Bank­ruptcy opens rare win­dow into dio­cese fi­nances

Church has trans­ferred tens of mil­lions of dol­lars in real es­tate in re­cent years

Albuquerque Journal - - FRONT PAGE - BY SU­SAN MON­TOYA BRYAN

New Mex­ico’s largest Catholic dio­cese has spent hun­dreds of thou­sands of dol­lars in re­cent months on lawyers to fight claims of clergy sex abuse and to pre­pare for a po­ten­tially lengthy bat­tle in U.S. Bank­ruptcy Court.

The Arch­dio­cese of Santa Fe’s pe­ti­tion for re­or­ga­ni­za­tion pro­vides a rare look into the fi­nances of a re­li­gious or­ga­ni­za­tion that has for decades been wrestling with the fi­nan­cial and so­cial con­se­quences of a scan­dal that rocked churches across the coun­try.

Arch­bishop John Wester de­scribes the fil­ing as an eq­ui­table thing to do as church re­serves dwin­dle. He says com­pen­sat­ing vic­tims is a top pri­or­ity.

Na­tional watch­dog groups and at­tor­neys for vic­tims of clergy sex abuse said this week that the arch­dio­cese’s ac­tions sug­gest other­wise.

They point to the money spent by the arch­dio­cese on lawyers over the last three months and the tens of mil­lions of dol­lars in real es­tate that has been trans­ferred to parishes in re­cent years, ef­fec­tively re­duc­ing the num­ber of as­sets held by the arch­dio­cese.

About 20 dio­ce­ses and other re­li­gious or­ders around the U.S. have filed for bank­ruptcy pro­tec­tion as a re­sult of clergy sex abuse claims, and vic­tims’ ad­vo­cates say there are trends. That in­cludes the shift­ing of as­sets to other funds or parishes, a tac­tic that has been used else­where, in­clud­ing dio­ce­ses in Min­nesota, Wis­con­sin, Ten­nessee and South­ern Cal­i­for­nia.

In Penn­syl­va­nia, doc­u­ments as­so­ci­ated with an Au­gust grand jury re­port that de­tailed decades of abuse and cover-up in­cluded let­ters be­tween church of­fi­cials and at­tor­neys that talked about push­ing as­sets around.

In one of the most pub­li­cized cases, lawyers for abuse vic­tims ac­cused Car­di­nal Ti­mothy M. Dolan of New York of cre­at­ing a trust fund to hide money from their clients when he was arch­bishop of Mil­wau­kee. Dolan wrote to the Vat­i­can in 2007 that trans­fer­ring more than $50 mil­lion in as­sets would pro­vide “im­proved pro­tec­tion of these funds from any le­gal claim and li­a­bil­ity.”

Dolan had dis­missed al­le­ga­tions that he was try­ing to shield church as­sets, and an ap­peals court later ruled that the fund was not pro­tected from cred­i­tors.

There were also clashes over as­sets be­long­ing to the Arch­dio­cese of St. Paul and Min­neapo­lis as part of that bank­ruptcy case.

Terence McKier­nan, co-founder of Bish­opAc­count­abil­, an on­line re­source of doc­u­men­ta­tion about the scan­dals, pointed to ef­forts by church of­fi­cials there to value a mas­sive gran­ite cathe­dral at just $1.

“The Catholic Church is real es­tate wealthy be­yond our wildest dreams,” he said. “And it’s a bit of a co­nun­drum — how much is the dio­cese worth? How do you value ec­cle­si­as­tic prop­erty?”

In its bank­ruptcy pe­ti­tion, the Arch­dio­cese of Santa Fe claims nearly $50 mil­lion in as­sets, in­clud­ing real es­tate val­ued at more than $31 mil­lion.

The fil­ing also states that more than $57 mil­lion in prop­erty is be­ing held in trust for nu­mer­ous parishes and prop­erty trans­fers worth an­other $34 mil­lion were done over the past two years. State records also show that in­di­vid­ual parishes were in­cor­po­rated as part of an ef­fort that started in 2012 un­der Wester’s pre­de­ces­sor.

De­spite the arch­dio­cese’s ef­forts to fi­nan­cially sep­a­rate it­self from its parishes, some lawyers say there’s still a con­nec­tion as the bank­ruptcy fil­ing shows the arch­dio­cese would be on the hook for in­dem­ni­fy­ing parishes if they were sued or had to pay out dam­ages of any kind.

“So it re­ally does seem to us to be a shell-game,” McKier­nan said of the cases that have al­ready played out. “No one thinks for a mo­ment that the bishop is re­lin­quish­ing control of these as­sets. He just hopes the bank­ruptcy judge won’t con­sider them as­sets.”

The New Mex­ico bank­ruptcy case came as the state at­tor­ney gen­eral’s of­fice served a pair of search war­rants last week, seek­ing doc­u­ments re­lated to two for­mer priests who had been cred­i­bly ac­cused of sex­u­ally abus­ing chil­dren.

The war­rants de­scribe in graphic de­tail the abuse en­dured by chil­dren years ago at the hands of the two priests.

The tip of the ice­berg is how at­tor­ney Paul Lin­nen­burger de­scribed the war­rants. He’s a lawyer with one of the New Mex­ico firms that has sev­eral cases pend­ing against the arch­dio­cese.

The arch­dio­cese has said that $52 mil­lion in in­sur­ance money and its own funds have gone to set­tling 300 claims over the years.

Lin­nen­burger said the de­tails of many of those cases have re­mained se­cret due to nondis­clo­sure agree­ments and pro­tec­tive or­ders. He ac­cused the church of hid­ing be­hind those or­ders and its re­li­gious mis­sion to avoid li­a­bil­ity for pend­ing and fu­ture cases.

“The writ­ing is on the wall now,” he said, “and it’s go­ing to come out, and, once it does, the peo­ple of New Mex­ico are fi­nally go­ing to see and un­der­stand just how much dam­age the church did to them over decades.”

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