J. David Figure Admits to Lying in Fraud Trial

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 that 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. Hunter is about 17 months into that term, and court records indicate she has on file a sealed request for a reduction of that sentence.

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 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 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 awaiting trial separately. The other J. David principals have all had their day in court.

The complicated J. David fraud bilked about 1,500 investors of $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 former 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, was on trial for eight months in 1989. A jury convicted her in December, 1989, of four tax charges. It 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.