Davenport Diocese Contemplates Bankruptcy over Sex Abuse Suits

By Todd Ruger
Quad-City Times
October 1, 2004

http://www.qctimes.com/internal.php?story_id=
1036375&t=Local+News&c=2,1036375

IOWA CITY — The Catholic Diocese of Davenport might file for bankruptcy because it does not have adequate financial resources to compensate victims of child sexual abuse by priests, Bishop William Franklin said Wednesday.
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“The diocese will make every effort to settle these cases,” Franklin told a special meeting of church leaders from across the diocese’s 22 counties in southeast Iowa who gathered Thursday night in the pews of St. Patrick Parish in Iowa City.
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“But you must know that Chapter 11 bankruptcy may be the only way to fairly and honorably compensate all victims — those who have already come forward and those who have not yet done so,” he said from the pulpit.
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Franklin called the meeting, he said, to tell parishes “be sure your corporate records are in good order.”
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While the diocese believes the parishes are separate corporations and should not be taken into any diocese bankruptcy, attorneys for the claimants dispute that.
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Franklin told the church leaders he heard compelling and tragic stories from more than 30 victims over six days of mediations this month — and learned there are “many more who have also been harmed, primarily by three former priests.”
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“It is important to bring healing to those who have been harmed,” he said.
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Davenport attorney Craig Levien, who represents at least 37 men who accuse priests in the diocese of abusing them as boys from 20 to 50 years ago, strongly disputed Franklin’s claim that the church finances are inadequate for fair settlements.
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“They’ve made no offers to the victims,” Levien said, adding the diocese has insurance and borrowing ability in addition to its assets. “It’s a scare tactic to use against the victims and a scare tactic to use against their own parishioners.”
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Levien, who has filed 14 lawsuits on behalf of his clients, said Franklin’s threat of bankruptcy undermines the diocese’s comments about the diocese’s responsibility and financial responsibility for the sexual abuse.
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“This would be the only diocese in the country claiming bankruptcy without paying one penny of their own assets,” he said. “To deny any responsibility or flee into bankruptcy denies the problem that is on their front steps today.”
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Franklin and Levien both declined to release the amount sought by the men in mediations, saying the talks are confidential.
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The diocese reported total net assets of about $10 million in an audited financial statement published in the Catholic Messenger last November, which included real estate, portfolios and other assets.
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Twelve land parcels owned by the diocese in Scott County have an assessed value of about $6.5 million, county assessor and auditor records show.
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The assessed value of the property owned by the diocese in Scott County alone jumps to $56 million if parishes and schools are included, and up to about $112 million if St. Ambrose University is included, according to county records.
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Only two other dioceses — Portland and Tucson — have filed for bankruptcy after paying settlements in the millions of dollars.
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Franklin said those dioceses no longer had the resources to compensate additional victims who came forward after making those settlements.
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“The diocese wants to fairly compensate all victims — not just the first ones to come forward,” Franklin said. “Compensation levels should not be based on a first-come, first-served basis.”
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Several diocese priests made comments at the end of Franklin’s statement, including the Rev. David Hitch at St. Mary’s in Tipton, Iowa, who said his brother was abused by now-defrocked priest James Janssen.
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Hitch told those at the meeting that his brother never wanted money, but wanted to be heard and taken seriously.
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“When he approached the bishop, he ran into a stone wall,” he said.
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Hitch called for “some type of investigation into how Bishop Franklin has handled this since 1995.”
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The Rev. William Kneemiller, priest at Sacred Heart in Lost Nation, Iowa, said the diocese doesn’t bat an eye at raising $20 million for a building project, so it should set a fund-raising goal to pay a settlement instead of file for bankruptcy.
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“I really think there’s a way of getting the settlement,” Kneemiller said.
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The diocese has discussed out-of-court settlements this month with 37 men alleging that they were sexually abused by priests decades earlier. If those talks fail, trials in the lawsuits filed against the diocese are scheduled to begin Nov. 1 at a rate of about one per month.
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Also in September, the diocese temporarily postponed its annual appeal for operating funds while those lawsuits are pending.
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The Annual Diocesan Appeal, which had been scheduled to kick off Saturday and Sunday, raised $2.5 million last year and $2.4 million in 2002, according to audited financial statements printed in the Catholic Messenger, the diocesan newspaper.
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Funds raised during the appeal defray about 70 percent of the operating budget for diocesan ministries and programs, officials said. The balance of the operating budget comes primarily from investments, Diocese spokesman David Montgomery said, while parish activities are supported by Sunday Mass collections.
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Todd Ruger can be contacted at (563) 383-2493 or truger@qctimes.com.