Weeping Hunter Maintains She’s Innocent on All Counts

Nancy Hoover Hunter said Thursday that she is innocent of the 197 federal tax-evasion and fraud charges against her and sobbed on the witness stand as she also maintained that she is innocent of the state conspiracy charges to which she pleaded guilty three years ago.

While discussing the 1986 pleas, Hunter appeared unable to control her crying, burying her head on her left arm and hiding her face. U.S. District Judge Earl B. Gilliam called a halt to the trial and dismissed jurors for a brief period, the third time in the last three days of testimony that the case has produced a dramatic interruption.

When Hunter was able again to speak, she dabbed at her eyes frequently with tissues while her attorney, Richard Marmaro of Los Angeles, led her through the 197 charges she now faces in connection with her role at the failed La Jolla investment firm J. David & Co.

Marmaro detailed each complex set of charges against Hunter, then asked her after each set whether she was guilty. At each turn, Hunter said no.

The 197 counts stem from Hunter’s role as a top executive at J. David, which collapsed in 1984 when nervous investors forced it into bankruptcy court. About 1,200 investors lost about $80 million in the J. David affair, a giant fraud in which prosecutors allege Hunter played an active role.

Marmaro has maintained since the trial began in March that Hunter was blinded by her love for the firm’s founder, J. David (Jerry) Dominelli, who became her lover, and was unaware of his illegal activities.

Dominelli pleaded guilty in 1985 to four counts of fraud and tax evasion in connection with the investment firm’s Ponzi scheme and is serving a 20-year sentence in federal prison.

Dominelli also pleaded guilty early in 1986 to state charges of conspiring to illegally finance Roger Hedgecock’s successful 1983 campaign to become San Diego mayor. In April of that year, Hunter decided to plead guilty to related state charges of conspiring to funnel thousands of dollars--allegedly J. David funds--to the campaign through the Tom Shepard & Associates consulting firm.

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.

“I wasn’t guilty of the charges, but at the time I didn’t feel like I had much choice,” Hunter said Thursday on the stand, beginning to cry. “I knew, I thought the U.S. government was thinking about this trial. I didn’t know if I could go through two things.

“I didn’t really want to do it,” Hunter added. “Nobody in my family wanted me to. But I did,” she said, sobbing uncontrollably and prompting the recess.

Hunter also wept during the first of the trial’s two other recent interruptions last Friday. The financial editor of the San Diego Union, Don Bauder, made faces of incredulity during Hunter’s testimony, prompting a lengthy break while Gilliam tried to figure out whether any harm had been done.

The judge eventually decided jurors had not been improperly influenced by Bauder’s gestures and ordered him to stay away when Hunter was on the stand.

The case resumed Tuesday. After Hunter had been on the stand for a few hours, lead prosecutor S. Gay Hugo was stricken with chest pains, taken from the downtown San Diego federal courthouse on a stretcher and taken to a La Jolla hospital.

Hugo left the hospital after a few hours, but Gilliam put the case over until Thursday.

After a relatively uneventful morning of testimony, Hunter’s uncontrolled crying stopped the case again--but this time, only for about 10 minutes.

After Hunter had composed herself and jurors returned, Hunter said she first learned in April, 1984, that Dominelli had been lying to her for the previous four or five years about almost everything that mattered to her.

“Now we all know everything, but at the time I didn’t know,” she said.

If she had known the truth, she said, she “would not have talked to him.”

Nor would she have agreed to work with him at J. David. “I’ve thought about that a lot, and I would have done whatever I needed to do to stop him,” she said.

Marmaro then detailed each set of related claims in the 197 charges, usually eliciting only a simple denial from Hunter.

When he asked her, however, if she knowingly failed to report to the Internal Revenue Service money Dominelli had given her to live in the early 1980s, she said she thought Dominelli was paying whatever taxes needed to be paid on the funds.

“I pay taxes,” she said. “I don’t try to get around or avoid paying taxes.”

Hunter also elaborated when Marmaro asked her if she knowingly engaged in a Ponzi scheme with Dominelli.

“No, I did not. I’m not guilty of that. Oh,” she said, and sighed loudly.

The trial is scheduled to resume today, with Hugo cross-examining Hunter. Hugo began her questioning late Thursday but got through only preliminary matters.