Boy Scouts declare bankruptcy
The Boy Scouts of America urged victims to come forward Tuesday as the historic, 110-year-old organization filed for bankruptcy protection in the first step toward creating a huge compensation fund for potentially thousands of men who were molested as youngsters decades ago by scoutmasters or other leaders.
The Scouts resorted to Chapter 11 in hopes of surviving a barrage of lawsuits, many of them made possible by recent changes in state laws to allow people to sue over longago sexual abuse.
Bankruptcy will enable the organization to put those cases on hold for now and continue operating. But ultimately the Boy Scouts could be forced to sell some of their vast property holdings, including campgrounds and hiking trails, to raise money for a victims’ fund that could top $1 billion.
The Boy Scouts estimated 1,000 to 5,000 victims will seek compensation.
“The BSA encourages victims to come forward to file a
claim as the bankruptcy process moves forward,” the organization said in a statement.
James Kretschmer of Houston, one of those suing, said he was molested by a Scout leader in the mid-1970s in the Spokane, Washington, area. The bankruptcy, he said, “is a shame because at its core and what it was supposed to be, the Boy Scouts is a beautiful organization.”
“But you know, anything can be corrupted,” he added. “And if they’re not going to protect the people that they’ve entrusted with the children, then shut it down and move on.”
More than 12,000 boys have been molested by 7,800 abusers since the 1920s, according to Boy Scout files revealed in court papers.
Evan Smola said two new victims had already called his law office in Chicago on Tuesday morning, bringing the firm’s total to 319.
“The opportunity to tell your story is a cathartic and healing experience,” Smola said. “It’s very painful when they actually do it, but getting it off your chest is a big step.”
It will be up to the court to set a deadline for filing claims. The amount of money each victim will receive is likely to depend on what assets are turned over and how many people come forward.
The filing in Wilmington, Delaware, sets in motion what could be one of the biggest, most complex bankruptcies ever seen, given the Scouts’ 50-state presence. The organization listed assets of $1 billion to $10 billion and liabilities of $500 million to $1 billion.
“We are outraged that there have been times when individuals took advantage of our programs to harm innocent children,” said Roger Mosby, the Boy Scouts’ president and CEO. “While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process, with the proposed trust structure, will provide equitable compensation to all victims while maintaining the BSA’s important mission.”
The Boy Scouts are the latest major American institution to face a heavy price over sexual abuse. Roman Catholic dioceses across the country and schools such as Penn State and Michigan State have paid out hundreds of millions of dollars in recent years.
The bankruptcy represents a painful turn for an organization that has been a pillar of American civic life for generations and a training ground for future leaders. Achieving the rank of Eagle Scout has long been a proud accomplishment that politicians, businessmen, astronauts and others put on their résumés and in their official biographies.
“I’m sad for all the victims who were preyed upon by people entrusted with their care. I’m sad that no amount of money will undo their trauma,” said Jackson Cooper, an Eagle Scout who is now a prosecutor in Louisville, Kentucky. “Whatever consequences come for BSA are no concern of mine. I only hope, if they continue to operate, they build robust systems to protect the young people in their care.”
The Boy Scouts’ finances have been strained in recent years by declining membership and sexabuse settlements.
The number of youths taking part in scouting has dropped below 2 million, down from a peak of more than 4 million during the 1970s. Its membership rolls took a big hit Jan. 1 when The Church of Jesus Christ of Latter-day Saints cut ties and withdrew more than 400,000 scouts in favor of programs of its own.
The financial outlook worsened last year after New York, Arizona, New Jersey and California relaxed their statutes of limitations to make it easier for victims to file claims. Teams of lawyers across the U.S. have been signing up clients by the hundreds to sue the Boy Scouts.
Most of the new cases date to the 1960s, ’70s and ’80s, before the Boy Scouts adopted mandatory criminal background checks, abuse-prevention training for all staff and volunteers, and a rule that two or more adult leaders must be present during all activities. Many of the lawsuits accuse the group of negligence and cover-ups.
Wayne Perry, a member of the organization’s national board and past president, said Scout families won’t notice any differences as a result of the bankruptcy. He touted the protections now in place for young people.
“Today, we are really, really good. Were we always good? No, nobody was good 50 years ago, 40 years ago, 30 years ago,” Perry said.
Amid the crush of lawsuits, the Scouts recently mortgaged some of their major properties, including their national headquarters in Irving, Texas, and the 140,000-acre Philmont Ranch in New Mexico.
One unanswered question is whether the Boy Scouts’ 261 local councils — and their campgrounds and other assets — will be dragged into the case, even though the Boy Scouts said the councils are legally separate entities and they were not part of the bankruptcy filing.
Mike Pfau, a Seattlebased attorney whose firm is representing scores of men nationwide, said the plaintiffs may go after the local councils’ property holdings, too.
“We believe the real property held by the local councils may be worth significantly more than the Boy Scouts’ assets,” he said. He said one question will be whether the Boy Scouts transferred property to their local councils to try to put it out of the reach of those suing.
Perry said he hopes the court remembers that the Boy Scouts are teaching leadership and life skills to children. “You have to take into account the balancing of the victims, but (also) the fact that the kids today who are joining Scouting had nothing to with those bad behaviors of criminal acts of perpetrators who are long gone,” he said.
Plaintiffs’ attorneys trace the Boy Scouts’ fall to 2010, when a jury awarded a former Scout nearly $20 million in a lawsuit in Portland, Oregon. The trial led the Oregon Supreme Court to release 20,000 pages of confidential Boy Scout files on 1,200 people after The Associated Press and other news organizations fought for their disclosure.
Until last spring, the organization had insisted it never knowingly allowed a predator to work with youths. But in May, the AP reported that attorneys for abuse victims had identified multiple cases in which known predators were allowed to return to leadership posts. The next day, the Boy Scouts acknowledged the truth.