The Catholic Church Is Rich Enough to Settle Sex Abuse Cases Forever
By Alex Norcia
September 26, 2018
Last week, the Diocese of Brooklyn and an after-school program settled with four people who were frequently abused as children at a Catholic Church, agreeing to pay a total of $27.5 million. The historic sum was reported at the tail end of a summer that has become a public relations fiasco for the Vatican worldwide, sparking something of an identity crisis within its own walls. In the past few months alone, Theodore McCarrick, a former archbishop of Washington, DC, resigned from the College of Cardinals when he became the highest-ranking clergyman to be directly accused of sexual violence. Weeks later, a grand jury report out of Pennsylvania concluded that, since the 1940s, roughly 300 priests had abused at least 1,000 children in just some of the state's dioceses. Traveling in Ireland not long after, Pope Francis was called on to resign by a prominent former Church official who claimed the pontiff knew about the McCarrick allegations before they went public. Meanwhile, state attorneys general in New York, New Jersey, and other states launched their own probes into local dioceses.
It sometimes seems as if you could rattle off a list of Catholic sex abuse scandals in perpetuity. The pope, for his part, has barely responded outside of summoning the world's bishops to the Vatican for a meeting this winter to discuss the ongoing crisis.
Considering the unlikelihood of criminal consequences for those at the clergy's top levels, and the fact that many of these sex abuse cases have far surpassed the statutes of limitations, the endgame seems increasingly a financial—that is, a civil liability—question. But can the Church settle with survivors forever? Will it ever, somehow, completely run out of money with which to do so? In settling sex abuse claims, the Church has already reportedly spent or agreed to spend at least $3 billion in the US alone, and about 20 American dioceses have filed for some kind of bankruptcy. There's little evidence that will slow down, or that the price tag won't keep climbing. (In Pennsylvania, for example, bishops said they supported a fund to compensate survivors if they could prove they were abused but, because of the statute of limitations in the state, could no longer file a lawsuit.)
But specifics on the Church's finances, like virtually everything else that goes on behind those holy gates, are hard to come by.
Just ask Jack Ruhl. He's a professor of accountancy at Western Michigan University who became interested in Catholic Church finances in the early 2000s, when he discovered a personal connection with an abuse scandal in his home city of Chicago. It's become more than just a research interest for him, though, now more resembling a passion like the one your uncle might have in tracing your family's lineage back to 1651 using Ancestry.com. In 2015, Ruhl and his wife, Diane, published their findings in the National Catholic Reporter—the first attempt to give a proper estimate (they claimed almost $4 billion) for how much sex abuse had cost the Church since 1950.
VICE talked with Ruhl about, among other things, how he measures Church finances (there are possible secret bank accounts and potential fraud to contend with), how it rakes in revenue, what happens when a diocese goes bankrupt, and just how long the Vatican can hold up against multibillion dollar liability.
VICE: How—and why—did you get started digging into Church money?
Jack Ruhl: This began back in 2004, when I was reading a pair of articles from the Chicago-Sun Times and the Chicago Tribune that referenced accusations made against a Jesuit priest, Father John Powell, who was a professor at Loyola University. I was a student there, and so was my wife, Diane, in 1975. He was also the author of a number of self-help books—Why Am I Afraid to Tell You Who I Am?, The Secret of Staying in Love, and He Touched Me. He had turned the conversation [with Diane] to how he was going to help her open up to her sexuality, so that she would not spend her life "staring down a microscope." Diane was and is quite studious; she was class valedictorian of her veterinary class. Eventually, the allegations arose that he had abused girls. It so happened that my wife and I knew Father Powell—as a matter of fact, he was even the priest at our wedding—and I asked my wife if he had done this to her, and she said yes. So, that's what really got my interest.
What's your process been since then?
First off, the Catholic Church in the US is under no obligation to furnish any financial information to anyone. The result is that only the hierarchical inner circle gets a true picture of finances, and sometimes even they don't know what's what. Nonetheless, some dioceses do release financial information. What I became interested in was finding out how many dioceses did so. There are [about 200] dioceses in the United States, and I went online, and was only able to find financial information for about 80 or 90. Sometimes the financial information is audited, sometimes not. Financial information that's not audited is worthless. That's not hyperbole.
Unaudited financial information is like this: I show you my check register that indicates I am wealthier than Warren Buffett. I say, "Believe me, because I'm a bishop who never lies or hides money, and I turn bread and wine into the body and blood of the Lord." Unaudited statements are just like this: lots of financial assertions with absolutely no evidence that they are reliable in the slightest.
And you're still doing this—even with all the roadblocks? You've been collecting the Church's financial information (or at least attempting to) for the better part of a decade or so?
[Laughs] I'm sitting at my desk right now. There's a mathematical technique that auditors use to see if their clients are fudging the numbers. So what I've actually been doing for six months now is collecting data from the bankruptcy of the Diocese of San Diego. To make a long story short, the bishop there at the time [in about 2007], Robert Brom—there were a number of lawsuits [over alleged sexual abuse], and they eventually filed bankruptcy. And in order to do that, you have to go before the court [with a team of church lawyers] and basically present all your assets. What they showed that is for the chancery—for the headquarters—and for the parishes, there were hundreds (literally hundreds) of bank accounts. So the bankruptcy court hired an expert, a forensics accountant, and what he found was that, just prior to filing bankruptcy, a number of parishes went to the banks and asked that the accounts have new TINs—taxpayer identification numbers. There was one bank—Union Bank of California—and they knew that San Diego was going through bankruptcy, and they said, "Hey, we'll give you a new taxpayer identification number," but we have to have a letter from the bankruptcy court. What eventually happened there was a judge—there was so much media, so much publicity—that she was in tears listening to the stories of the survivors and reading the account of how this diocese had tried to understate its assets.
[The diocese eventually settled with survivors, though it's still apparently dealing with the financial fallout.]
Why keep doing this? What are you hoping to achieve?
Transparency. A lot of people don't understand this, but the financial statements online, they're just for the headquarters—millions and millions of dollars are out there, in the parishes.
So how much money do these parishes and dioceses have? How are these churches making money?
Well, a number of ways. In a set of financial statements, there are things like the income statement and the balance sheet, and then there are also notes to these financial statements. If you look in the notes, for a lot of these, you'll see they have money in stocks, in mutual funds—that's one way. Then, of course, there's the weekly collection for people who go to mass. And then sometimes you come across—I found, in one instance, for example, where someone had passed away and gave acreage or a building to the [local] church. A very large donation, bequeathed after a death.
And then this is funneled upward—meaning, the parishes eventually end up giving money to the Vatican?
Yes, they're sending money—it used to be called Peter's pence. It's basically tax from the Vatican.
How much is the Vatican worth? TIME estimated it at as much as $15 billion way back in 1965.
I'm glad you brought this up. A few years ago, just for fun, I was able to get some financial statements from the Vatican. My first real question was who decides on the financial standards, and the reporting standards, for the Vatican. Well, it's the Vatican city-state—so the person who ultimately decided this was Pope Paul VI. [He was the pontiff from 1963 until 1978.] Of course, what does he know? Let's just say he wasn't particularly trained to create accounting standards.
Then what I did—I was astounded. On the financial statements for the Vatican—actually, why don't you take a guess? I know you didn't ask for games. But guess what the valuation is of St. Peter's Basilica?
I don't know. Hundreds of millions of dollars.
Well, I have my next question: Why?
[Laughs] Basically, they just want to appear as a poor church—to me, that's the dodge. So people can't say it's a rich one—that it's actually worth "x" millions or billions or trillions of dollars. The people with the only real idea of how much the Church is worth, as I said, are the higher-ups on the inside.
When a diocese settles with a survivor or survivors, then, how exactly is it paying tens of millions of dollars?
Well, that's a good question. Looking at their financial statements—the most recent financial statements are up to 2016. Take one example: There's a bank called Allied Irish Banks, and some of the dioceses—Los Angeles was one of them. I'll use it as an example. If you remember, a few years, there was a payout in the hundreds of millions of dollars from the Archdiocese of Los Angeles, and some of that money had been borrowed from that Irish bank. Surprisingly, too, what some of the churches do as well—and very few people know this—is they issue bonds. Ostensibly, the bonds, they claim, are being sold in order to renovate the gymnasium, or something like that.
Technically, then, the Church could be in a decent position to pay these settlements forever?
Yes. Let me give you an explanation, too, about when the insurance companies come into play. What happens is, say, the archdiocese will pay out to the survivors, and then the churches will turn around and say to the insurance company, "Hey, guys, you covered us, so we expect to be covered for the $25 million," or whatever. Then fights will begin between that archdiocese and the insurance companies.
Let me put it another way: Is there a conceivable way that the Church—meaning the Vatican—could ever entirely go bankrupt?
No. For one thing, there are just so many bank accounts we don't know about. And they're not going to tell anyone about them.
What's the sketchiest thing involving money a Church higher-up has done that you don't think people know about, or that you think people have forgotten about?
Father [Timothy Dolan], the archbishop in New York—and I think he's trying to get ahead of continuing scandal—has hired a former judge to lead a study on whether the Church is doing what they're really saying they're doing, in regards to helping survivors. What I do think a lot of people forget is that, back in the year 2007, Cardinal Dolan was then archbishop of Milwaukee, and he moved $57 million to the cemetery fund [to hide the amount of money and assets his diocese had, so as to not have to pay survivors demanding compensation]. At the same time, he was foolish enough to write a letter to the pope.
As a matter of fact, I can quote it—I have a quote right here on my desk: "I foresee an improved protection of these funds from any legal claim and liability."
Truly, we could talk about this forever.