Fool for Love or Partner in Fraud--It’s Up to the Hunter Jury to Decide : J. David: Closing arguments were made in the Nancy Hoover Hunter trial; deliberations begin next week.

Nancy Hoover Hunter’s trial on 197 counts of federal tax evasion and fraud went to the jury Wednesday after prosecutors and defense attorneys got one last shot at painting conflicting pictures of Hunter’s role in the failed investment firm of J. David & Co.

Prosecutors again urged the federal court jury to convict Hunter on all counts, saying she was a knowing participant in the J. David affair--a giant fraud in which about 1,500 investors were bilked out of $80 million--and that it is “time to hold (Hunter) accountable.”

Defense attorneys, however, argued that Hunter is innocent of all 197 charges, repeatedly returning to their claim that she, too, had been deceived--by J. David (Jerry) Dominelli, the founder of the La Jolla firm.

“The lady was involved in the guy’s business; we don’t contest that,” said Richard Marmaro, one of Hunter’s attorneys. “She wasn’t involved in the guy’s fraud.”

The closing remarks from both sides capped three days of argument in which prosecutors and the defense team set out the same broad themes as before, but which saw them say for the first time Wednesday that they agree on one crucial detail: that the central issue in the case is whether Hunter believed she was acting honestly or fraudulently.

Hunter’s state of mind is the key, both sides told jurors, because the 197 counts involve charges that she intended to defraud either investors or the federal government. Without that intent, she cannot be convicted, lawyers said.

“The question is, ‘What was in her mind?’ ” Asst. U.S. Atty. Stephen Clark said. “We all agree--that was the question.”

Because of court scheduling, jurors will not actually begin deliberating the case until Tuesday. U.S. District Judge Earl B. Gilliam, who is hearing the case, has said that he considered sequestering the jury but decided against it.

The charges against Hunter stem from her role as a top executive in J. David from 1979 until February, 1984, when company checks began to bounce and nervous investors forced the firm into bankruptcy.

Prosecutors charge that Hunter played an active role in the giant fraud, creating false documents both to lure investors to J. David and then to lull them into staying put while the firm headed toward bankruptcy.

Hunter, Clark told jurors Wednesday, was Dominelli’s “leading lady.” He needed her to “bring legitimacy, respectability, the right crowd--and that means people with money”--to J. David.

“The scheme could not have succeeded without the leading lady. The leading lady has to know her lines, and (Hunter) played them well,” Clark said.

Defense attorneys Marmaro and Robert Brewer, however, contend that Hunter fell in love with Dominelli and that love blinded her to his illegal activities. Dominelli pleaded guilty in 1985 to four counts of fraud and income-tax evasion and is serving a 20-year sentence in federal prison.

“In the end, this is a case about Jerry Dominelli and his explanations,” Marmaro said. “How he got a lot of people, including Nancy Hunter, to do a lot of things that, in hindsight, you scratch your chin over.”

Clark seized upon the notion that Hunter’s love “blinded” her toward the massive fraud.

“Nancy Hunter is asking you to find not just that love is blind, but that love is deaf and love is dumb,” Clark told jurors. “That’s not the way love works, and, most of all, that’s not the way life works.”

Marmaro, meanwhile, said prosecutors had not proven their case against Hunter and had simply piled on the charges to give the indictment credence through sheer weight. Originally, there were 234 charges, but Gilliam dismissed 37 counts midway through the trial.

Marmaro, who had the floor for most of the day Wednesday, also charged that the government had pressed its case against Hunter not because she actually is guilty of crimes but because circumstances make it appear that she has to be guilty. He cited four reasons:

* Hunter shared Dominelli’s office, and “there was the perception she was No. 2” at J. David, Marmaro said. Clark, in his remarks, displayed an enlarged photo of Hunter at her desk at the firm, which was located directly next to Dominelli’s.

“No. 2 is a meaningless number unless you know what No. 1 was all about,” Marmaro said. He challenged jurors to name five U.S. vice presidents.

* Hunter lived with Dominelli, Marmaro said. “So what?” he said.

“What is it about living with someone that puts you on notice that the person is a fraud?” he asked.

* Hunter “received and spent a lot of money,” Marmaro said.

In 1983, for instance, about $3 million went through Hoover’s personal checking account, the bulk of it J. David funds, Asst. U.S. Atty. S. Gay Hugo said Tuesday. Clark displayed a picture Wednesday of Hunter, wrapped in a fur coat, leaning on a Porsche.

Marmaro conceded that it is “embarrassing to look back and see that (Hunter) lived like a rich lady.”

But, he told jurors, Dominelli told Hunter that he was making as much as $1 million monthly. And he asked, “If you had a boyfriend, girlfriend, husband or wife making that kind of money, would you have hesitated to do what (Hunter) did?”

Further, Marmaro said, Dominelli gave Hunter the money, and she never had any reason to think it was anything but legitimately earned, since he never told her otherwise.

“It is not a crime in this country to spend money, even a lot of it, if you thought it was legitimately earned,” he said.

* Finally, Hunter helped prepare certain post-1979 track records--sheets that prosecutors say were advertised as a chart of Dominelli’s trading history, Marmaro conceded.

Prosecutors have stressed that the sheets, in Hunter’s handwriting, are false and misleading, making Dominelli appear to be a successful trader when often he was not. But Marmaro said the information in the sheets was supplied to Hunter by Dominelli and “Nancy never checked Jerry.”

Her “handwriting on all those track records is totally innocent,” Marmaro said.

The trial began March 28. It is believed to be the longest criminal trial in the history of the San Diego federal court.