Salem Lawyer Gatti Faces Ethics Complaint
February 6, 2012
Attorney Dan Gatti made headlines nearly a decade ago by filing lawsuits on behalf of 15 men who said they were sexually abused as teenagers by a prison chaplain at a state reform school in Woodburn during the 1970s.
Now, the ailing Salem lawyer, on the mend from open-heart surgery and resulting complications, faces his own trial.
The Oregon State Bar has leveled an ethics complaint against Gatti, accusing him of knowingly misleading his clients about out-of-court settlements stemming from the sex-abuse lawsuits, totaling $1.6 million.
A disciplinary hearing on the complaint is expected to be held this summer, said Kateri Walsh, the bar's community relations administrator. A three-person panel will hear the bar's complaint against Gatti and judge its validity.
Potential sanctions run from a public reprimand to a suspension of Gatti's law license or even disbarment, Walsh said.
The ethics complaint, filed with the Oregon Supreme Court, accuses Gatti of misleading his clients about settlements obtained from the Portland Archdiocese and the state of Oregon.
According to the complaint, Gatti failed to obtain "informed consent" from his clients prior to cutting lump-sum settlements with the archdiocese and the state to resolve their abuse claims.
The complaint also alleges that Gatti made "false representations" to his clients about the settlements and that he failed to disclose to them that he participated in determining settlement amounts for each man.
Gatti told the Statesman Journal that the complaint is totally unfounded. He is asking for it to be dismissed.
"This complaint is disappointing and quite unbelievable to me in light of the fact that there is no allegation of anyone ever being damaged," he said.
Gatti was taken aback to learn that a hearing on the complaint is on track for summer.
"No depositions have been taken. No discovery has occurred," he said. "I'm really hopeful that when they do a deposition, their discovery, it will just go away 'cause that's what it should do, go away."
Gatti, 66, said he has placed his attorney work on hold as he deals with ongoing medical issues. He underwent open-heart surgery in 2009 and is still dealing with medical complications, which have required multiple surgeries.
Gatti said he hopes to resume his law practice on a part-time basis this summer.
The long-time lawyer has represented a wide variety of clients — from women scarred by cosmetic surgeries to car crash victims and people claiming they were ripped off by insurance companies.
In the early 2000s, Gatti emerged as the leading litigator in a wave of lawsuits accusing local Catholic priests of decades-old sexual abuse.
The suits accused priests, some deceased, of preying on children decades ago at Mount Angel Abbey, a 125-year-old monastery about 20 miles east of Salem, and a since-closed seminary high school.
Gatti also filed claims on behalf of 15 men who alleged they were sexually abused by the Rev. Michael Sprauer in the 1970s at the MacLaren School for Boys in Woodburn (now MacLaren Youth Correctional Facility).
These lawsuits, dating to 2003-04, named Sprauer and the state, which employed him at MacLaren from 1972-75, as well as the Portland Archdiocese, which governs Catholic priests in Western Oregon.
The Portland Archdiocese paid $600,000 to settle with Sprauer's accusers.
Settlements with the archdiocese didn't prevent accusers from pursuing their claims against Sprauer and the state.
In 2007, three accusers went to trial in Multnomah County against Sprauer and the state. It was the first sex-abuse lawsuit against a Catholic priest to go to trial in Oregon.
Attorneys representing the priest and the state told the jury that the sex-abuse allegations were fabricated by ex-cons as part of a money-making scam. However, jurors found in favor of two of the men, awarding them nearly $1.4 million in damages, but legal limits on state liability in negligence cases made it highly unlikely the two men would have received anywhere near the full amount awarded by the jury.
In the aftermath of the trial, the state agreed to pay $1.05 million to settle with all 15 accusers.
According to the ethics complaint, Gatti took part in determining how much money each man would receive from the state settlement, as he allegedly had done with the previous settlement with the Portland Archdiocese. In this case, too, he allegedly failed to disclose to his clients that he took part in divvying up settlement shares.
Gatti's handling of the settlements were first called into question by a state prison inmate named Earl New.
Sent to prison in 1994 for convictions of burglary, kidnapping and sodomy, New is currently locked up at the Snake River Correctional Institution near Ontario in Eastern Oregon. His earliest possible release date is July 6, 2021.
As alleged by the ethics complaint, New asked Gatti in August 2008 to provide him with a detailed accounting of the settlements with the archdiocese and the state, along with a copy of his case file.
It says Gatti did not respond to the inmate's inquiries.
In October 2008, New sent a letter to the Oregon State Bar, complaining that Gatti had "withheld information from him, misled him and ignored his request for an accounting," according to the ethics complaint.
The bar's complaint supports New's assertions, accusing Gatti of violating rules of professional conduct.
For instance, the complaint says Gatti "had a duty to inform New and the other abuse clients" of his participation in the settlement allocations and "knowingly or intentionally" withheld this from the men.
The complaint also accuses Gatti of providing false information to the bar's Client Assistance Office.
It says Gatti stated in a November 2008 letter to the Client Assistance Office that he had provided New with "a factual and truthful accounting" for the disbursement of the settlements in his case, that "New's case and the cases of the other abuse clients were handled separately" and that New was not entitled to know how much settlement money was paid out to the other men.
"These representations were false, misleading and material and the Accused knew they were false, misleading and material when he made them," the complaint says.
Walsh said prosecution of the complaint against Gatti was authorized by the state Professional Responsibility Board, "which functions a lot like a grand jury for us."
"They authorized us to bring charges," she said.
After the upcoming hearing, the three-member panel will issue a written opinion on whether Gatti committed ethical misconduct. If violations are found, the panel will recommend sanctions.
Either party — the Oregon State Bar or Gatti — then has option of appealing the panel's decision directly to the state Supreme Court.
This is not Gatti's first run-in with the State Bar.
In 2000, the state Supreme Court reprimanded him for posing as a chiropractor to obtain information about medical reviews done on behalf of an insurance company. The high court cited an Oregon State Bar ethics rule that forbids lawyers from engaging in any form of deceit.
Gatti responded to the rebuke by admitting that he had misrepresented himself as a chiropractor but defended the tactic as an investigative tool to expose fraud in the insurance industry.
"There are some who think I should get a medal and some who think I should be disbarred," Gatti told the Statesman Journal about the controversy. "You know, Erin Brockovich got paid. I got a reprimand."
The ethics case triggered national repercussions when federal and state prosecutors suspended many undercover investigations — and the U.S. Department of Justice, in the aftermath of the 2001 terrorist attacks on the East Coast, sued to overturn the Oregon rule.
The state Supreme Court, which has the final say over the practice of law in Oregon, then revised the rule in 2002, essentially vindicating Gatti.