IRS Agent Tells Court Hunter Owes Nearly $1 Million in Taxes

An Internal Revenue Service agent told a federal court Thursday that Nancy Hoover Hunter, a key figure in the $90-million J. David & Co. fraud case, owes nearly $1 million in back taxes.

IRS agent George Garcia made the statement as the last prosecution witness in Hunter’s trial on a 234-count indictment stemming from the 1984 collapse of the fraudulent La Jolla investment firm.

Hunter has contended she was unaware of the illegal activities of her business associate and lover, J. David (Jerry) Dominelli, who headed the once high-flying operation and is now serving a 20-year prison sentence.

The government contends that Hunter, who was a top J. David executive, is guilty of fraud, tax evasion and conspiracy.

Also Thursday, a juror at Hunter’s trial was dismissed from the case by U. S. District Judge Earl B. Gilliam because she was overheard telling someone she was glad she wasn’t in Hunter’s shoes.

In his testimony, Garcia said Hunter is liable for $946,900 in taxes, based on slightly more than $2 million she failed to report as income from 1980 through 1983.

Most of the $2 million in unreported income came from a series of checks drawn on J. David & Co. accounts and deposited into Hunter’s checking account, Garcia said.

Garcia said he recalculated Hunter’s 1983 tax return without using a loss she claimed after putting money into Tom Shepard & Associates, the firm that managed the election campaign of former San Diego Mayor Roger Hedgecock.

Both Shepard and Hunter pleaded guilty to violations of California campaign contribution laws, after prosecutors charged that the consulting firm was established as a sham company to illegally funnel money into the Hedgecock campaign.

In that case, Hunter was ordered to perform 350 hours of public service, which she did at the Santa Barbara public library.

After two trials, which ultimately drove him from office, Hedgecock was convicted of charges stemming from the same violations.

Garcia’s testimony started two hours late because of a conversation that led to the dismissal of juror Beth Parks by Gilliam.

Court reporter Leeann Pence told Gilliam that she had heard Parks talking about the Hunter trial at a coffee stand across the street from the federal courthouse.

“I heard her say something: ‘It’s not as interesting as you think,’ ” Pence testified after being placed under oath.