A new lawsuit claims the Roman Catholic Diocese of San Diego attempted to hide real estate holdings valued at more than $450 million to avoid paying out legal settlements to hundreds of victims of childhood sexual abuse.
The lawsuit follows a February announcement from the diocese that “staggering” legal costs from hundreds of new sex abuse lawsuits could force it to file for bankruptcy.
Cardinal Robert McElroy wrote in a letter to parishioners that most of the assets were “depleted” due to settling earlier abuse claims. Facing new lawsuit filings, the diocese may consider bankruptcy to compensate victims, he wrote.
“Bankruptcy would provide a pathway for ensuring that the assets of the Diocese will be used equitably to compensate all victims of sexual abuse while continuing the ministries of the church for faith formation, pastoral life, and outreach to the poor and the marginalized,” the letter said.
New Abuse Claims Revealed
The diocese said it had received more than 400 claims alleging sexual abuse of a minor by a priest, though none of them claim abuse by any priest who is currently part of the ministry.
In 2007, the organization settled 144 claims for a combined $198 million. Lawsuits filed since the settlement could result in additional liabilities of more than $550 million, “which is why bankruptcy is under consideration,” McElroy wrote.
The new lawsuit alleges that the attempts to hide church assets were in response to a new California law extending the deadline for sex abuse victims to file lawsuits. The suit seeks to undo at least 291 of those property transfers.
Before the new law took effect in California, a child sex abuse victim had until age 26 to file a civil suit. Now, under the Child Victims Act, a victim has at least until age 40. The law allows victims older than 40 to file lawsuits, provided they file a declaration from a licensed mental health professional, certifying that there is a “reasonable basis to believe” that sexual abuse occurred.
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Victims allege church conspiracy
Attorney Irwin Zalkin alleged that the Roman Catholic Diocese of San Diego made false claims regarding the state of its assets. “This diocese and its parishes have engaged in a conspiratorial enterprise to defraud child abuse victims and to deny them the justice they deserve,” Zalkin said.
In a statement, the Diocese said that under church canon law, the assets of each parish have been kept separate from the diocese since its founding in 1936.
The lawsuit also alleges that California’s new law prompted the Diocese to enter an “Independent Compensation Fund,” which provides compensation to abuse victims whose claims first must be approved by a claim evaluator. The fund does not require victims to file a lawsuit. The suit alleges those victims would have been eligible to file lawsuits under the new California law but instead were coaxed into submitting claims through the Independent Compensation Fund and settled “for pennies on the dollar.”
“They have developed a PR spin on how they’re concerned about victims, and they want to do the right thing by victims, but at the end of the day, it’s all about the money and protecting their assets, protecting their brand, over protecting the safety and welfare of children,” Zalkin said.
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