A new article from Bloomberg Businessweek reveals that many dioceses have limited payouts to abuse victims by shielding $2 billion in assets through various means, including Chapter 11 bankruptcies and reclassifying assets. The bankruptcies allow churches that were accused of abuse to settle lawsuits while holding on to as many assets as possible and block new lawsuits, thus providing a clean slate.
The article stated that BishopAccountability.org found church leaders paid $750 million from the early ’80s through 2002 to abuse victims. Lawsuits grew with public awareness after the Boston Globe published its investigation into abuse in the catholic church in 2002. Seven states and D.C. passed laws in 2019 that suspend the statute of limitations on civil sex abuse suits, which will likely lead to more lawsuits on the horizon.
After New York passed the law, 430 lawsuits were immediately filed, leading to the diocese of Rochester to file bankruptcy, with Brooklyn and Buffalo stating that they will likely follow. The Bloomberg article also found that before filing for bankruptcy, a lot of churches reclassified assets, as was the case in the archdiocese in Santa Fe. It was revealed that Tony Salgado, chief financial officer for the archdiocese, called a meeting for diocese managers to instruct them on how to incorporate their parishes separate from the archdiocese. Around this time the Archdiocese of Santa Fe Real Estate Corp. began transferring properties, allowing the archdiocese to take about $91 million off their books. Former business manager Christine Romero stated that Salgado told her that it was done "to protect us from the pedophile lawsuits."
Paul Linnenburger, a lawyer who represents clergy abuse victims, stated that victims could refuse to settle if the archdiocese refuses to budge on its asset pool. This would lead to a judge lifting the shield protecting it from lawsuits, which would, in turn, lead to trials and larger payouts for victims.
Source: Bloomberg
