SAN DIEGO — Under pressure from Superior Court judges to end a 4-month-old trial, attorneys representing former J. David & Co. investors agreed Tuesday on the amount of money it would take to settle the case against a law firm and several of its partners who once represented the failed La Jolla investment firm.
Plaintiff lawyers as well as attorneys representing defendants Wiles, Circuit & Tremblay and former partner Michael A. Clark huddled separately with Superior Court Presiding Judge Donald W. Smith over a 90-minute span late Tuesday. Smith prohibited all parties from disclosing the acceptable settlement sum, although one attorney acknowledged that the amount exceeded Wiles, Circuit's $2-million insurance coverage.
"There has been, for the first time since 1984, a specific number that we can relate to," said attorney Jack Samet, representing Wiles, Circuit.
Both sides will return to Smith's chambers in two weeks.
The settlement conference Tuesday was called by Superior Court Judge G. Dennis Adams during a weeklong hiatus of the civil trial being conducted in El Cajon before Judge James A. Malkus.
Bank Facing Trial
The trial has clogged court calendars since June and threatens to continue through the end of this year. Each side contends that it has so far been victorious in the court case.
When the current trial ends, a months-long proceeding, covering much of the same evidence, will begin against First National Bank of San Diego. The bank, like Clark and Wiles, Circuit, has been accused of aiding and abetting J. David (Jerry) Dominelli in his investment fraud.
J. David & Co. raised about $200 million from 1,500 investors, promising them high returns on their foreign currency trading accounts. In truth, Dominelli did little if any trading and actual investor losses reached $82 million.
Dominelli was sentenced last year to 20 years in federal prison after pleading guilty to four counts of fraud and income tax evasion. A federal grand jury is still investigating several other former J. David executives as well as lawyers and other professionals who worked for the firm.
When Clark testified last month and earlier this month at the civil trial, Assistant U.S. Atty. Gay Hugo and three IRS investigators sat through several days of his examination.
Three other professional firms have previously settled out of court with the former J. David investors. The law firms of Rogers & Wells and Abramson & Fox paid $40 million and $7 million, respectively, and the Laventhol & Horwath accounting firm settled for $6.5 million.
Wiles, Circuit's insurance policy with Pacific Employers, a subsidiary of Cigna Corp., has a maximum payout of $2 million, with a cap on each individual claim of $1 million, according to Robert N. Schiff, Pacific Employers' attorney.
The insurance company is contending, however, that "all of the investors' claims are one claim," Schiff said.
A settlement sum beyond that covered by the insurance policy would have to be collected from the individual defendants.
In late 1984, the plaintiffs offered to settle the case against Clark and Wiles, Circuit for $2 million, but the law firm rejected the proposal.