Diocese Bankruptcy: More Abuse Victims, Church Property Listed

By Elizabeth Hardin-Burrola
The Gallup Independent
December 18, 2013

ALBUQUERQUE — The Diocese of Gallup filed for Chapter 11 reorganization just over a month ago, but already a number of significant events have taken place.

The following is a summary of some of the case’s more important developments and issues:

Higher abuse numbers

During the first court hearing Nov. 15, the diocese’s lead bankruptcy attorney Susan Boswell said the Gallup Diocese was aware of 105 men and women who were alleged victims of clergy sex abuse in the diocese. In less than two weeks, Bishop James S. Wall submitted a document to the court revising that number upward to 121. In an upcoming court hearing Thursday, that figure may once again rise.

Creditors committee formed

Seven individuals were selected to serve as members of the unsecured creditors committee Tuesday. Because they are all believed to be victims of clergy sex abuse, their names are not being published without their consent. One member, Criss Candelaria, was contacted Tuesday and consented to being publicly identified. An attorney in private practice in Pinetop, Ariz., Candelaria is a former Apache County Attorney and a longtime Arizona prosecutor. He has previously spoken out about being targeted for sexual abuse as a child by the Rev. James M. Burns. Along with Candelaria, the committee is made up of five men, four of whom are Hispanic, and two women. It is believed at least one committee member is Navajo.

Steep fees

In an attempt to keep administrative expenses and professional fees “as low as reasonably possible,” the Office of the U.S. Trustee, a Department of Justice program that monitors bankruptcy cases, has submitted “limited objections” to the applications authorizing the employment of three law firms and one accounting firm to represent the Gallup Diocese. Those firms, however, are already collecting steep fees. The diocese paid Quarles & Brady LLP $200,000 on Nov. 8, it paid Walker & Associates, P.C. more than $22,000 on Oct. 29, and it paid Keegan, Linscott & Kenon, P.C. $75,000 on Nov. 8. Lead attorney Boswell is billing the diocese $375 per hour for the first 125 hours of representation. After 125 hours, her fee will increase to $495 per hour.

Separate or subsidized

The Chapter 11 reorganization only involves the Diocese of Gallup’s chancery office, which includes Gallup’s Sacred Heart Retreat Center, and Gallup Catholic School, aka Sacred Heart Catholic School. In early bankruptcy documents, the Gallup bishop presented a picture of parish priests not being employees of the diocese and parish churches along with their assets as being separate from the diocese. Catholic schools in the diocese were also presented as being separate from the diocese. However, Wall’s more recent financial statement lists 11 parishes receiving salary subsidies from the diocese, two parishes receiving financial assistance from the diocese, and five parishes that are owed priest subsidy payments. In addition, Chancery officials advertise and approve the hiring of school principals and those principals answer to a diocesan education superintendent.

Trust property

According to the Gallup Diocese, much of its real estate is “trust property” in which the diocese “holds mere legal title” but which is actually owned and controlled by parishes. Some parishes only have one piece of property the land the church occupies, while others have as many as ten pieces of property. St. John the Baptist Parish, located in St. Johns, Ariz., owns the G-Bar Ranch, which was the subject of a civil lawsuit in recent years, and Gallup’s Sacred Heart Parish which is the bishop’s cathedral is listed as owning commercial property where one of Gallup’s Lowes grocery stores is located.

Real property

The Gallup Diocese lists 85 pieces of property across Arizona and New Mexico as “real property,” which is defined as “any property in which the debtor holds rights and powers exercisable for the debtor’s own benefit.” The list includes vacant land, houses and mobile homes, office and school buildings, cemeteries, and subdivision property. Some is located outside the diocese, as in the city of Rio Rancho. All the property is listed as having an “unknown” value. Based on documents provided by the diocese, it is unclear of the listing for the bishop’s home, his nearby “Cure of Ars House of Discernment,” and his private chapel, which he renovated and decorated with artist Arlene Sena’s Spanish colonial-styled paintings.

Third party liability

In its financial documents, the diocese states it “may have claims against certain third parties who are or have been co-defendants in certain litigation alleging abuse claims against the Diocese of Gallup or who have not been named in such suits but may still be liable to the Diocese of Gallup …” Regarding allegations against diocesan priests who came from other dioceses or members of religious orders who are credibly accused of sexual abuse in the Gallup Diocese, their home diocese or religious order may be financially drawn into the bankruptcy case.

Multiple creditors

A list of creditors holding secured claims shows diocesan officials owe nearly $113,000 to Pinnacle Bank for a $200,000 promissory note signed in June 2011, and another list of creditors holding unsecured nonpriority claims shows diocesan officials owe the Archdiocese of Santa Fe for a $29,000 loan and the Diocese of Phoenix for a $200,000 loan. The Gallup Diocese also owes more than $15,000 to Saint Luke Institute in Maryland and $35,000 to the Guest House in Michigan both mental health treatment facilities for Catholic clergy. Among its many debts, the diocese continues to owe unpaid legal fees to law firms in Los Angeles, Phoenix and Gallup, and even owes $6,600 to its own fundraising organization, the Catholic Peoples Foundation.



Any original material on these pages is copyright © 2004. Reproduce freely with attribution.