Diocese Faces More Suits

By Sam Hemingway
Burlington Free Press
July 9, 2009

The state's Roman Catholic diocese is facing two new lawsuits claiming it transferred assets into separate entities to make it harder for victims of priest sexual abuse who have sued the church to collect monetary damages in their cases.

The two lawsuits were filed in state and federal court this week by 27 people who have cases awaiting trial in Chittenden Superior Court in Burlington or, in three instances, won damages following a jury trial and are awaiting rulings on appeals of their cases.

Besides the diocese itself, the named defendants in the two cases are Bishop Salvatore Matano; Monsignor John McDermott, diocesan chancellor; and Martin Hoak, the financial officer for the diocese.

In nearly identical language, the two lawsuits claim the diocese and its top officials began in 2005 to shift church assets into trusts created by Matano and the diocese to put the assets "beyond the reach" of creditors, including the alleged victims of priest sexual abuse.

Those assets included titles to several hundred parish properties and part of the diocese's investment portfolio.

Documents on file at Chittenden Superior Court show that in 2006, the diocese transferred $3,819,000 to a church pension fund and another $3,704,000 was placed in a newly created trust for Vermont Catholic Charities.

"Defendants ... took this action so as to permit the diocese to claim it did not have sufficient funds to pay settlements or judgments, to frustrate those who had legitimate claims (or) to prevent them from ever recovering the monies to which they were entitled," the twin lawsuits said in part.

Jerome O'Neill, the lead attorney for the 27 named plaintiffs, said Wednesday that the two lawsuits were filed this week in order to beat a legal deadline for bringing such claims and because of the breadth of what he said were fraudulent conveyances by the diocese.

"We were not aware of the full scope of the transfers that the diocese made until recently," O'Neill said. "We believe now it involved several million dollars in investments and several hundred million dollars worth of property."

Tom McCormick, a diocesan attorney, said Wednesday that he had just received copies of the lawsuits. He was reluctant to comment, but did say the diocese had not engaged in any fraudulent transfers of assets.

"The purpose of the transfers was to put the assets in a form that was consistent with canon law," McCormick said, referring to a legal set of rules the church follows. "It was not done with the intent of leaving any claimant without a possible recovery."

The two lawsuits ask the courts to award the 27 plaintiffs compensatory and punitive damages. The case filed at Chittenden Superior Court represents the 20 alleged victims of priest sexual abuse who still live in Vermont; the federal case was filed on behalf of seven alleged victims who live outside Vermont.

To date, juries at Chittenden Superior Court have awarded in excess of $12 million to three former altar boys who alleged they were molested by priests. All three cases are on appeal before the Vermont Supreme Court.

The diocese has also paid out at least $1.75 million over the past five years to settle cases filed by seven other former altar boys with priest sex abuse claims.

Contact Sam Hemingway at 660-1850 or e-mail at To get Free Press headlines delivered free to your e-mail, sign up at


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