Archdiocese moves to hire Joseph Dixon III for special criminal defense

The Archdiocese of St. Paul and Minneapolis is seeking to hire former federal prosecutor Joseph Dixon III to defend it against new criminal and civil accusations that it failed to protect children from an abusive priest.

And given that the archdiocese is in bankruptcy and short on cash, Dixon is charging a reduced rate of $400 an hour, court documents show.

"This reflects a substantial discount," Dixon said in his engagement letter.

The papers are part of the archdiocese's application to hire Dixon and the law firm where he works, Fredrikson & Byron, as special criminal counsel. The application was filed Tuesday in U.S. Bankruptcy Court, a day after the church's sexual abuse scandal forced the resignation of Archbishop John Nienstedt and his second in command, Bishop Lee Anthony Piché.

Dixon is a legal sharpshooter, a well-regarded former assistant U.S. attorney best known for sending Ponzi fraudster Tom Petters to prison. After a stint at insurance giant UnitedHealth Group Inc., he jumped to Fredrikson & Byron — and to the defense side of the bar — saying he missed the courtroom.

Dixon didn't respond Tuesday to messages for comment.

The archdiocese said it needs Dixon because the recent criminal charges could affect the availability of insurance to cover mounting claims, and have "serious repercussions" on the bankruptcy estate's finances. Ramsey County Attorney John Choi filed the charges earlier this month.

Dixon's fees would add to the stack of legal bills generated since the archdiocese filed for Chapter 11 bankruptcy reorganization Jan. 16. It has been racking up legal and professional costs at the rate of $473,000 to $887,000 a month, the archdiocese estimates. The latest monthly operating report, filed for April, shows the church owed nearly $1.6 million in legal and professional fees. Most of the costs are for the archdiocese's main bankruptcy attorneys at Briggs and Morgan.

So far, 84 people who said they were sexually abused by priests have filed claims, said Robert Kugler, the lawyer for the committee of unsecured creditors in the bankruptcy. That group includes abuse survivors and all other creditors except the Catholic parishes. The deadline for claims is Aug. 3.

The Catholic parishes, concerned they will be exposed to the archdiocese's financial troubles, formed their own creditors committee. They've been feuding over which attorney should represent them.

Kugler called the resignation of Nienstedt a big surprise, and a positive development for creditors because it improves the credibility of the archdiocese and will "put them in a better position to move forward with a bankruptcy case."

Mediation sessions have been scheduled through October. Representatives of the various parties — victims, companies owed money, parishes, church officials and more than a dozen insurance companies — have met at least 10 times around a conference table, Kugler said. Some sessions last hours, others run for days. Attendance varies from 10 people to as many as 70.

The talks will be more productive when the insurance companies have to deal with actual claims, he said.

So far there have been no offers on the four pieces of real estate the archdiocese has put up for sale in St. Paul, all near the cathedral on the hill. But prospective buyers interested in redeveloping or simply occupying the properties are touring them every week, said Paul Donovan, executive director of the Advisory Service Group at Cushman & Wakefield/NorthMarq, in charge of selling them. The deadline for offers is Aug. 15.

Properties for sale are the chancery; the Hayden Center, a former school that is now offices; 244 Dayton, home of The Catholic Spirit newspaper; and 250 Dayton, a small vacant lot.

The chancery, a complex on Summit Avenue, includes the archbishop's residence.

"It has amazing views of downtown St. Paul," Donovan said.

Jennifer Bjorhus • 612-673-4683