Embattled Stockton Diocese Nears Bankruptcy Exit; Attorneys and Alleged Victims Speak out

By Alex MacLean
Union Democrat
January 11, 2017

Nearly three years since filing for bankruptcy in response to a flood of sexual-abuse claims, the Roman Catholic Diocese of Stockton is hoping to close the book on what Bishop Stephen Blaire has described as a “very difficult chapter.”

Judge Christopher M. Klein of the U.S. Bankruptcy Court for the Eastern District of California approved Blaire’s reorganization plan for the diocese on Tuesday, according to a written statement. The diocese filed for bankruptcy on Jan. 15, 2014, after paying out more than $15 million to settle nearly two dozen sex-abuse claims over a 20-year period.

“The approved consensual Plan will allow the Diocese to exit bankruptcy within the next few weeks,” the statement said. “The Diocese with limited financial assets will be able to continue its essential ministries and services to meet the needs of the parishioners and others who rely on the Diocese’s ministry, education, and charitable outreach.”

Under the plan, the diocese has agreed to pay $15 million to survivors of sexual abuse by clergy. Part of the plan also involves making “non-monetary” commitments to the survivors that the diocese described as “important aspects of any healing process.”

Other details of the plan include setting up a trust fund exclusively for the benefit of survivors, paying at least 50 percent of what the diocese owed to general unsecured creditors, restructuring secured loans, and settling with insurance carriers.

The plan received near-unanimous approval from survivors and other creditors, according to the diocese. In a written statement, Blaire called it an “equitable resolution.”

“The creditors committee was very pleased we were able to work out an amicable, agreed-upon solution,” said Sister Terry Davis, spokeswoman for the diocese. “It’s really the best of what everyone hoped would happen.”

A notice announcing the August 2014 deadline to file claims against the diocese for alleged sexual abuse that occurred prior to Jan. 15, 2014, included a list of 11 priests who have been accused of sexual misconduct over the years.

Those on the list included Father Michael Kelly, who served in Sonora from 1987 to 1997 and San Andreas from 2000 to 2002, Father Titian Miani, who served in Angels Camp from 1982 to 1985, and Oliver O’Grady, a convicted serial child molestor who served in San Andreas from 1984 to 1985.

The diocese received 34 new claims of sexual abuse prior to the deadline.

While the diocese is looking to move forward and repair its reputation, critics and alleged victims say it has failed to address some longstanding issues.

Travis Trotter, an airline pilot, claimed he was sexually assaulted by Kelly while an altar boy at the Cathedral of the Annunciation in Stockton between 1984 and 1985. He later sued the diocese, after the criminal statute of limitations had expired, and received a $3.75 million settlement in April 2012.

In reaction to the reorganization plan’s approval, Trotter released a statement critical of the diocese’s treatment of alleged victims like himself.

“Neither Father Kelly nor the Diocese of Stockton ever admitted their guilt or offered an apology to myself and to other victims,” Trotter stated. “Throughout my trial the Diocese did everything in its power to discredit me and protect Kelly.

“To say this bankruptcy is an equitable resolution for the pain and suffering caused by Kelly and the Diocese demonstrates their utter lack of understanding and compassion for so many victims.”

Federal prosecutors have an active arrest warrant issued for Kelly on suspicion that he unlawfully left the United States to avoid prosecution while under criminal investigation by the Calaveras County Sheriff’s Office for sexual misconduct.

Kelly left the U.S. for his native Ireland in April 2012, shortly after a civil jury found him liable for the claims in Trotter’s lawsuit. He cited health concerns as his reason for leaving in letters to parishioners and the diocese, despite pleas from the diocese for his return.

The alleged victim in the Calaveras County case, who claimed he was abused by the priest at a Mokelumne Hill church when he was 10, testified during the civil trial in Trotter’s lawsuit while Kelly was still present in court.

A criminal complaint was later filed by the Calaveras County District Attorney’s Office accusing Kelly of four counts of child sexual abuse, for which he faced a maximum of 14 years in prison if convicted.

The DA’s Office unsuccessfully sought Kelly’s extradition from Ireland before dropping the charges last year following the untimely death of the 26-year-old alleged victim in the case.

However, Kelly remains wanted by the U.S. Attorney’s Office for the Eastern District of California for the unlawful flight charge.

Vince Finaldi, who was Trotter’s attorney, said he’s heard reports that federal authorities have arrested Kelly in Morocco and are working to extradite him. However, the U.S. Attorney’s Office had no information Wednesday about an arrest having occurred.

The U.S. Department of Justice did not respond to an inquiry about Kelly.

Finaldi said he believed the diocese has been providing aid to Kelly, but Blaire has said he hasn’t been in contact with the priest.

Davis confirmed that Kelly hasn’t been defrocked, but she said he can’t operate as a priest. She wasn’t aware if he receives any sort of benefits from the diocese, such as healthcare or a pension.

“There’s still a priest out there on the lam who hasn’t been held accountable,” Finaldi said. “In addition, his supervisors haven’t been held accountable.”

Finaldi was referring to Blaire and Monsignor Richard Ryan, the latter of whom was Kelly’s roommate for a number of years and testified during Trotter’s trial that he had never witnessed any misconduct.

The timing of the bankruptcy filing effectively ended active litigation that Finaldi’s firm and others were pursuing against the diocese.

Finaldi said he believes issues within the organization will continue until more changes are made.

Finaldi’s firm filed a new lawsuit against the diocese in August 2016 on behalf of a male pool-maintenance worker at the Church of the Presentation in Stockton who claimed he was sent sexually explicit text messages and photos on his cell phone from Monsignor Larry McGovern.

Stockton police investigated the worker’s claims but didn’t file criminal charges, according to Finaldi. McGovern was placed on administrative leave indefinitely while the diocese investigates the accusations.

The diocese came under criticism in December for reinstating a priest to active ministry who had been under in-house investigation for a year stemming from allegations of inappropriate conduct with a minor.

Father Editho Mascardo was under investigation from July 2015 to May 2016 by the Stockton Diocesan Review Board, which didn’t conclude that sexual abuse had occurred. Prior to being placed on leave, he had served as a parochial vicar at St. Patrick’s Church in Sonora.

Although the details of the allegations against Mascardo were not released by the diocese, Stockton police confirmed a report containing allegations of sexual misconduct against him was filed there in September 2001. Prosecutors did not pursue that case due to a lack of sufficient evidence.

Mascardo was said to be assigned to hospital chaplain work in Modesto after being reinstated.

“Do I think there’s still major sexual issues in the diocese? Yes, I do,” Finaldi said. “Until they change their fundamental policies and procedures, it’s going to keep going on.”








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