By Annysa Johnson
Milwaukee Journal Sentinel
May 15, 2011
http://www.jsonline.com/features/religion/121843378.html
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| The Archdiocese of Milwaukee has been talking about selling the Cousins Center since at least 2006. The 415,000-square-foot complex is on 44 acres along S. Lake Drive in St. Francis. Other entities, including the Milwaukee Bucks, sublet portions of the property. |
It is perhaps the most high-profile property owned by the Catholic Church in southeastern Wisconsin: a 415,000-square-foot complex on 44 acres along S. Lake Drive in St. Francis.
For years, the Archdiocese of Milwaukee has said it is selling the Archbishop Cousins Catholic Center, valued as high as $10 million in recent years, and that it has mortgaged it to fund a $17 million sex-abuse settlement in California.
Now, four months into its bankruptcy, the archdiocese maintains that it has never owned the property that houses its offices and operations, and proceeds from its sale cannot be used to pay any settlement with Wisconsin victims as part of the bankruptcy.
In documents filed with the court and interviews with a church spokesman, the archdiocese now says it rents the Cousins Center in return for maintenance and upkeep from De Sales Preparatory Seminary Inc., a separate legal entity that was incorporated in 1961 to operate a now-defunct high school seminary at the site.
Jerry Topczewski, chief of staff for Milwaukee Archbishop Jerome Listecki and his predecessor Archbishop Timothy Dolan - who led the local church when the sale plans were announced in 2006 - concedes there may have been "imprecise communications" about the Cousins Center.
"But that doesn't change the facts as they are . . . that De Sales Preparatory Seminary Inc. owns the Cousins Center, that the archdiocese rents it from the seminary and that they're two separate entities," he said.
Attorneys for sex abuse victims and creditors, who have asked the court to appoint a forensic accountant to the case, said they will scrutinize the Cousins Center ownership along with every other asset they believe is held by the archdiocese.
Victims' advocates were more blunt, saying it smacks of an attempt by the archdiocese to shield a valuable asset from creditors.
"It's really pretty stunning," said Peter Isely of the Survivors Network of Those Abused by Priests. "Dolan specifically talked about (the Cousins Center sale) - in writing and in interviews. So suddenly they don't own it? They've been misleading everyone for years."
The archdiocese filed for bankruptcy in January, saying it was the only way to compensate victims and continue the work of the church. It has said it has only about $7 million in cash and properties available for settlement; and that the vast majority of church assets, from parishes to trusts, are legally separate and cannot be touched.
De Sales Preparatory Seminary Inc. had been considered part of the archdiocese "under the direct fiscal management of the archbishop" until the 2004 fiscal year, according to its financial statements posted online at www.archmil.org. But it was removed, along with a number of other nonprofits, endowments and restricted funds, "to better reflect the activities of the archdiocese."
Topczewski said the seminary's ownership is no secret, and it's been noted in the financial statements since 2004. The financials also state repeatedly between 2005 and 2010 that the Cousins Center was being sold to pay for its sex-abuse costs.
At issue in the Cousins Center ownership is likely to be how that entity was structured, who sits on its board of directors and how it was presented publicly, say bankruptcy experts. Depending on the degree of overlap with the archdiocese, they said, the court could apply a principle known as substantive consolidation, which is used to combine assets of related entities.
"There are a couple of things the courts look at - there's an internal test and external test," said Jonathan Lipson, who teaches bankruptcy law at the University of Wisconsin Law School and has written on the Catholic Church bankruptcies.
"Were they treating these entities internally as if they were separate - separate books, bank accounts, boards. . . . And what did the world think? How did they hold them out: as separate entities or not?" he said.
"These can be very difficult things to litigate because they're so fact intensive, and there's usually no smoking gun."
According to Topczewski, the preparatory seminary's corporate board consists Listecki as president; Father Don Hying and Father Bill Stanfield, rector and vice rector of the archdiocese's St. Francis De Sales Seminary for adult men; and archdiocese Chancellor Barbara Anne Cusack. Its registered agent on file with the state is the archdiocese's chief financial officer, John Marek.
The archdiocese's board of directors consists of Listecki, Marek and Father Carl Last of the Cathedral of St. John the Evangelist. Auxiliary Bishop Richard Sklba sat on both boards until his retirement this year.
The archdiocese pays no rent to the seminary board but must cover all costs associated with the Cousins Center operations, maintenance and upkeep - more than $650,000 annually, according to Topczewski. It then sublets portions of the property to other entities, including the Milwaukee Bucks.
Financial statements in 2004 and 2010 said the archdiocese occupied the Cousins Center, but there was no lease agreement.
Talks since 2006
The archdiocese has been talking about selling the Cousins Center since at least 2006 when it agreed to pay $17 million to 10 California victims abused by priests who had been transferred there by the Milwaukee Archdiocese. Archdiocese officials said at the time that the property would be sold, along with other short- and long-term investments, to pay the $8.25 million not covered by insurance.
Topczewski was quoted at the time as saying the archdiocese's finance committee recommended hiring a broker to sell the center. Two potential buyers, including Cardinal Stritch University, eventually backed out.
The archdiocese has also maintained that it mortgaged the property in 2006 to pay the California settlements. It now appears, based on the financing statement on file at the Milwaukee County Register of Deeds and an interview with Topczewski, that the archdiocese took out a $4.7 million line of credit against the building's fixtures and furnishings, which was guaranteed by the preparatory seminary board using the Cousins Center as collateral.
The Cousins Center has been represented as property of the archdiocese in local and national media, including the Catholic News Service; the archdiocese's own Catholic Herald newspaper; and its website, www.archmil.org.
As recently as December, Listecki referenced the mortgaging of the Cousins Center in a www.archmil.org/Resources/LoveOneAnother-December162010.htm">letter posted on the website as one of the many steps the archdiocese has taken to address the sex abuse scandal.
"Our financial picture shows an organization that has depleted most of its unrestricted assets to support victims/survivors and cover related costs," he said. "To free up resources for these purposes, we have sold property, redirected interest and investment income, liquidated savings and investments, mortgaged the Cousins Center and reduced archdiocesan staff by nearly 40% since 2002."
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