Dominelli Attorney Athay Gets Probation in Tax Case

D. Gilbert Athay, the criminal defense attorney representing J. David (Jerry) Dominelli, on Thursday was sentenced to four years probation and fined $10,000 for failing to file federal income tax returns in 1979 and 1980.

Athay pleaded guilty to two misdemeanors in June after a federal grand jury in Salt Lake City had indicted him in April for not filing federal tax returns in 1978, 1979 and 1980. One of the counts was dropped when he pleaded guilty. The indictment alleged that Athay owed more than $40,000 in back taxes.

Athay faced as much as two years in prison and fines of up to $20,000. A sentencing report filed by prosecutors urged that Athay receive some type of imprisonment.

But U.S. Magistrate Calvin Gould in Salt Lake ignored the report, although he did impose a two-year suspended sentence against Athay, meaning that he could go to jail if he violated terms of his probation.

Among the conditions of Athay’s probation is that he pay his taxes, file tax returns and keep financial records. Athay and the Internal Revenue Service representatives will discuss his tax obligation, according to law enforcement sources.

Athay’s case has drawn the attention of the Utah State Bar Association, which has requested copies of all documents filed in the case, according to a source close to the case.

Under the association’s rules, a formal complaint could be filed against an attorney who is convicted of either a felony or misdemeanor.

No such action has yet been taken, according to Jeff Palletti, the Bar Association’s attorney. A complaint typically is filed within three months after the conviction, he said.

The ultimate punishment from the association would be disbarment, although officials could also reprimand or suspend an attorney for misconduct.

American Bar Association regulations call for sanctions to be imposed for engaging in dishonesty, misrepresentation, fraud and illegal conduct and moral turpitude.

Athay could not be reached for comment.

Dominelli was sentenced to 20 years in federal prison last month after pleading guilty to 4 counts of fraud and tax evasion.

His J. David & Co. firm in La Jolla lured $200 million from 1,500 investors with promises of 40% annual returns. Government prosecutors claim that about $80 million of investors’ funds was spent by Dominelli and his associates on themselves.