J. David Fraud Case Figure Guilty of Tax Evasion

A federal jury found Nancy Hoover Hunter, an accused participant in a major fraud scheme, guilty Monday on four counts of tax evasion and acquitted her of one other tax-related charge but could not reach a decision on the more pertinent charges against her.

Hunter was accused of helping to carry out a multimillion-dollar Ponzi scheme along with financier J. David Dominelli, who is serving a 20-year term in federal prison for his role as the mastermind of the fraud.

The jury announced itself deadlocked on the 192 counts of fraud and conspiracy that were at the heart of Hunter’s eight-month trial. Members of Hunter’s family hugged each other and said, “That’s good, that’s good,” as the jury returned its verdict.

Those feelings of joy and victory evaporated moments later, however, when U.S. District Judge Earl B. Gilliam, saying Hunter was a flight risk, ordered her to jail without bail pending an April 16 sentencing hearing.

Hunter was led away by marshals out a side door of the courtroom, then returned, looking as if she wanted to speak with her family members, including her husband, Kenneth Hunter of Santa Barbara, who had yelled across the room, “I love you, sweetie.”

Nancy Hunter, a former mayor of Del Mar, stood still for a moment, then collapsed, apparently having fainted, onto the red-carpeted floor.

Gilliam left the courtroom as Hunter’s niece, Sandy Shroeder, screamed, “Ruthless! He’s ruthless!” and yelled at the judge, “How could you do this to her?”

Gilliam ordered spectators and reporters from the court, but as various people went in or out of the room, Hunter could be seen on the floor for the next 20 minutes, sagging in the arms of her attorney, Robert Brewer, or her husband.

Hunter faces up to 20 years in federal prison, or five years apiece on each of the four counts of tax evasion, Assistant U.S. Atty. S. Gay Hugo said. Hugo, the lead prosecutor in the case, also told the judge that prosecutors intended to refile the 192 counts--primarily fraud and conspiracy charges--against Hunter.

The charges against Hunter stemmed from her role as a top executive in the La Jolla investment firm J. David & Co. from 1979 to 1984, when its checks began to bounce and nervous investors forced the firm into bankruptcy.

In all, investors lost about $80 million in the J. David affair, a giant Ponzi scheme in which prosecutors alleged that Hunter played an active role. The 192 counts that stymied the panel centered on her purported involvement with the Ponzi scheme.

Hunter’s defense lawyers, Brewer and Los Angeles lawyer Richard Marmaro, contended that she was blinded by her love for the founder of the firm, Dominelli, and was unaware of any illegal activities.