US Catholic Diocese Threatens Bankruptcy after Abuse Payouts
By Dan Glaister
The Guardian [Arizona]
June 24, 2004
A Catholic diocese in Arizona, facing a series of potentially ruinous civil lawsuits that allege sexual abuse by its priests, is preparing to declare itself bankrupt.
The move would be the first time that a diocese has filed for chapter 11 bankruptcy protection in the US. In an open letter read to parishioners on Sunday, the Bishop of Tucson, Gerald Kicanas, described it as "the only option" available.
Under the scheme, the diocese would be allowed to continue to operate while reorganising its debt.
But the move has provoked protests, with critics arguing that it would enable the church to avoid its moral responsibility and that the threat of filing for bankruptcy is a tactic to make the alleged victims of sexual abuse feel guilty.
"I don't believe that the church has to or will file for bankruptcy," said Barbara Blaine, the president of Snap, the Survivors' Network of those Abused by Priests.
"The only way for anyone to know the truth is for the church to open up its books. It's common for the bishops to threaten to file bankruptcy, but no one has yet, and the Vatican would not allow anyone to do so because it would mean handing over control of its assets to a civil court.
"It is a tactic to instil fear and force victims to withdraw their claims by making them feel guilty."
In February the Tucson diocese said 126 of its priests faced allegations of sexual abuse by 100 people.
It is facing 19 civil lawsuits alleging sexual abuse. These come in the wake of several large settlements by the diocese that have led to it paying out close to $20m.
In January 2002 an out-of-court settlement was reached with 10 men who alleged they had been abused by four priests during the 60s, 70s and 80s. Although the amount of the settlement was secret, it is thought to have been $16m.
Last August the church paid out a reported $1.8m to the families of five girls alleging abuse by a teacher at a Catholic school in Yuma on the Arizona-Mexico border.
The next month, facing a further 14 lawsuits, the diocese sold its Tucson headquarters. It now says it faces a long-term debt of $4.7m and a budget deficit of $7m for the year. But those pursuing the claims say that the church is engaged in financial subterfuge. The $1.65m sale of its headquarters was to an organisation called the Catholic Foundation for the Diocese of Tucson.
The foundation, which has assets of $11m, is a fundraising arm of the diocese. The diocese is also accused of not fully disclosing its accounts.
"They underestimate what they have and their summary does not include what the parishes are worth. We are entitled to see that," said Lynne Cadigan, a lawyer representing Ronald Lehner, who alleges that he was abused in the 70s by Monsignor Robert Trupia.
Although the diocese has recognised that Monsignor Trupia was a notorious sexual predator, he is still on the diocese payroll.
Another case involves a former priest called Juan Guillen, who has already been found guilty of sexual misconduct with an altar boy and is in prison.
"In the letter that was read out to parishioners on Sunday, Bishop Kicanas said that while he wanted to pursue mediated settlements of the cases, it had proved impossible to arrive at settlements that were within the means of the diocese.
"Previous settlements," he said, "have severely limited our ability to respond to the present demands."
He described chapter 11 as "a way to best continue the mission of the diocese while responding to legal demands and the needs of victims".
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