in opening arguments in her fraud trial.
“She loved Jerry Dominelli. She didn’t know he was a crook, and she will tell you that she didn’t know he was stealing people’s money,” Richard Marmaro, Hunter’s lawyer, told the jury in federal court. “She shared his office and she shared his bed, but she did not share what was in his mind.”
Hunter will take the witness stand at the end of the trial and tell the jury about her love for Dominelli, which became “obsessive,” Marmaro said.
The person “who was lied to the most and was hurt the deepest was Nancy Hoover. . . . He stole her heart and he stole her trust. He told her he would divorce his wife and marry her,” Marmaro said.
Was Top Executive at Firm
Hunter, Dominelli’s former live-in companion, is charged with 234 counts of conspiracy, mail fraud, fraud by a commodity pool operator, making false statements to a federal agency, income tax evasion, and aiding and assisting in the false preparation and filing of federal tax return. The charges stem from her role as a top executive in J. David & Co. from 1979 until February, 1984, when its checks began to bounce and nervous investors forced the firm into bankruptcy court.
In all, investors lost about $80 million in the J. David affair, a huge Ponzi scheme in which clients were lured to the glamorous La Jolla firm by the use of phony investment records and the promise of fabulous returns on their money. In reality, J. David & Co. had a dismal investment record and old clients were paid off with money from new investors.
Dominelli pleaded guilty in 1985 to four counts of fraud and income tax evasion and is serving a 20-year sentence in federal prison.
Assistant U.S. Atty. S. Gay Hugo said Tuesday in her opening argument that Hunter was intimately involved in the J. David fraud, knew about it every step of the way and created false documents to help Dominelli lure investors to his fledgling firm.
“The defendant was a key figure in the scheme to defraud,” Hugo said. Hunter frequently moved numbers from a “loss” column on financial reports to the “profit column” to make it appear as if J. David & Co. was performing well, Hugo said. When the scheme began to collapse, Hunter helped shred documents in the firm’s offices, Hugo said.
“The defendant and Dominelli were on a 4 1/2-year joy ride,” Hugo said. “Their joy ride was fueled by money they got by enticing individuals . . . with false records.”
But Marmaro painted Hunter as a housewife and part-time politician who was enthralled by Dominelli.
“Nancy Hoover was deeply in love with Jerry Dominelli, and that love became obsessive,” he said. “She will tell you she didn’t know he was a crook, and she will tell you she didn’t know he was stealing people’s money.”
‘Created a Myth’
Marmaro said Dominelli “created a myth . . . that Nancy Hoover had power” in the firm, giving her titles such as president, but in reality she was like an office administrator, ordering furniture and taking care of personnel matters while Dominelli handled the investments.
“The evidence will show that when it came to controlling the money, Jerry Dominelli did that alone,” Marmaro said. “This was a one-man show. This was Jerry Dominelli’s show. . . . He deceived people. He stole millions of dollars.”
“The evidence will show that Jerry Dominelli hid many things from many people, that he was an intensely private man.”
“He hid things from his lawyers and from his accountants and he hid things from Nancy Hoover, his co-worker and his companion.”
Hunter was composed but grim-faced as Marmaro recited for the jury how she became involved with Dominelli in 1979 while both were married and worked at adjoining desks at the brokerage firm of Bache, Halsey, Stuart, Shields in La Jolla, where she had gotten a job in 1976.
At the time, Hunter was married to George Hoover, a former officer in the U.S. government’s foreign service who later became a stock broker. They had a daughter Nina, now 24, and a son George, now 26.
At first, she disliked Dominelli, Marmaro said. “She thought he was a male chauvinist and she really had no use for him.”
Dominelli noticed that Hunter was having marital problems and began telling her stories about his Vietnam War record and his tough childhood on the streets of Chicago, Marmaro said. “Nancy Hoover had what Jerry Dominelli lacked,” he said. “She was pretty, she was personable, she was nice, she was honest.”
But Dominelli lied to her about a number of things, Marmaro said. He claimed that he was a law school graduate, when in fact he was expelled from high school, he said.
Lied About Military Record
He also lied about his military record, he said. He told Hunter that he was a Vietnam War hero who had saved many lives and had spent the first two years after his return from Vietnam traveling the country visiting the families of slain soldiers. In fact, Marmaro said, Dominelli had never been to Vietnam. “He served in an undistinguished manner in the U.S. Marines and was discharged in 1963 as a private,” he said. “The effect of his lies was dramatic” and changed Hoover’s perception of him, Marmaro said. By October, 1979, she had fallen in love with him, he said.
Meanwhile, Dominelli claimed he was divorcing his wife, but he was lying, Marmaro said.
Eventually, Hunter and Dominelli began living together and spent millions of dollars of investors’ money on expensive homes, cars and furs. They spent more than $1.5 million remodeling office space in La Jolla, Chicago and San Francisco, according to prosecutors.
Hunter believed that the money Dominelli was spending was legitimate profit from the investment business and believed that he had paid the income tax on the hundreds of thousands of dollars in gifts he gave her, Marmaro said. In fact, he had not paid the tax and Hunter is now charged with income tax evasion in relation to the “gifts.”
Hunter’s mother, sister, aunt and brother-in-law left money in the firm to the end, he said. “Nancy Hoover is not the type of person to let her family invest with a crook,” he said.
In 1986, Hunter pleaded guilty to state charges of conspiracy to funnel thousands of dollars into the 1983 mayoral campaign of Mayor Roger Hedgecock. She was sentenced to three years probation, fined $10,000 and ordered to perform 350 hours of public service, which she did at the Santa Barbara Public Library.