Lawsuit alleges fraud by Diocese of San Diego to avoid paying abuse victims
A lawsuit was announced Tuesday alleging the Roman Catholic Diocese of San Diego fraudulently transferred real estate to dummy corporations in order to avoid paying out legal settlements to hundreds of victims of childhood sexual abuse.
The suit alleges that due to the impending passage of a bill that extended the statute of limitations for alleged sex abuse victims to file lawsuits, the diocese transferred at least 291 real estate parcels to its parishes in a bid to conceal assets.
The suit, which seeks to undo those transfers, states the total assessed value of the transferred property exceeds $450 million.
The news coincides with the arrival of Lent this year, and has created some unease for the local Catholic faithful.
Matthew Savino was at Mission San Diego to attend mass for Ash Wednesday. He said even with the difficult times for the Diocese, he’s staying focused on his religion.
“I'm just here for my faith and to stick to God. I'm not going to really let that interfere with what's going on,” the 21-year-old said.
The announcement also comes less than two weeks after the Diocese of San Diego said it may have to file for bankruptcy due to "the staggering legal costs" of hundreds of sex abuse lawsuits it faces.
Earlier this month, Cardinal Robert McElroy wrote in a letter to parishioners that most of the diocese's assets were "depleted" due to settling abuse claims. With hundreds of new lawsuits in the pipeline, the diocese may look to bankruptcy as an avenue to compensate victims, he wrote.
McElroy's letter states, "Bankruptcy would provide a pathway for ensuring that the assets of the diocese will be used equitably to compensate all victims of sexual abuse, while continuing the ministries of the church for faith formation, pastoral life and outreach to the poor and the marginalized."
During a Wednesday news conference, attorney Irwin Zalkin alleged the diocese made false claims regarding the state of its assets.
"This diocese and its parishes have engaged in a conspiratorial enterprise to defraud child abuse victims and to deny them the justice they deserve," Zalkin said.
In a statement the Diocese said that under canon law, assets of each parish are separate and independent of the Diocese, and that more than a decade ago, it started formalizing the legal status of the parishes and their assets under civil law. The Diocese also says that move came before the bill to extend the time frame for filing sexual abuse suits.
The lawsuit also alleges Assembly Bill 218's passage prompted the diocese to enter into an "Independent Compensation Fund," which provides settlements to victims whose claims first must be approved by a claim evaluator. The suit alleges those victims would have been eligible to file lawsuits due to AB 218, but instead were coaxed into submitting claims through the Independent Compensation Fund and settled "for pennies on the dollar."
Zalkin said, "They have developed a PR spin on how they're concerned about victims and they want to do the right thing by victims, but at the end of the day, it's all about the money and protecting their assets, protecting their brand, over protecting the safety and welfare of children."
Diocese spokesperson Kevin Eckery said they have moved back their timeline and should have a decision on whether or not they will file for bankruptcy by mid-summer.