Closing Remarks Paint Hunter as Victim, Villain

Prosecutors urged a federal jury Tuesday to convict Nancy Hoover Hunter of 197 counts of tax evasion and fraud, arguing that Hunter was intimately involved in the four-year, $80-million fraud perpetrated by the failed La Jolla investment firm of J. David & Co.

Defense attorneys, however, responded that, although prosecutors may have shown that Hunter’s “handwriting was all over (the J. David) business,” she was “not a crook.” Instead, her defense team argued, Hunter was deceived by a “master villain,” J. David (Jerry) Dominelli, the founder of J. David.

The conflicting closing arguments, which filled a day at U.S. District Court in downtown San Diego, were in line with the themes both sides have been proclaiming since the trial began in March.

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.

Clients were lured to the glamorous La Jolla firm by the use of phony investment records and the promise of fabulous returns on their money. In reality, J. David had a dismal investment record and old clients were paid off with money from new investors.

Hunter, prosecutors contend, played an active role in that huge Ponzi scheme. Assistant U.S. Atty. S. Gay Hugo argued Tuesday that Hunter created false documents, not only to lure investors to J. David, but to lull them into staying put while the firm plunged toward financial ruin.

Defense attorneys Richard Marmaro and Robert Brewer, however, maintain that Hunter fell in love with Dominelli and was so blinded by that love that she was unaware of any illegal activity. The two lawyers have also claimed repeatedly that Dominelli lied about critical matters to virtually everyone--employees, investors and Hunter.

“Don’t fall into the ‘she was there, she must have known’ trap,” Brewer told jurors Tuesday. “Nancy Hunter was used.”

Dominelli pleaded guilty in 1985 to four counts of fraud and income-tax evasion and is serving a 20-year sentence in federal prison.

Hugo began her closing argument Friday, contending that Hunter and Dominelli enjoyed a 4 1/2-year “joy ride” that was fueled by investor money.

Hugo spent most of her time Tuesday detailing the false track and trading records.

The phony track records featured inflated trading gains, inflated foreign currency values or losses that had been switched into the gain column, Hugo charged.

One 1981 track record, for instance, showed that Dominelli had made $661,150 in trades, Hugo said. She referred to a display of track records from 1977 to 1982 that prosecutors brought into U.S. District Judge Earl B. Gilliam’s courtroom.

In fact, Dominelli actually lost $152,960 in that account, Hugo said, a difference of $814,110. Hugo urged jurors to “look at (Hunter’s) knowing participation in creating all of these false records that went to investors.”

The monthly statements, Hugo said, were the fictitious records of purported trades involving selected pools of investor money. Hunter herself, and no one else, made up and sent out those statements because only Hunter and Dominelli had access to the true trading records, information that would have brought the “joy ride” to a halt, Hugo said.

Both Brewer and Marmaro spoke Tuesday, but neither directly addressed the monthly statements in their arguments. Brewer devoted most of his argument, however, to the track records, saying they were the “critical issue” in the case.

Hunter, he argued, was not at all involved in preparing the track records of Dominelli’s trades for the years 1977-79. And four track records from 1980 on were irrelevant because they were not sent to investors listed in the indictment as victims, he said.

Brewer also attacked the way prosecutors attempted to prove the 101 counts of mail fraud and 85 counts of commodity pool fraud in the indictment, or 186 of the 197 charges.

Of those 186 counts, prosecutors didn’t even call the investor purportedly defrauded in 100 of them, Brewer said. That should make jurors suspicious, he said.

Further, many of the investors who did testify said they didn’t receive a track record or it wasn’t important in deciding to invest with J. David, Brewer said.

There were many other similar “gaps in the government’s case,” Brewer said. Instead of relying on the evidence, prosecutors put on a weak case in hopes jurors would feel compelled to find Hunter guilty because “of the time this case has taken and the number of counts,” he said.

Marmaro also said the government’s evidence was weak, claiming there was “not one shred” to prove Dominelli told Hunter the truth. “In fact, all the evidence is to the contrary,” he said.

Dominelli lied to Hunter from “the beginning to the end of this case,” Marmaro said. “Now she’s in the awful position of having to explain.”

Marmaro also asked jurors to consider why Dominelli, the “one person who knows the most about the facts of this case,” was never called as a witness during the eight months the case has dragged on.

Prosecutors didn’t call Dominelli, Marmaro said, because “they know what he would have said. He would have taken the stand to say, ‘The lady didn’t know. I lied to her just like I lied to everyone else.’ ”

The defense, Marmaro said, didn’t call Dominelli for an elementary reason: “The guy whose lies got us into this case in the first place, and we’re supposed to call him?”

Marmaro is scheduled to resume arguing today, after which prosecutors will get a chance at rebuttal. U.S. District Judge Earl B. Gilliam will then give the case to the jury.