MURDER CALLED `HUMAN SACRIFICE'; GUILTY OF KILLING HER LOVER'S WIFE : WOMAN LINKED TO OCCULT COULD GET DEATH.

Byline: Jesse Hiestand Daily News Staff Writer

A witchcraft-practicing supermarket clerk was convicted Friday in the brutal murder of her lover's wife, a slaying that prosecutors claimed was a human sacrifice intended as a birthday gift.

Defendant Diana Haun, 36, of Port Hueneme stared straight ahead as the jury pronounced her guilty of fatally stabbing Sherri Dally, a 35-year-old homemaker and day care operator who had two young children of her own.

Haun also was found guilty of kidnapping and of conspiracy to commit murder, with a special circumstance of murder for financial gain, which means she could face the death penalty. A special-circumstance allegation of lying in wait was found not true.

Clad in a dark skirt and cream-color blazer, Haun kept her composure throughout the brief afternoon session. She politely said, ``Thank you,'' to a bailiff who led her from the courtroom to a holding cell.

Outside the courtroom, the victim's relatives expressed their satisfaction at the outcome.

``As the family, we first want to thank the jury for all their hard work,'' said Dally's mother, Karlyne Guess, who hugged Ventura County District Attorney Michael D. Bradbury after the verdicts were read.

``They not only worked from their brains but from their hearts, and we're pleased with the verdict,'' Guess said.

The jury is scheduled to return Oct. 20 for the second phase of the trial, when they will recommend whether Haun should spend the rest of her life in prison without parole or die by lethal injection.

``That is the opportunity for the jury to bring the community's moral values and sense of fairness into the trial,'' said Ventura attorney Wendy C. Lascher, who has represented clients in capital cases.

There also has been speculation that prosecutors could offer Haun a life sentence if she agrees to testify against her longtime lover, Michael Dally. He faces capital murder, kidnapping and conspiracy charges in his wife's slaying.

Prosecutors said Haun was a follower of the occult, who sacrificed Sherri Dally as a birthday gift for Michael. They also said Haun killed Sherri Dally so she could marry Michael without his having to pay for a costly divorce.

``She had other skills as well - witchcraft, black magic, spells and human sacrifice,'' Deputy District Attorney Mike Frawley said during the trial.

But defense attorneys maintained that Haun was merely a dupe, running errands for Michael Dally without realizing their intent. They also said a mysterious third party was involved and may have committed the murder.

According to prosecutors, Haun disguised herself as an undercover police officer - covering her black hair with a blond wig and dressing in a tan uniform - when she abducted Sherri Dally from a Target parking lot in Ventura on May 6, 1996.

Haun rented a Nissan Altima for the kidnapping, prosecutors said, and large stains of the victim's blood later were found on the floor, ceiling and back seat of the car.

Sherri Dally's decomposed and dismembered body was found June 1, 1996, in a remote ravine north of Ventura.

The lurid details of the case were reported extensively before the trial, prompting the court to draft jurors from neighboring Santa Barbara County. Spectators crowded the courtroom throughout the seven-week trial, and dozens of people lined up Friday for a seat in the courtroom.

Retired aerospace engineer Bill Phillips followed the case closely, attended the trial on eight occasions, and managed to get a seat for the reading of the verdicts. He said he had considered the evidence carefully, as though he were a juror.

``As each attorney gets up and brings up their points, you think about them and see if they stand up,'' said Phillips, 74. ``You try to listen to all the evidence. I think she was guilty.''

In addition to the public's attention, the case has drawn the interest of Hollywood. Producer Lauren Sand is working on a script for a made-for-TV movie, but noted that the script frequently needs updating as the case unfolds.

``The story's not over yet - it's still in the fifth or sixth act,'' she said. ``It's going to make a good film. There are a lot of lessons to be learned in this, a lot of lessons in obsession.''

CAPTION(S):

4 Photos

Photo: (1--Color) Diana Haun stares Friday as members of the jury confirm their votes to convict her of first-degree murder in the death of Sherri Dally.

(2--Color) Sherri Dally

Slain in May 1996

(3) Defense attorney Neill Quinn awaits the verdict in the murder trial of Diana Haun, who was found guilty Friday of killing her lover's wife.

(4) Ventura County Deputy District Attorneys Mike Frawley, left, and Lela Henke-Dobroth stand in the courtroom before the verdict is read.

Alan Hagman/Pool