NBC Sandiego
July 31, 2007
http://www.nbcsandiego.com/news/13789951/detail.html
San Diego — The finances of San Diego County's Catholic Diocese are being called into question. Monday night, a court-appointed financial expert released an audit that found inconsistencies and problems with the diocese's accounting system.
According to the 175-page report compiled by financial expert R. Todd Neilson, a handful of parishes deliberately concealed or inappropriately handled about $500,000 in funds in sometimes
"purposeful attempts" to circumvent federal bankruptcy proceedings,
The "openly questionable activities" appear to be limited to a small number of parishes and most pastors and lay personnel demonstrate a good faith effort to comply with church financial procedures, the report noted.
"As a result (church officials) are often woefully unaware of the specific financial operations of individual parishes," Neilson said.
The report found no overall system of accounting throughout the diocese.
U.S. Bankruptcy Judge Louise DeCarl Adler ordered the examination of the diocese's finances in April after declaring the church's accounting system "Byzantine."
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The report, compiled by financial expert R. Todd Neilson, marks the first time a diocese under federal bankruptcy protection has been subjected to such outside financial review. Lawyers will be able to question Neilson at a hearing scheduled for Aug. 23.
The San Diego diocese filed for Chapter 11 bankruptcy on Feb. 27, just hours it was to go to trial in more than 140 lawsuits alleging sexual abuse by priests. The filing automatically halted court proceedings in the lawsuits.
The diocese said in a statement sent by its in-house counsel, Micheal Webb, that the problems Neilson identified had already been corrected or were in the process of being addressed.
"When even the most sophisticated enterprises are subjected to the scrutiny of rigorous audits, things are identified that could or should be improved. Given that our diocese and the parishes are not businesses, it is not surprising that Mr. Neilson found some room for improvement," the statement said.
Local Churches Named In Report
Among his findings, Neilson said three parishes "engaged in openly questionable activities."
Neilson said Our Lady of Guadalupe Parish, Calexico, for example, set in motion a series of transactions that deliberately concealed $49,685.47 from the bankruptcy court. He said the church engaged in a "purposeful attempt ... to evade the direction of the Court to report all cash available."
Neilson also scolded St. Mary of El Centro Parish for parceling a $300,000 donation into six separate cashier checks as a "purposeful attempt ... to circumvent the intent and direction of the court request on transparency in the recognition of financial cash balances by all of the parishes.
"It is especially unfortunate that just eight days after the debtor's bankruptcy the pastor and the parish finance council would engage in such deliberately misleading behavior," Neilson wrote.
The auditor found the finances of Our Lady of Mount Carmel San Ysidro Parish "perplexing." He said the parish has maintained it is one of the poorest in the diocese, yet holds $1.2 million in local bank accounts. Neilson said that sum is only exceeded by one other parish in the diocese.
That is "certainly not indicative of an impoverished parish unable to pay their obligations to the debtor," the report said.
The San Diego diocese has the largest number of unresolved cases of clergy sex abuse. The diocese said it couldn't afford to offer more money without crippling the missions of the church.
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