Hedgecock Sticks to His Story While Testifying for Hunter

Insisting that he had only “totally proper” personal and political financial dealings with Nancy Hoover Hunter, former San Diego Mayor Roger Hedgecock told a U. S. District Court jury Tuesday that a campaign consulting firm funded by Hunter was a legitimate business, not a device to funnel illegal contributions to his 1983 mayoral race.

Repeating testimony from his 1985 trial, Hedgecock testified in Hunter’s fraud and tax-evasion trial that Hunter bankrolled the consulting firm, started by a mutual friend, Tom Shepard, in the early 1980s as a routine business investment.

Showing flashes of his trademark combativeness as he stuck to a story that he has told frequently inside and outside courtrooms for 4 1/2 years, Hedgecock contended that, contrary to prosecutors’ allegations, Tom Shepard & Associates was not merely a sham operation established primarily to illegally finance his mayoral race.

“Was there any discussion with Nancy Hoover or Tom Shepard about funneling money to your campaign?” Hunter defense attorney Richard Marmaro asked Hedgecock.

“No, never,” Hedgecock answered.

Hunter, the former J. David & Co. executive who, like Shepard, was one of Hedgecock’s closest allies during a political career that ended with his 1985 felony conviction, is being tried on 197 counts of fraud and tax evasion stemming from her involvement with the now-defunct La Jolla investment firm.

The firm’s namesake and Hunter’s former live-in companion, J. David (Jerry) Dominelli, is serving a 20-year prison sentence after pleading guilty to charges of bilking investors out of more than $80 million through an elaborate Ponzi scheme in which clients were lured to the firm through phony records and the promise of fabulous returns on their money.

Called as a defense witness, Hedgecock is one of the means by which Hunter’s attorneys hope to rebut prosecutors’ contention that Hunter improperly took a tax deduction for her investment in Shepard’s firm when, in fact, she knew it to be nothing more than a ruse to disguise tens of thousands of dollars in illegal contributions to his 1983 campaign.

Paradoxically, however, by hoping to score points through Hedgecock’s testimony, the defense was forced to rely on someone who has been found guilty of conspiracy charges that both Hunter and Shepard--as well as Dominelli--pleaded guilty to in 1986 plea-bargain deals. Thus, Hedgecock’s denial Tuesday of wrongdoing in his tangled financial and political relationship with the three is contradicted by his own verdict--which he argues was tainted by a bailiff’s jury tampering--and three guilty pleas.

Similar Testimony

During his 1 1/2 hours on the stand before U. S. District Judge Earl Gilliam, Hedgecock delivered testimony similar to that which he gave in his first 1985 trial, which ended in a mistrial with the jury deadlocked, 11 to 1, in favor of his conviction on conspiracy and perjury charges. Hedgecock did not testify in his second trial, in which he was convicted of 13 felony counts stemming from charges that he falsified financial disclosure statements to conceal illegal J. David contributions funneled to his campaign via Shepard’s firm.

Now a radio talk-show host, Hedgecock is free pending appeal of his one-year jail sentence--an appeal in which an appellate panel’s order for a full court hearing on the jury-tampering allegations figures prominently.

Describing what he knew of Shepard’s firm’s formative period, Hedgecock said that, in December, 1981, Shepard, who then served on Hedgecock’s county supervisorial staff, told him that he planned to leave to start a consulting firm to be funded by Hunter. Noting that he and Hunter had had a falling out after she left her husband to live with Dominelli, Hedgecock stressed that he had no conversations with Hunter about that deal, adding that he relied solely on Shepard’s characterization of the matter.

In August, 1982, Hedgecock’s campaign committee signed a contract with Shepard for what then was an exploratory potential race for mayor--a contest that hinged on a vacancy being created by then-Mayor Pete Wilson’s victory in the November, 1982, U. S. Senate election. At the time, Hedgecock said he believed that Shepard’s firm had other clients.

“Did you have any reason to believe that Tom Shepard & Associates was anything other than a legitimate political consulting firm?” defense attorney Marmaro asked.

“No--I thought it was legitimate,” Hedgecock said.

During his cross-examination by Assistant U. S. Atty. Stephen Clark, Hedgecock visibly enjoyed the verbal jousting that led to several acerbic observations from both sides, managing along the way to get in a few digs against some longtime foes--in particular, the San Diego Union and Tribune newspapers, which he contends have treated him unfairly for years.

Clark, however, drew first blood by beginning his questioning of Hedgecock by asking: “Are you the same Roger Hedgecock who was convicted in Superior Court in October, 1985?” Hedgecock responded affirmatively, hastening to add that the case is on appeal.

A Letter of Praise

The first of several light moments came when prosecutors sought to document the warmth and closeness of Hedgecock’s relationship with Hunter in an effort to undermine his credibility.

To that end, Clark produced a letter sent by Hedgecock to Hunter in the early 1980s in which he said that a story about her that appeared in the San Diego Tribune “looked great.” Dismissing the letter as “one of hundreds” written weekly for him by his staff, Hedgecock generated loud laughter among courtroom spectators by adding: “I don’t recall writing it, and I wouldn’t have been so lavish in my praise of the local paper.”

On various occasions, Clark sought a yes or no answer from Hedgecock, only to receive a longer explanation that frustrated the prosecutor’s attempt to pin down the former mayor. Once, for example, Clark inquired whether Hedgecock was aware in the early 1980s that Hunter was wildly spending hundreds of thousands of dollars on things such as houses and exotic cars, only to have Hedgecock answer: “I was aware Nancy was a benefactor of a number of organizations in the community.”

“So the answer to my question is yes?” Clark said.

“The answer is the answer I gave you,” Hedgecock snapped.

Clark also pressed Hedgecock for now-familiar details on his personal financial dealings with Hunter, including a controversial oral-agreement loan that Hedgecock used to remodel his South Mission Hills house shortly after being elected mayor in May, 1983. That loan, which Hedgecock repaid with interest started out at $50,000, but as expenses grew, it reached $130,000.

As he did in his own trial, Hedgecock insisted that, to the best of his knowledge, Hunter used her personal funds for the loan, not--as was shown during his trial--J. David corporate revenue. When asked about the lack of conventional documentation of the loan’s terms, Hedgecock said: “She’s not an institution or savings and loan. This was a personal loan . . . between friends.”

Trying to reinforce prosecutors’ view of Tom Shepard & Associates as little more than a laundering operation for illegal political contributions, Clark pointed to Hedgecock campaign expenses that were paid with J. David funds. In each case, however, Hedgecock insisted that he had assumed that his campaign committee had paid the bills or was unaware of the specifics.