Back in the late 1970s, Larry Remer and Tom Shepard were idealistic liberal activists. Shepard worked for a young county supervisor named Roger Hedgecock, who advocated controlled growth, favored the coastal commission, and enjoyed the support of gay rights organizations. Remer, a veteran of the Door, a Vietnam-era radical newspaper, ran an anti-establishment weekly called Newsline, in which he frequently attacked then-mayor Pete Wilson and his then-wife Betty, a La Jolla real estate agent, for their conflicts of interest. Then along came J. David Dominelli.
A one-time dealer in penny stocks, Dominelli set up shop in La Jolla in 1979, advertising miraculous returns on investments in what he called the "overnight" market in international currency swaps. Beguiled by Dominelli's lavish personal spending and his extravagant gifts to charity, more than 1500 investors lined up to sink their money into what later was revealed to be an $80 million Ponzi scheme.
Before his fall, Dominelli -- along with Nancy Hoover, Dominelli's flashy blonde mistress and an ex-mayor of Del Mar -- set out to take over San Diego's political establishment. The vessel they chose was Roger Hedgecock, a county supervisor and former Del Mar city attorney who also happened to be a close friend of Hoover's.
Key to their plan was Tom Shepard, like Hoover a former member of the Del Mar City Council and longtime Hedgecock aide, who had set up a political-consulting firm in preparation for Hedgecock's 1983 race for mayor against former city councilwoman Maureen O'Connor.
O'Connor planned to put at least a million dollars of her wealthy husband's money into the race. As would later come to light, Dominelli and Hoover had made a secret plan to launder their own six-figure contributions to Hedgecock, circumventing the city's $250 limit on individual contributions.
After Hedgecock's victory in the spring of 1983, Shepard briefly became the crown prince of San Diego political consultants. He triumphed again that year in Hedgecock's well-funded campaign for voter approval of the downtown convention center next to the waterfront hotels of a key financial backer, millionaire Doug Manchester. By then, however, Dominelli's empire of fraud had already begun to come apart, and an army of investigators were digging through the records of J. David & Co., Dominelli's firm. A year later, Shepard faced indictment, along with Hedgecock, Dominelli, and Hoover, for conspiring to funnel thousands of dollars of illegal Dominelli money into Hedgecock's mayoral campaign.
At first, Shepard maintained that the $350,000 his political-consulting outfit received from Dominelli during the Hedgeock campaign was merely an "investment" in the firm by Dominelli's sidekick and lover, Nancy Hoover. But he eventually pleaded guilty to a misdemeanor money-laundering charge and was fined $1000 and ordered to do 200 hours of community service as part of three years' probation.
"I was aware that it was illegal for me, Nancy Hoover, or Jerry Dominelli to contribute the amount of money to Roger Hedgecock's campaign for mayor that was being supplied to Tom Shepard and Associates," Shepard said in a statement submitted to the court in April 1986.
Added Hoover, pleading to a felony: "I was aware at the time that I supplied funds to Tom Shepard & Associates that it was illegal for a company to make political contributions in the mayor's campaign.
"...Being aware [of contribution limits] Jerry Dominelli and I supplied a substantial amount of money to Tom Shepard & Associates understanding that the funds would be used to pay employees who were almost exclusively on Mr. Hedgecock's campaign."
Hedgecock, who would ultimately cut his own more favorable deal with prosecutors and become a talk-show host, dubbing himself San Diego's "radio mayor," complained about Shepard's testimony.
Remer also secretly took $350,000 from Hoover during 1982 and 1983, and critics said his weekly paper, Newsline, acted as an arm of the '83 Hedgecock campaign. "The money was too good to be true," Remer later told the Union-Tribune in a 1989 interview. "I had no idea what was going on, how investors' money was being misused."
During 1984's grand-jury investigation of Hedgecock, a memo from Remer to Hoover and Dominelli, dated May 12, 1983, came to light. In the memo, Remer asked Hoover and Dominelli to use their influence over the new mayor for Newsline's benefit. "I want to mine the political base of support that put Roger in office for Newsline," Remer wrote in the memo. "I want to leverage our relationship to the mayor's office into advertising from entities like the Transit company...and from city lessees." Hedgecock later denied he'd done any favors for Remer, and no charges were ever brought against the publisher.
In the same memo, recovered from Dominelli's files by bankruptcy investigators, Remer talked of forging an advertising-sales partnership with Shepard, to be underwritten by Hoover and Dominelli. "I've talked with Tom [Shepard] about this, and he's amenable to it if you guys want to pay for it."
After his guilty plea, Shepard's post-Hedgecock recovery was gradual but steady. Lying low for a year or two, he was hired by Richard Chase, husband-to-be of Nancy MacHutchin, Hedgecock's chief fundraiser. Richard Chase was in the business of developing trash dumps, and Shepard ran the September 1987 campaign for the so-called trash-to-energy plant in San Marcos. Though the measure was narrowly approved by San Marcos voters, the plant as conceived by Chase was never built. For years to come, Shepard and the Primacy Group, a consulting firm formed by Shepard and Remer, would continue to work for Chase and his series of ventures, including a failed 1988 plan to transport trash by train through the backcountry.
The next year, Shepard and Remer's Primacy Group ran the successful campaign for San Diego district city council elections. Other Primacy Group clients included city councilwoman Valerie Stallings, who a decade later would become enmeshed in a scandal regarding stock she purchased in a firm controlled by Padres owner John Moores.
In November 1989, it was revealed that Remer and Shepard had been retained by Southern California Edison, which was then attempting to take over San Diego Gas & Electric. "There's no question San Diego is witnessing a very insidious, concealed effort by Edison to buy influence here," Michael Shames, director of the Utility Consumers Action Network (UCAN), told the Union-Tribune. "Larry has clearly become part of that conspiracy."