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  Bankruptcy Court Filing Sheds Light on Milwaukee Archdiocese Finances

By Annysa Johnson
Milwaukee Journal Sentinel
February 7, 2011

http://www.jsonline.com/features/religion/115517014.html

The Catholic Archdiocese of Milwaukee, which faces more than a dozen civil fraud lawsuits over its handling of clergy sex abuse cases, filed for Chapter 11 bankruptcy protection in January. As the case proceeds, we'll have updates, analysis, documents and more.

The Archdiocese of Milwaukee filed its financial statements in U.S. Bankruptcy Court Monday, listing $40.7 million in assets and $24 million in liabilities, and offering an unprecedented look at the holdings of the Catholic Church in southeast Wisconsin.

The filing is the first step in what is expected to be a protracted legal battle over assets available to pay claims of men and women sexually abused by Catholic clergy as children, dating back decades.

Jeff Anderson, the St. Paul, Minn., attorney representing the victims, said the financials are incomplete, but declined to elaborate. And he likened the Milwaukee Archdiocese to the Diocese of San Diego, which was criticized in 2007 by its bankruptcy judge, who believed the church misrepresented its assets.

Archdiocese spokesman Jerry Topczewski rejected that characterization.

"Our finances are no secret," said Topczewski, chief of staff for Milwaukee Archbishop Jerome Listecki.

"We don't have vast resources, and what we do have is restricted to ministry," he said.

Legal experts said they have no way of assessing Anderson's claim, based on the documents.

"But this is exactly the kind of thing that can make this messy and protracted," said Jonathan Lipson, a University of Wisconsin-Madison law professor who reviewed the filing.

The Milwaukee Archdiocese filed for Chapter 11 bankruptcy protection in January after failing to reach a settlement with two dozen sex abuse victims. As part of the bankruptcy, the court will determine what assets are available to compensate creditors, including victims, and oversee a reorganization plan that would allow the archdiocese to continue operating.

Topczewski and Listecki have said that the vast majority of church assets are in restricted accounts that cannot be tapped for settlements. They said before the filing that the church has about $7.1 million in cash and property available to compensate victims.

The $40.7 million in assets listed Monday is less than half the $98 million that appears on the church's 2010 audited financial statements. Omitted, said Topczewski, are $48 million in restricted cemetery accounts and funds held in accounts for other entities.

Monday's filing offered a glimpse at the archdiocese's income, holdings and financial obligations. According to the document:

• The archdiocese earned $25.9 million in income during fiscal year 2010, down from $26.7 million the previous year. Its income so far for fiscal year 2011 was $13.2 million.

• It owns 25 properties with a total value of $7.7 million. About half of the holdings - all cemeteries or schools and a youth home - are listed as having no value. Others range in value from $4.5 million for an undeveloped cemetery in Franklin to $120,000 for the Newman Center at UW-Whitewater.

• The archdiocese holds bank and investment accounts totaling about $19.7 million.

• Liabilities include $13.7 million in the retired priests' health plan, $1.2 million in the pension plan for cemetery workers, $3.4 million for Messmer High School and $702,000 for payments to sex abuse victims who went through the archdiocese's mediation process.

• The values of numerous items are listed as "unknown" in the financial report, including those of liturgical vestments and jewelry, and numerous insurance policies.

The archdiocese filed for bankruptcy protection after a breakdown in settlement talks with 24 men and women who were molested as children, 16 of whom have pending lawsuits against the archdiocese in Milwaukee County Circuit Court.

They accuse the archdiocese of defrauding them by moving priests with known histories of sexual abuse from parish to parish without telling families of their background.

One of those who had not yet filed lawsuits has since withdrawn as a claimant.

The archdiocese said the talks collapsed after the plaintiffs' attorney rejected a $4.6 million settlement offer. The victims, however, said they refused to discuss financial terms until the archdiocese agreed to their non-monetary demands, including the release of all documents pertaining to abuse in the archdiocese.

 
 

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