Targeting the trust fund: Court puts nearly $60 million back in play in Archdiocese bankruptcy case

By Mike Lowe
Fox 6
March 10, 2015

http://fox6now.com/2015/03/10/archdiocese-mike-lowe/

MILWAUKEE (WITI) — A federal appeals court has issued a ruling that puts nearly $60 million back in play. It’s cash that could be paid to victims in the Catholic clergy sex abuse scandal. It is a blow to the Archdiocese of Milwaukee’s bankruptcy case and it could have wide-ranging effects.

With the clergy sex abuse scandal creeping closer to church coffers, then-Milwaukee Archbishop Timothy Dolan set aside millions in a cemetery trust fund. He then fought to protect that money from abuse lawsuits in bankruptcy court.

“What this did is delay, by years, the place we already should have been at the beginning,” Peter Isley, Midwest Director of SNAP – the Survivors Network for Those Abused by Priests said.

The timeline looks like this:

• 2007: Archdiocese of Milwaukee creates the trust.
• 2008: The Vatican approves the transfer of $57 million.
• 2009: Timothy Dolan becomes the Archbishop of New York. He is now Cardinal Timothy Dolan.
• 2011: Archdiocese of Milwaukee files for Chapter 11 bankruptcy.
• 2013: A bankruptcy judge rules against the diocese. Six months later, federal appeals Judge Rudolph Randa said the church could protect the money, but now the 7th Circuit Court of Appeals has reversed that decision — making the money fair game.
• July 2013: Archbishop Jerome Listecki defends the trust fund.

FOX6’s Mike Lowe: “You know, the accusation is that he was trying to shield assets from lawsuits.”

“No. And I…as I’m sure…I’m sure you read Cardinal Dolan’s respnse to that.  There’s no truth to that,” Listecki said.

FOX6’s Mike Lowe: “Well, he in the report says, quote, ‘I foresee an improved protection of these funds from any legal claim and liability.’ How do you explain that?”

“When I say due diligence, he was doing due diligence, making sure the trust always would be maintained as a trust,” Listecki said.

“There is so much smoke blasting out of that gun, okay, it’s in writing,” Isley said.

Isley, himself a victim of clergy sexual assault is now the Midwest Director of the Survivors Network of Those Abused by Priests. He says the cemetery trust fund amounts to federal bankruptcy fraud.

“What counts is that they took money from one place,  millions of dollars, hid it away legally and then came to federal court and said ‘ we don’t have the money,'” Isley said.

In a statement on the ruling, the Archdiocese of Milwaukee’s lawyer said: “This decision casts a shadow over religious freedom.”

“There’s a long, long history of people justifying what they’re doing,” Isley said.

Isley says he believes the latest ruling now means Cardinal Dolan will be the cardinal who approved it and even possibly that former Pope Benedict XVI could be deposed in this case.