Hunter Admits Lying at Her Trial About Burning J. David Documents

Nancy Hoover Hunter, the former mayor of Del Mar who ultimately admitted criminal involvement in the $80-million J. David & Co. investment fraud, testified Friday as a government witness and confessed she lied on the stand when she was on trial two years ago.

Hunter, 52, who essentially served as second-in-command at the now-defunct La Jolla investment firm, said she was admitting her lies because she hoped to win a reduction of her 10-year prison term. About 17 months into that term, Hunter has on file a sealed bid to cut that sentence, court records indicate.

Hunter gave examples Friday of her lies. She had insisted two years ago, for instance, that she had not burned canceled J. David checks when the company collapsed in February, 1984. But she said Friday that she had burned them, and other documents, in the fireplace at her Rancho Santa Fe home.

Hunter took the stand in federal court in San Diego against Edward J. (Ted) Pulaski Jr., J. David’s leading salesman. She devoted the bulk of her testimony Friday to the four-year rise and fall of the firm. She is expected to testify more directly about Pulaski next week, lawyers in the case said.

Pulaski, 50, who now works as a consultant, is charged with seven felony counts, one charge of conspiracy and six of selling unregistered securities. If convicted on all charges, he could draw 35 years in prison and a $70,000 fine, said Assistant U.S. Atty. Edward Allard, the prosecutor in the case.

His trial signals the approaching end of the J. David saga. After years of court battles, criminal cases remain only against Pulaski and Mark Yarry, a former executive with one of J. David’s subsidiaries whose case is separate and awaiting trial. The other J. David principals have all had their day--and in Hunter’s case, months--in court.

The complicated J. David fraud bilked about 1,500 investors of some $80 million from 1979 to 1984. It involved a Ponzi scheme, in which money from new investors was used to pay off old investors, and little actual commodity trading was done.

Prosecutors alleged that Hunter played a key role in the scheme, creating false documents to lure investors to J. David and then persuading them to remain as the firm slid toward bankruptcy.

Hunter’s ex-lover, firm founder J. David (Jerry) Dominelli, pleaded guilty in 1985 to fraud and tax evasion in connection with the scheme and is serving a 20-year sentence in federal prison.

Hunter, charged with 197 felonies, endured an eight-month trial in 1989. A jury convicted her in December, 1989, of four tax charges. It acquitted her of one other tax charge and deadlocked, 11 to 1 for conviction, on 192 other counts, primarily fraud and conspiracy stemming from her role at J. David.

Hunter’s trial is believed to be the longest-running criminal case in the history of the San Diego federal court. U.S. District Judge Earl B. Gilliam sentenced her to 10 years in prison.

Prosecutors had been prepared to go to trial again last May on those 192 counts. They also had indicated that after that case ended, Hunter faced yet another trial on charges similar to those facing Pulaski, on securities violations connected to the J. David affair.

Last May, however, Hunter averted any more trials by pleading guilty to two counts apiece in those two cases and agreeing to drop any appeals from the first trial. In return, prosecutors dropped all other charges against her.

Gilliam then sentenced her to a 10-year term to run with the first sentence. Recently, she has been behind bars at a minimum-security institution in Spokane, Wash.

Hunter, who at her trial was often shown in a photo wearing a fur coat and resting on a fancy sports car, wore a sweater and slacks Friday to court. Her blonde hair, pulled back in a pony tail, has gone white in parts. She said she has left the Spokane camp only to prepare for her testimony against Pulaski and to go to the dentist.

Pulaski’s lawyer, Bernard Skomal, told the jury Friday that her sudden incarnation as government witness suggested her new testimony could not be believed.

He said earlier this week while preparing for the case, “It’s funny how a few years in jail changes your perspective.”

Because the court papers are sealed, it’s not known what sort of reduction Hunter is seeking. A hearing is set for June 17--by which time Pulaski’s trial is expected to be over.

Under a little-known rule, the same federal judge who sentences a criminal may, upon reflection, decide leniency is in order.

Allard, the prosecutor in Pulaski’s case, said he could not comment on the court papers detailing Hunter’s bid for a reduced term because the files are sealed.

He said only that Hunter’s plea bargain, an open document, says that any “cooperation” she provides federal authorities can be brought to Gilliam’s attention. But, Allard said, “There are no guarantees. There absolutely are no guarantees.”

Hunter’s defense lawyers, Richard Marmaro of Los Angeles and Robert Brewer of San Diego, were not in court Friday. They declined to comment earlier this week.