Dominelli Pleads Guilty As Last Days Of Empire Relived
SAN DIEGO (AP) _ J. David Dominelli, pleading guilty to felony charges stemming from the collapse of his multimillion-dollar investment empire, admitted fabricating his image of a savvy moneytrader to lure investors.
Dominelli and Parin Columna, a former employee of J. David & Co., pleaded guilty Thursday before U.S. District Court Judge William Enright, formalizing a plea-bargain agreement reached earlier this month.
Dominelli, 43, faces a maximum prison term of 20 years and $107,000 in fines when he is sentenced June 24 on two counts of mail fraud, one count of bankruptcy fraud and one count of income tax evasion.
He admits diverting clients’ money to his own bank accounts and owing investors $80 million.The judge warned Dominelli that he may be ordered to make restitution of between $82 million and $83 million, the total amount involved in the charges.
Jailed for nearly a year and ailing from a stroke suffered last fall, Dominelli once was regarded as a financial wizard with a knack for making money in the volatile but potentially lucrative international currency exchange market.
He said he encouraged people to entrust their money with him by portraying himself ″as a broker, trader and investment counselor who was particularly knowledgeable and successful″ in moneytrading.
″This portrayal was false,″ Dominelli said in his statement, adding he fabricated profit figures and diverted investor funds into his personal bank accounts.
Dominelli said about 60 percent of the $200 million his company handled was returned to investors before February 1984, when J. David was forced into involuntary bankruptcy proceedings. He said he owed investors ″not more than $80 million.″
The bankruptcy led to a federal grand jury probe and the subsequent indictment of Dominelli on 25 criminal charges of fraud, conspiracy to commit fraud, contempt and perjury.
The contempt allegations stemmed from Dominelli’s flight to the Caribbean island of Montserrat in April. The island’s government expelled him two weeks later as an ″undesirable,″ and he was returned to the United States, where he was arrested.
Dominelli pleaded guilty to two of the original charges and to two added Thursday by the U.S. Attorney’s office in exchange for having 23 charges dropped.
Columna, who accompanied Dominelli to Montserrat, had been charged with helping his former employer conceal documents and equipment from the trustee overseeing the company’s liquidation.
Columna, 31, pleaded guilty Thursday to a misdemeanor criminal contempt of court, which carries a maximum penalty of six months in jail and a $1,000. Nine felony charges were dropped.
Earlier, Dominelli sat through a two-hour hearing at which San Diego accountant George Kilcrease used disjointed financial records and canceled checks to show how, in a little more than a year, Dominelli spent $152 million in investors’ funds.
Accountants limited their reconstruction to the period between December 1983 and January 1984, a month before disgruntled investors forced J. David & Co. and many of its 52 affiliates into bankruptcy proceedings, Kilcrease said.
J. David took in about $152 million during the 13-month period and spent about $155 million, he said.
In March 1983, he said, Dominelli began making unauthorized transfers from company accounts to his personal checking account. About $29 million was traced in such transfers.
During the company’s last month of operation, the ″volume of checks written was staggering, especially considering that the checks were manually written,″ Kilcrease said.
Dominelli, meanwhile, still faces state perjury and conspiracy charges for allegedly plotting with Mayor Roger Hedgecock and two others to finance Hedgecock’s 1983 campaign with $357,000 of J. David money. Local election laws limit individual contributions to $250 and prohibit donations from corporations and unions.
Hedgecock, who is being tried separately, faces retrial later this year on 13 felony counts. Jurors deadocked 11-1 in favor of conviction on Feb. 13.
The federal probe into the collapse of J. David, meanwhile, ″could go on for years,″ Assistant U.S. Attorney Bob Rose said.
The federal inquiry, officials said, now would seek to determine whether directors and principals of the company are criminally liable.