Davenport Diocese Contemplates Bankruptcy over Sex Abuse Suits
By Todd Ruger
October 1, 2004
IOWA CITY — The Catholic Diocese of Davenport might file for bankruptcy
because it does not have adequate financial resources to compensate victims
of child sexual abuse by priests, Bishop William Franklin said Wednesday.
“The diocese will make every effort to settle these cases,”
Franklin told a special meeting of church leaders from across the diocese’s
22 counties in southeast Iowa who gathered Thursday night in the pews
of St. Patrick Parish in Iowa City.
“But you must know that Chapter 11 bankruptcy may be the only way
to fairly and honorably compensate all victims — those who have
already come forward and those who have not yet done so,” he said
from the pulpit.
Franklin called the meeting, he said, to tell parishes “be sure
your corporate records are in good order.”
While the diocese believes the parishes are separate corporations and
should not be taken into any diocese bankruptcy, attorneys for the claimants
Franklin told the church leaders he heard compelling and tragic stories
from more than 30 victims over six days of mediations this month —
and learned there are “many more who have also been harmed, primarily
by three former priests.”
“It is important to bring healing to those who have been harmed,”
Davenport attorney Craig Levien, who represents at least 37 men who accuse
priests in the diocese of abusing them as boys from 20 to 50 years ago,
strongly disputed Franklin’s claim that the church finances are
inadequate for fair settlements.
“They’ve made no offers to the victims,” Levien said,
adding the diocese has insurance and borrowing ability in addition to
its assets. “It’s a scare tactic to use against the victims
and a scare tactic to use against their own parishioners.”
Levien, who has filed 14 lawsuits on behalf of his clients, said Franklin’s
threat of bankruptcy undermines the diocese’s comments about the
diocese’s responsibility and financial responsibility for the sexual
“This would be the only diocese in the country claiming bankruptcy
without paying one penny of their own assets,” he said. “To
deny any responsibility or flee into bankruptcy denies the problem that
is on their front steps today.”
Franklin and Levien both declined to release the amount sought by the
men in mediations, saying the talks are confidential.
The diocese reported total net assets of about $10 million in an audited
financial statement published in the Catholic Messenger last November,
which included real estate, portfolios and other assets.
Twelve land parcels owned by the diocese in Scott County have an assessed
value of about $6.5 million, county assessor and auditor records show.
The assessed value of the property owned by the diocese in Scott County
alone jumps to $56 million if parishes and schools are included, and up
to about $112 million if St. Ambrose University is included, according
to county records.
Only two other dioceses — Portland and Tucson — have filed
for bankruptcy after paying settlements in the millions of dollars.
Franklin said those dioceses no longer had the resources to compensate
additional victims who came forward after making those settlements.
“The diocese wants to fairly compensate all victims — not
just the first ones to come forward,” Franklin said. “Compensation
levels should not be based on a first-come, first-served basis.”
Several diocese priests made comments at the end of Franklin’s statement,
including the Rev. David Hitch at St. Mary’s in Tipton, Iowa, who
said his brother was abused by now-defrocked priest James Janssen.
Hitch told those at the meeting that his brother never wanted money, but
wanted to be heard and taken seriously.
“When he approached the bishop, he ran into a stone wall,”
Hitch called for “some type of investigation into how Bishop Franklin
has handled this since 1995.”
The Rev. William Kneemiller, priest at Sacred Heart in Lost Nation, Iowa,
said the diocese doesn’t bat an eye at raising $20 million for a
building project, so it should set a fund-raising goal to pay a settlement
instead of file for bankruptcy.
“I really think there’s a way of getting the settlement,”
The diocese has discussed out-of-court settlements this month with 37
men alleging that they were sexually abused by priests decades earlier.
If those talks fail, trials in the lawsuits filed against the diocese
are scheduled to begin Nov. 1 at a rate of about one per month.
Also in September, the diocese temporarily postponed its annual appeal
for operating funds while those lawsuits are pending.
The Annual Diocesan Appeal, which had been scheduled to kick off Saturday
and Sunday, raised $2.5 million last year and $2.4 million in 2002, according
to audited financial statements printed in the Catholic Messenger, the
Funds raised during the appeal defray about 70 percent of the operating
budget for diocesan ministries and programs, officials said. The balance
of the operating budget comes primarily from investments, Diocese spokesman
David Montgomery said, while parish activities are supported by Sunday
Todd Ruger can be contacted at (563) 383-2493 or email@example.com.