Jailed Donnelly: Hearing set for alleged Ponzi-schemer

Donnelly attorney John Davidson told reporters of his client, "His hope is that in this rush of accusations that have been made that people give his family the privacy they need."
PHOTO BY LINDSAY BARNES

Alleged Ponzi schemer John M. Donnelly made his first public appearance this morning at a March 12 hearing in federal court. On the same day that New York mega-thief Bernard Madoff pleads guilty to the world's biggest Ponzi scheme, Crozet-area resident Donnelly stands accused of bilking clients out of $11 million.

Appearing fit with close-cropped dark blond hair, Donnelly, wearing the thick gray striped uniform of the Central Virginia Regional Jail in Orange, where he is has been held since his March 11 arrest, was led into the third-floor courtroom, where he immediately waved and smiled at his wife, a top UVA fundraiser.

Under the gaze of Judge Waugh Crigler, the 52-year-old financier and former motorcycle road racer answered questions from Crigler and his attorney.

The judge set a preliminary hearing for 1:30pm Thursday the 19th. That means Donnelly will remain incarcerated at least until then.

Before the hearing began, wife Deborah Donnelly appeared composed in a gray tweed jacket and sitting in the second row immediately behind the defendant, although as the hearing began, she appeared tense, her arms crossed while she repeatedly circled one foot.

The chief executive for the fund-raising arm of UVA's Curry School of Education, Mrs. Donnelly was named in the complaint as a "relief defendant." A civil designation which indicates that a person was a recipient, even unwittingly, of some allegedly ill-gotten gains, status as a relief defendant can lead to government cooperation–- or worse.

As relatives of Albemarle's biggest Ponzi-schemer, Terry Dowdell, discovered the hard way last year, accepting treats from a criminal in the family can lead to federal charges. Dubbed the Vavasseur scheme and the subject of the Hook's June 26, 2003 cover story, Dowdell's globe-spanning crime defrauded investors of over $100 million.

Dowdell's wife, Mary Dowdell began as a mere relief defendant, who saw her house and jewels auctioned off in 2003. However, she accepted wire transfers of money from two of her husband's co-conspirators after she and her husband had already been warned by federal investigations. She was convicted last year in the federal court and given a five-year sentence. Her daughter, the comptroller for the Montessori Community School on Pantops, pleaded guilty and received house arrest..

After the hearing, Deborah Donnelly declined comment, and, following a private meeting with attorneys, briskly left the courthouse. Donnelly's attorney John Davidson said that his client heads a "nice family" that includes two school-aged children, and that he is not at risk of flight if bond is granted. He declined to address a question about the difficulty of gaining bond when assets are frozen.

"Mr. Donnelly is incredibly worried about his family," said Davidson. "His hope is that in this rush of accusations that have been made that people give his family the privacy they need."

–This is an online-only story.

8 comments

Have any of the Mr. Donnelly's clients come forward ?

Mr. Madoff claimed he did what he did because of the expectations of his investors for huge returns. Will this be Mr. Donnelly's defense as well ?

Thanks RW, these are sad stories of people who obviously trusted Mr. Donnelly and believed he was smarter than others. Maybe we will enter a new age of lowered expectations and greater oversight, of not only our own money, but the money spent by our elected officials in our name.

RW, So what is the story regarding clients who "have come forward"?

Plop, read the article RW linked to.

Deborah Donnelly needs to "lawyer up" as they say. She needs her own lawyer who specializes in securities fraud, and she needs a divorce lawyer (call me cynical, but there's a problem over there in Crozet if she didn't know.... BTW, anybody considering a career change out there in Hookland? Consider becoming a forensic accountant. You'll be employed until you croak. The "new" SEC is jumping all over anything that's even vaguely out of line.

Thanks Barb. Sorry I missed it.

Nice class of people you've got working for you, Bob Sweeney.