Bishop Says Abuse Scandal Could Force Diocese into Bankruptcy

By Todd Dvorak
Associated Press, carried in Waterloo/Cedar Falls Courier
October 1, 2004

IOWA CITY -- Bishop William Franklin says the Roman Catholic Diocese of Davenport lacks the financial resources to compensate victims of alleged priest abuse and warned a settlement could force the church into bankruptcy.

Franklin also said no final decisions have been made for meeting the monetary demands set forth recently in negotiations with 37 men who claim they were sexually abused by priests in the last 50 years.

"Diocesan financial resources are limited -- they are not adequate to compensate the victims for the amounts demanded," Franklin told more than 150 clergy and board members from parishes around the diocese Thursday.

"The diocese will make every effort to settle these cases, but you must know that Chapter 11 bankruptcy may be the only way to fairly and honorably compensate all victims," he said.

The Davenport diocese, like others around the nation, has been hard hit in the last five years by sexual abuse lawsuits aimed at former priests, some dating back to the 1950s.

The lawsuits also allege church hierarchy knew about some instances of abuse but covered up cases, failed to discipline priests and simply moved them among the 95 parishes scattered around 22 counties in southeastern Iowa.

Preliminary talks aimed at settling the claims out of court began last month. Diocese attorney Rand Wanio said the victims have proposed a dollar amount for settling claims, but he said both sides have agreed not to disclose the figure.

The first of several trials is scheduled to begin in November.

As part of the negotiations, Franklin said he has spent several days meeting with victims, hearing stories he described as compelling and tragic.

"We expressed to the victims we were truly sorry ... and that the abuse was not their fault," Franklin said, reading from prepared remarks.

Nationwide, only diocese in Portland and Tucson, Ariz., have taken the step of filing bankruptcy to offset settlements from abuse lawsuits, Wanio said.

Efforts to raise money may also force wholesale changes in the diocese and its assets, especially if the church fails to enlist its insurance companies for money to offset costs, Franklin said.

"We have a very unclear insurance picture," Wanio said.

Officials may consider scaling back operations, selling and moving its headquarters, including its home for retired priests, and making other assets available to the court.

Franklin also urged leaders at individual parishes to review business records of each parish, which he said were set up as individual corporations decades ago and shielded from bankruptcy litigation involving the diocese.

But Craig Levien, the attorney representing most of the victims, accused church officials of distorting the net worth of the diocese and said access to parish assets remains an unanswered legal question.

"We strongly disagree that the diocese does not have the resources to meet their financial responsibility to fully compensate victims of sexual abuse," Levien said.


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