Scouts plan called ‘woefully’ inadequate
Survivors object to average payout of $6,000
Boy Scouts of America is proposing to pay roughly $220 million toward a trust to compensate tens of thousands of former members who say they were abused as scouts, according to a statement from the committee that represents survivors in the case.
Another $300 million may come from a voluntary contribution from local councils, the Boy Scouts said in court documents filed Monday, but the local organizations have given no formal commitment.
The number is a fraction of the $1 billion of the organization’s estimated value, and a sliver of the value of its subsidiaries, including local councils as well as various trusts and endowments, which USA TODAY estimates could exceed $3.7 billion.
The proposal is part of a reorganization plan put forth by the nonprofit detailing how it intends to handle the massive child sex abuse case that’s threatening its existence – the largest ever involving a single national organization – and emerge as a viable entity.
It comes a little more than a year after Boy Scouts filed for bankruptcy in federal court in Delaware. At the time, the organization said it faced 275 lawsuits in state and federal courts plus another 1,400 potential claims. Nearly 95,000 claims were filed by the November deadline set by the bankruptcy judge.
The proposal would amount to about $6,000 per claimant, even after the number of claims is reduced after duplicates are deleted and other reviews. That number assumes an even distribution among survivors and does not reflect issues related to statutes of limitations or specific acts of abuse.
Boy Scouts says it will put forth all unrestricted cash and investments above the $75 million it says it needs to continue operations. It also will contribute its art collection, which includes original Norman Rockwell pieces and two paintings by Walt Disney, as well as two facilities in Texas and its oil and gas interests, consisting of more than 1,000 properties in 17 states.
In a statement, the Boy Scouts said supplements to the plan “will include a more detailed breakdown of the process to compensate survivors and more details about how local councils will support this effort.”
“The Plan demonstrates that considerable progress has been made as we continue to work with all parties toward achieving our strategy to provide equitable compensation for victims and address our other financial obligations so that we can continue to serve youth for years to come,” the statement says.
But the proposal may be dead on arrival. The survivors’ Torts Claimant Committee objects to the plan.
“It’s a woefully low amount of value and even worse amount of cash,” said James Stang, who serves as the committee’s counsel.
Stang and the committee calculated the $220 million figure based on its knowledge of Boy Scout’s assets and documentation that has been provided in closed-door discussions.
Gill Gayle, an abuse claimant who serves on the advisory board for the Coalition of Abused Scouts for Justice, which represents approximately 65,000 survivors in the bankruptcy, said it was only after juries began awarding survivors million-dollar verdicts that Scouts realized “the sum total of paying for their deeds exceeds their monetary value.”
“We’re talking about them trying to get a discount on child abuse, on systematic child abuse that occurred decade after decade after decade,” Gayle said.
As a result of the violent sexual abuse he alleges he suffered as a kid in Scouts, Gayle said he spent $125 to $150 an hour on therapy for 26 years, which was rarely covered by insurance. The Scouts’ proposed settlement would barely reimburse him for that cost alone.
Much about Boy Scout’s finances remains unknown, which could complicate the approval process. What is owned by local councils, and in turn how much of that should go to victims, remains a central point of contention.
Another sticking point is how much Boy Scouts deems core to operations or restricted by donors, and thus not available to compensate survivors.
Tim Kosnoff, a lead attorney with the group Abused in Scouting, said the gulf is vast between what assets Boy Scouts have proposed to contribute and what survivors will approve – maybe too vast for the nonprofit to close before it runs out of money. The organization has said it needs to exit bankruptcy by August or risk a cash shortage, citing declines in revenue due to COVID-19 restrictions that have closed Scout camps and diminished fundraising opportunities.
“I just don’t see a plan that would be acceptable to the victims coming together in time for the Boy Scouts,” Kosnoff said. “I think they’re finished. I think they’re out of time.”
Local assets are vast
As it stands, the plan only contains a commitment from the national organization to request that local councils voluntarily contribute no less than $300 million to a trust for survivors. In exchange, the Boy Scouts are seeking complete and permanent prohibition of any lawsuits – an exchange that is already being rejected by survivors and their attorneys.
As first reported by the Wall Street Journal, roughly 70% of the Scouts’ wealth is held by different legal entities, namely local councils, most of which the national organization has attempted to wall off from the bankruptcy.
In an analysis of 2018 tax filings, the latest available, USA TODAY found more than $3 billion in assets held by more than 380 limited liability corporations – LLCs – connected to local scout groups. That would put the proposed contribution of the local councils to the survivors’ trust at roughly one-tenth of their total assets.
More than $1.35 billion of those assets are securities, while another $2.18 billion were land, buildings and equipment, and net depreciation.
That land includes thousands of acres in the mountains of Colorado and camps with views of Pikes Peak to a 700-acre donation by John D. Rockefeller Jr. in New Jersey, a stone’s throw from New York City and some of the most expensive real estate in the world.
From a 53,000-square-foot office building in Atlanta to a 1.5-mile reservation along the shores of the Lake of the Ozarks to a beachfront campground in St. Croix in the U.S. Virgin Islands, the local councils’ assets are vast.
The USA TODAY Network found $101 million in local councils’ property in New York state alone, and $16 million in Tennessee, according to tax records.
Those numbers may not come close to reflecting current worth.
In an extreme case, the Las Vegas Area Council listed the value of its land, buildings and equipment at more than $13 million on its 2019 tax filings. Its holdings include nearly 1,150 acres in the Las Vegas Valley, the Spencer W. Kimball Scout Reservation.
The bulk of the land was sold by the Bureau of Land Management in 1958 to what is now the Las Vegas Area Council . The council was restricted from selling or transferring the land for 25 years.
It was marketed by a commercial broker for high-end development on behalf of the council in 2019. The listing price: $90 million.
That property has not sold. W. Todd Walter, the Scout executive for the Las Vegas council, told USA TODAY the Tort Claimants Committee “hired an independent, third-party land appraiser who just appraised that land at $12to-14 million.”
Attorneys say that thus far bankruptcy proceedings have done little to provide clarity. Stang said the claimants committee has received information from Boy Scouts and the councils, “but it is in our opinion it is incomplete.”
“Not all 250 some odd councils have responded as completely as others, or at all,” Stang said.
Accusations of hidden assets
The national organization describes its relationship with local councils as essentially a franchise arrangement: The national group handles the development of Scout content and structure, licensing, training, human resources, legal support and information technology; the local councils oversee troops and Cub Scout packs in a region and run day-to-day operations.
The bankruptcy judge has granted an injunction on all litigation against the councils.
The filings suggest that after the proposed plan would take effect, any abuse claims against the councils would be “permanently and forever stayed.”
Victims’ attorneys are fighting against Boy Scout’s assertion that the councils are discreet entities, noting that they operate hand-in-glove with the national organization and the councils have significant liability for their part in allowing child abuse to continue unabated for decades. They’ve accused Boy Scouts of using the division to shield assets from survivors since a majority of the organization’s wealth lies at the local rather than national level.
Moreover, suspicions have been raised that local councils have deliberately hidden assets.
The Torts Claimants Committee accused the Middle Tennessee Council of transferring several camps into a trust last summer, breaking an agreement that they wouldn’t sell or transfer properties without notifying the creditors.
Kosnoff said victims are being asked to sign off on a plan to vacate their rights to sue without a clear picture of the councils’ financial status.
“You’re asking victims to release not just BSA national but all these councils and you have no idea what the value is of the assets?” Kosnoff asked. “Is it $2 billion in assets? Is it $10 billion? $20 billion? Nobody can answer that question, which is going to be I think a dilemma for the bankruptcy court.”
In January, the Torts Claimant Committee filed a complaintabout the national organization’s assertion that $667 million of their $1 billion estate, more than 60%, is off-limits to victims.
The committee has argued that much of Boy Scouts’ restricted assets are, in practice, unrestricted, including three high adventure bases. Those camps – Philmont in New Mexico, Northern Tier in Minnesota and Florida Sea Base – have an asserted value of more than $60 million, according to court records.
The committee says they have been used to gain a line of credit from JP Morgan Chase, thus indicating they are not restricted. In court records, Boy Scouts said that line of credit, more than $62 million, is also restricted.
More than half of the assets Boy Scouts says are restricted relate to the Summit Bechtel Reserve in West Virginia, which amounts to $345 million.
Another wildcard in the total financial picture for survivors is the amount of contribution from Boy Scout’s insurers. Though they will be on the line to contribute based on the policies held by Boy Scouts, the amount has yet to be determined.
In recent weeks, insurers affiliated with insurers including Chubb and Hartford Financial Services Group, have questioned the validity of claims filed by law firms representing survivors arguing that they were poorly vetted and lack sufficient information.
In court documents, the insurers also requested permission to question survivors as well as any attorneys who signed claim forms for them. Those forms typically must be signed by claimants but, as the deadline approached, attorneys signed hundreds on behalf of their clients.
Robbie Pierce, who said he was abused by a Boy Scout camp employee when he was 13, welcomes oversight of the claims, saying that, if anything, the number is still low. He said he spoke with other members of his troop who chose not to come forward even though they were abused by the same camp employee.
“We’re not opportunistic. We’re a bunch of Boy Scouts,” Pierce said. “That used to be the word for honest and helpful people.”
What’s next in the case
Attorneys for survivors in the case say they will file a response to the plan, while the claimant’s committee will raise its own objection. Gayle said the coalition is focused on making sure all survivors are taken care of.
“The strategy here is to have everyone recognized for what they suffered, first of all, and to have that respected, and to get as much help to them as we can,” Gayle said.
If an agreement can’t be reached, or Boy Scouts can no longer turn a profit, the court may turn to liquidation, Pamela Foohey, associate professor at the Indiana University Maurer School of Law, said. That might not be a bad outcome for some survivors, she said, referencing the bankruptcy of the Weinstein Company after its founder, Harvey Weinstein, was accused of sexual harassment and assault over decades.
“Seeing the Weinstein Co. taken apart publicly might have been a satisfying outcome,” Foohey said.
Another result may be similar to the case with Bikram Yoga. The brand of hot yoga filed for bankruptcy protection in recent years as a result of sexual misconduct allegations against its founder. Its studios rebranded as Bode Yoga, which Foohey said is another option for Boy Scouts, with the local councils rolling over into a rebranded entity.
Some survivors, however, are upset by the idea of an end to Boy Scouts and hope the nonprofit survives.
Michael Lipari, who was abused at 14 by a Scout leader whom he helped convict of child abuse, said he wants to see the organization acknowledge its mistakes and do everything in its power to make the organization safe.
“They should take some of the survivors and say, ‘We’re going to have you on a board of advisers on how we can better ourselves and be an organization that can protect children. What are some of your recommendations?’ ” Lipari said.
“But the first step is they need to own it. Truly own every aspect of it. It’s a lot bigger than just putting money into a pot.”
Pierce said that when he first filed a claim, he wanted to find a way for Boy Scouts to continue to exist while helping those it harmed.
“Once I saw the numbers, and that there were literally thousands of us, I thought this organization has done so much more damage to young men than it has ever done good in this world. And they have always prioritized keeping themselves afloat over the safety of the young men,” Pierce said. “The fact that they’re now trying to find a way to continue to exist and pay us the least that they can, it’s not a surprise. That is their playbook.”
“There are too many of us for this ever to be fair, to ever get back a fraction of what we’ve lost.”