Most Charities Sign Waiver in J. David Case

Nearly all of the 25 charities and civic organizations that were asked to return more than $1 million in contributions from J. David & Co. have agreed to waive a statute of limitations clause that would have prevented the J. David bankruptcy trustee from filing lawsuits to recover those funds.

Trustee Louis Metzger on Friday said that “almost every one” of the charities has agreed to the one-year waiver, and two groups have accepted the trustee’s offer to return 60% of the funds they received from the fraud-ridden La Jolla investment firm.

Only three of the 25 local nonprofit groups have not responded to Metzger’s demand last month that they either return the funds, waive the federal bankruptcy statute of limitations requirement or face immediate litigation, the trustee said.

The deadline for answering Metzger’s request is today. Metzger has his own deadlines for filing lawsuits to retrieve the charitable contributions. The trustee declined to disclose the two separate statute of limitations dates, but has acknowledged that they are fast approaching.

“People have been very understanding,”Metzger said in an interview Friday. “They understand my responsibility, (although) they have a different point of view.”

Simply agreeing to the waiver doesn’t mean that the organizations will return the funds to the bankrupt J. David estate, however. “Getting a waiver is different than reaching a settlement,” said Metzger.

At least four arts organizations that agreed to the waiver conditioned their action with a 30-day revocation clause.

“We wanted to show good faith with the process,” said one arts administrator who asked not to be named. “This is just the preliminary dance. We’re trying to set the ground rules. We don’t want this to be completely out of our control.”

The San Diego Opera, KPBS-TV Channel 15, the La Jolla Museum of Contemporary Art, the Museum of Photographic Arts, the La Jolla Chamber Music Society and COMBO each responded to the trustee’s request with their own counterproposals, according to Bill Nelson, president of the opera, who has been in contact with a number of groups that received the letter from Metzger.

Nelson said he didn’t believe Metzger would recover funds from the opera. “It was designated and all spent,” he said of the $85,000 donation from J. David.

Meanwhile, University of San Diego officials on Friday said they plan to return 60% of the funds under “exposure” from the trustee.

USD received a total of $38,200 from J. David (Jerry) Dominelli and his associate, Nancy Hoover, according to William Pickett, USD vice president of university relations.

Of that amount, $2,000 was given to them in the so-called preference period, 90 days prior to the J. David bankruptcy, and 60% of that already has been returned.

In addition, a $4,600 donation to USD by J. David was for several sports banquets, and so isn’t included in the trustee’s request.

The maximum total “exposure” is $31,600, said Pickett.

Metzger made his demand of the nonprofit organizations last month, arguing that although the groups accepted the money in “good faith,” the contributions were actually used to protect Dominelli’s Ponzi scheme, in which new investor funds were needed to pay off existing clients.

The contributions were used to market J. David’s image and they helped solidify the firm’s reputation as a successful investment enterprise, Metzger has claimed.