Abuse victims' attorneys say Twin Cities archdiocese is sitting on $1.7 billion

By Martin Moylan
Minnesota Public Radio
May 24, 2016

http://www.mprnews.org/story/2016/05/24/creditors-twin-cities-archdiocese-undervaluing-assests

In court papers, attorney Jeff Anderson and others accuse the Archdiocese of St. Paul and Minneapolis of tucking money away in corporations to shield it from creditors. Here, Anderson and abuse survivors Jim Keenan, left, and Al Michaud, right, participate in an October 2014 news conference. Photo by Jennifer Simonson

Archbishop Bernard Hebda speaks at a news conference Tuesday responding to accusations that the Archdiocese of St. Paul and Minneapolis is hiding from creditors outside the chancery on Tuesday. Photo by Manda Lillie

Attorneys for victims of clergy sex abuse say the bankrupt Archdiocese of St. Paul and Minneapolis could have $1.7 billion in net assets to compensate abuse survivors — over $1 billion more than what it has claimed.

The attorneys argue in a recently filed motion that the archdiocese is trying to conceal and understate its assets, but the church says that isn't so.

Abuse victims' attorney Jeff Anderson said the church has indicated it would have less than $50 million to make payments to some 430 abuse victims.

"What has been happening in this bankruptcy is a serious and sinister scheme to hide, to conceal their true net worth. And not have to account to the survivors," he said.

The archdiocese has used a variety of tactics to under-report its true worth, Anderson said. He and the committee for unsecured creditors in the bankruptcy contend the archdiocese controls parishes, schools, charities, foundations and other entities with hundreds of millions of dollars in assets, which they say should be available to abuse victims.

The archdiocese says it will file a reorganization plan this week.

On Tuesday afternoon, Archbishop Bernard Hebda said the church has been fully cooperative in the bankruptcy proceedings.

"Let me be extremely clear: The archdiocese has disclosed all of its assets. And has followed all of the rules set forth by the court. And all directives from the judge," Hebda said.

Anderson argues the organizations under archdiocese control include the Catholic Cemeteries; DeLaSalle, Totino Grace and Benilde-St. Margaret high schools, the Catholic Services Appeal, and the Catholic Community Foundation.

Next month, the creditors committee and Anderson will ask a federal judge to make assets of the parishes and other Catholic organizations available to creditors of the archdiocese.

Anderson said some organizations were created or reorganized expressly to try to legally shield their assets from abuse victims suing the archdiocese.

He said signs at the cemeteries once noted they were part of the archdiocese but those words were painted over. And he said there's clear evidence that the archdiocese runs the parishes.

"They claim that because they're separately incorporated they aren't part of the archdiocese bankruptcy," Anderson said. "But the reality operationally, structurally, functionally show and these documents demonstrate clearly that the archbishop that is in control of the parishes."

Anderson says his asset estimates are based on internal church documents and the testimony of Jennifer Haselberger, the former chancellor for canonical affairs for the archdiocese.

Similar asset arguments were made in the Milwaukee archdiocese bankruptcy, without success. But University of Minnesota law professor Christopher Soper says much will depend on the soundness of the arguments of Anderson and the creditors committee.

"It's rare that this kind of relief would be granted but certainly possible," Soper said. "It's happened before in other corporate cases."

Charles Zech, director of the Center for Church Management and Business Ethics at Villanova University, said the argument to count parish and archdiocese assets is solid.

"Honestly, in reality no one believes that parishes are not owned by the diocese or archdiocese," Zech said. "They set up a legal system that makes it look that way. But the way the whole thing is set up, it's clear the archdiocese controls the parishes."

In bankruptcies in Tuscon and Wilmington, Delaware, Zech said, parishes ended up contributing to a diocese settlement with abuse victims.