Detroit Archdiocese Transfers Assets; Critics Say It's a Shell Game
By Robert Allen
The Archdiocese of Detroit transferred hundreds of parishes this year to a separate real estate corporation, a move critics say is similar to attempts across the country by the Catholic Church to shield assets from lawsuits filed by victims of clergy sex abuse. For the six-county archdiocese, which includes 313 parishes, this is a first step toward creating an individual corporation for each parish, archdiocese spokesman Ned McGrath said Thursday. He said U.S. dioceses had been encouraged by church leadership to make such a change since 1911, and timing has nothing to do with concerns over lawsuits, which have already cost the church billions of dollars. Terry McKiernan, co-founder of BishopAccountability.org, which tracks the abuse crisis, said this is a shell game to protect those assets from seizure through lawsuits regarding child sex abuse. He compared it to several other cases, such as a fund the Archdiocese of Milwaukee used to try to protect tens of millions of dollars in assets when it entered bankruptcy. "I don't know if Detroit will go in that direction," McKiernan said. "But clearly, they're bracing for something." Across the United States, about 20 dioceses and other religious orders have filed for bankruptcy protection as a result of clergy sex abuse claims, the Associated Press reported last week. As a result, victims' advocates say they are seeing trends across the country that include shifting of assets to other funds or parishes, a tactic previously used in Minnesota, Wisconsin, Tennessee and Southern California. "This is not an unusual step," said James Stang, a Los Angeles attorney who has represented more than 13 creditors' committees involving survivors of sexual abuse and now represents victims of former Hollywood mogul Harvey Weinstein. "They will tell you that the transfer of the property to a trust or away from the archdiocese actually reflects their canon law concepts. I look at it as club rules." Mooney Real Estate Holdings was incorporated as a nonprofit in March through the Bodman law firm in Detroit, with the Archbishop of the Roman Catholic Archdiocese of Detroit named as its sole member. Details of the corporation were reported Monday by Church Militant, an independent conservative Catholic news website that has long been at odds with the Catholic Church. The purposes of Mooney Real Estate Holdings, according to its articles of incorporation document, include to operate "exclusively for religious purposes" and "to acquire, own and lease real property for the benefit of the Roman Catholic Archdiocese of Detroit" and its "parishes, schools, cemeteries and other ministries, Sacred Heart Major Seminary, and other religious, charitable and educational organizations ..." That document is dated March 22, a month after two bills — which were scaled back before they became law — were introduced to extend the statute of limitations for child victims of sexual abuse. The bills initially had drawn concerns from the Catholic Church. Stang said the Detroit Archdiocese's move appears to have been to "put the assets out of reach," but it wouldn't necessarily stop an attorney in a potential lawsuit, who could sue for a fraudulent transfer. "When you look at intent to defraud, timing is critical," Stang said. In a letter dated June 22 that McGrath said was shared with all the priests and parishes in June, the Rev. Jeffrey D. Day wrote an explanation of the ownership transfer as a "century-old quest." "For historical background, the Holy See in 1911 directed dioceses in the U.S. to move toward the civil law model of parish incorporation, to be more closely aligned with canon law. It recommended parish incorporation versus the 'corporate sole' model in which all arch/diocesan property is titled in the name of the diocesan bishop," according to the letter. The Archdiocese of Detroit started moving toward parish incorporation about 11 years ago, but McGrath said the Great Recession and other factors got in the way. "All I can say is this is something we started trying to do in 2007, and we're trying to do it again," McGrath said. "That's all. We're just trying to get in line with church law on the whole thing. There's no other motive to it other than that." The Archdiocese of Detroit said it has paid out more than $3 million in settlements and counseling costs for victims in clergy sex abuse cases since 2004. Nationally, abuse victims’ lawsuits have forced U.S. dioceses and religious orders to pay more than $3 billion in settlements, NPR reported in August. Since 2002, the Archdiocese of Detroit has published a list of clergy accused of abuse, McGrath said. "Our record of working with people who bring their complaints forward speaks for itself," he said. "One complaint is one too many. But I think we've been very receptive to the complaints and responses. So I don’t think we have anything to have to defend in that particular area. Can we do better? Sure, I believe we can always do better." McKiernan called the property transfer "a pretty clear attempt to firewall." He said that recent raids indicate authorities are looking aggressively into allegations. "There's not only potential criminal charges but also a considerable financial exposure, and it certainly looks to me like the archdiocese is creating a sort of segmented system to deal with that new reality." In October, law enforcement officials with the Michigan Attorney General's Office executed search warrants for clergy files at all seven Catholic dioceses in Michigan as part of its investigation into sexual abuse of children by priests. But McGrath said they didn't see this coming seven months earlier, when Mooney Real Estate Holdings was established.
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