Before Victims Filed Claims, Some Targets of Abuse Lawsuits Moved to Shield Assets

By Brendan J. Lyons
Albany Times-Union
August 17, 2019

Gary Greenberg, founder of the Fighting for Children PAC, speaks during a news conference at the Legislative Office Building Tuesday Jan. 2, 2018 in Albany, NY. (John Carl D'Annibale / Times Union)

It could take years, and protracted legal battles, for victims of rape and sexual abuse to receive any compensation from the hundreds of lawsuits they began filing across the state last week against their alleged childhood predators or the organizations that employed them.

The lawsuits were among the first round of what are expected to be thousands of claims that will be filed in the coming year, after New York lifted its civil statute of limitations on sexual crimes and opened a one-year window for victims to sue those responsible.

The one-year period was enabled by the Child Victims Act, which was signed into law by Gov. Andrew M. Cuomo in February. Its ratification suddenly became a reality last November ó after more than a decade of political gridlock in the state Legislature ó when Democrats who long supported the measure seized control of the Senate chamber from Republicans.

That political shift also provided a months-long warning to abusers and the institutions that harbored them that the Democratic-controlled state Legislature may pass the measure, lowering a shield that had long protected the abusers from being sued for allegations dating back decades.

But any future judgments in favor of victims could become mired in protracted legal battles, especially if the defendants have taken steps to shield their assets or seek to use bankruptcy proceedings to minimize harm or delay payouts as they reorganize finances.

The Boy Scouts of America, like many Catholic institutions across the United States have done, is also considering bankruptcy protection as their organization and its state affiliates are increasingly becoming targets of sexual abuse lawsuits, according to attorneys handling the cases.

Sources close to a handful of Capital Region targets who are facing sexual abuse accusations, but who spoke on the condition of anonymity, confirmed that some of those people have taken steps to transfer their financial assets in an effort to protect them.

Michael L. Koenig, an Albany attorney whose legal expertise includes complex civil litigation, said one of the issues that may arise in the abuse cases is what was the "trigger date" for an individual, or an institution, to know they could face exposure under the Child Victims Act.

"I think one of the issues that's going to be litigated is what is the date someone knew or should have known, and took steps to protect their assets," Koenig said.

For roughly a century, New York has been governed by a now-antiquated fraudulent conveyance statute that prohibits transferring assets to avoid paying a judgment. Attorneys with experience in those cases said finding hidden or transferred assets ó other than property ó can be difficult, especially when defendants transfer things such as cash, jewelry or artwork to someone they trust, such as a relative.

The legal hurdle is that the complainant has to prove that the person or institution made the transfer with the fraudulent intent of defeating a claim.

"If Iím in my vehicle today and hit and, God forbid, kill somebody, and then two hours later I go and put my house in my wifeís name, that's a classic example of a fraudulent conveyance," Koenig said.

Last month, the New York City Bar Association wrote a letter urging Gov. Andrew M. Cuomo to sign a bill the Legislature passed this year that would update the state's fraudulent conveyance law, bringing it in line with federal bankruptcy regulations and 45 other states.

The Uniform Voidable Transactions Act, as it was named by the Legislature, would provide "a more sensible and more certain allocation of rights and remedies among those who have done business with a debtor in the period before its insolvency became known," the association wrote.

Jeff Herman, a south Florida attorney who is pursuing claims against the Albany Roman Catholic Diocese and other groups across New York, said the lawsuits he is pursuing are largely against institutions, which would have a more difficult time trying to hide or transfer assets.

"When that happens, of course, it makes the issue of collectibility more complicated but not impossible," Herman said. "When someone transfers an asset to avoid having to pay a debt there are legal mechanisms to go after those assets."

The state Office of Court Administration has assigned 45 judges, including five in the Capital Region, to handle the lawsuits that are targeting individuals accused of abuse as well as the Catholic Church, the Boy Scouts of America, private and public schools, daycare centers and foster-parent organizations.

Michelle Simpson Tuegel, a Dallas-based attorney whose firm represents about 170 plaintiffs filing abuse claims in New York, said there are various reasons many organizations seek bankruptcy protection but it is not a shield against paying judgments.

"It can slow things down and that is frustrating, especially to survivors who have waited for decades for their justice, but it is not a road block, itís not the end of the road, itís just a different road," she said. "I don't really know all of their reasons for declaring, other than they feel the financial pressure and they may feel there's some way to avoid the hit through bankruptcy."

In New York, Tuegel said her firm represents clients who are bringing sexual abuse lawsuits against various organizations, including Catholic dioceses, Episcopal churches, rabbis, sports organizations and the Boy Scouts. Her firm also represents women who allege they were sexually abused by former U.S. Gymnastics team doctor Larry Nassar.

In the cases of targets who may try to hide assets, Tuegel said those defendants can be deposed as well as people close to them who may have been the recipients of the transfers.

"I'm sure there will be defendants who make those attempts," she said. "It's a violation of other laws, potentially criminal and civil, and they may just be creating more liability for themselves."

She noted that New York Cardinal Timothy Dolan, archbishop of the Diocese of New York, who previously held leadership positions in Wisconsin, "made some conveyances in that state that at least on the surface appeared to be a way to shield some assets."








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