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Dallas Resources – January 2003 By Brooks Egerton A Catholic priest's ministry for poor people has charged them millions for help while spending large sums on real estate, cars and other purchases that benefit him and his associates, a Dallas Morning News investigation shows. Dallas Bishop Charles Grahmann assigned the Rev. Justin Lucio to the unsupervised ministry after deeming him unfit for parish work a decade ago. Father Lucio lost his last pastor's job in 1989 after accusations of sexual and financial misconduct, which he denied and the bishop says were unsubstantiated. The priest then set up Casita Maria, or Little House of Mary, a tax-exempt corporation that has counseled thousands of undocumented immigrants. But it also has loaned money to some board members, even though state law forbids such a practice. It charged no interest and allowed the borrowing, in one case, to exceed a director's annual salary as Casita's No. 2 staff member. Furthermore, the charity has made inaccurate or incomplete sworn statements about its finances to the federal government. And Dallas police have named some staff members as suspects in the unsolved theft of about $ 50,000. Father Lucio answered a few questions during early research for this story but later declined to be interviewed in detail. Guadalupe Granados, a Casita Maria employee who serves with Father Lucio on the agency's board, acknowledged most of The News' findings. "Maybe everything hasn't been done by the rules and regulations," she said. "But these are just mistakes some people made because we're not informed." Father Lucio said he had given the newspaper abundant information by allowing a reporter to copy some records at his Oak Cliff office. He later cut off access to other files. State law requires most nonprofit organizations to release, to anyone who asks, "all records, books, and annual reports of the financial activity of the corporation," and makes refusal to do so a misdemeanor. Ms. Granados, who keeps the organization's books, said she was aware of that law but would follow Father Lucio's order to withhold documents. She said that the inaccurate statements to the government "are things that can be corrected." Bishop Grahmann - a longtime advocate for immigrants, whose influx has made Catholics the largest religious group in Dallas - declined an interview request. So did Coadjutor Bishop Joseph Galante. Diocesan spokesman Bronson Havard would not comment about The News' findings except to say that the priest "is responsible for his own actions, as is any adult person operating an agency subject to government regulation and oversight." Internal Revenue Service spokesman Phil Beasley declined to comment about Casita specifically, but did say, "Any time there's self-dealing, the IRS will want to ask questions." The roots Casita Maria was born in 1989, the year Father Lucio was forced from St. James Catholic Church and began a protracted pressure campaign against diocesan leaders. His supporters picketed and accused the hierarchy of racism; the priest went on a hunger strike. Later, he filed a slander suit against a lay leader who had told the Dallas Diocese about the sexual and financial misconduct accusations. Ultimately, Father Lucio dropped the lawsuit and agreed never to refile it. While the suit was pending, Bishop Grahmann reassigned Father Lucio to part-time work at another church, then rescinded the move after the priest sometimes didn't show up to celebrate Mass. Mr. Havard said Father Lucio then was restricted to non-parish ministry and assigned to full-time work at Casita. This "final resolution of the controversy" came "with the full encouragement and support of the Hispanic community leadership," the spokesman said. In the decade since, some of those supporters have turned away from the organization. One of the priest's most prominent backers then was Adelfa Callejo, a Dallas lawyer and longtime civil rights activist. In a recent interview, she said she initially believed Father Lucio's claims that the diocese was retaliating against him because of his advocacy for its burgeoning Hispanic population. She said she began referring clients to Casita in the early 1990s, only to hear complaints about staff members driving expensive cars and charging high fees. She said she also became worried about Father Lucio's personal volatility and eventually cut ties with him. "I told him, 'You are betraying your trust as a priest,'" she said. Ernesto Maldonado, a lawyer who helped incorporate Casita Maria, also has broken with Father Lucio. He said the organization abandoned its purpose long ago. "It was just a money-making machine," he said. "And it's so easy to make money off these people. They live in the shadows. They die in the shadows." Early in its existence, the organization won nonprofit status with the IRS, which spares it taxation, and permission for non-lawyers to represent clients in Immigration and Naturalization Service proceedings, which saves on attorney costs. In turn, Casita had to promise to offer free or nominally priced services. "Because there will be numerous ones that will not be able to pay anything, we will request donations from the general public to assist in this ministry," Casita wrote to the IRS in 1989, estimating that 98 percent or more of its clients were poor and unable to work legally. "No one in this organization, or on the board of directors, is seeking to profit from this ministry or receive any unreasonable compensation for their labor." Tax returns show, however, that Casita has gained all of its income in recent years from client fees and interest earned on those funds. Such a situation could lead to an investigation by federal immigration officials, said Anne Estrada, director of the Dallas district of the INS. She cited an immigration appeals board ruling that said: "The imposition of nominal fees was not intended as a means through which an organization could fund itself." Casita's fees range from $ 15 for an initial consultation to $ 300 and higher for help filling out government forms. The diocese's Catholic Charities program charges similar amounts for immigration counseling. Casita's records show that in 2000, the immigration service investigated whether to withdraw its accreditation of the charity, though it is not clear why. Casita hired a lawyer to argue its case and prevailed. The charity and the INS refused to release their files on the matter. Before cutting off contact with The News, Father Lucio said his ministry
did not rely entirely on fees. He explained that in 2001, it raised about
$ 1,500 at a special event and occasionally got donations of a few hundred
dollars from lawyers or other professionals. The money wasn't accounted
for separately from the fees, he said, and donors didn't get receipts. Casita's reported income - virtually all cash - totaled nearly $ 1 million in 2001, the last year for which it filed a tax return. The charity has no written budget, and the board's three top officials - Father Lucio, Ms. Granados and her husband, Joe - are also staff members. "That's generally not a good practice," said Dr. Audrey R. Alvarado, executive director of the National Council of Nonprofit Associations. "Then who's overseeing your performance?" Father Lucio said Casita has no budget because he can't predict how many needy people are going to seek help each year. "The board has never asked for a projected budget," he said. The board has met a few times, at irregular intervals, over the last two years. Ms. Granados said the non-staff directors sometimes glanced at financial statements but never scrutinized them. "I had no idea what was coming in and what was going out," said Christine DeSio, who served as treasurer until quitting the board about a year ago. She declined to comment further. Board member Jose Pineda described himself as "completely ignorant" about the organization's finances, although he acknowledged, "I do have a fiduciary duty to Casita Maria." While the charity has spent thousands of dollars on cars and real estate used by top staff members, most of its approximately 15 employees work without computers and none has Internet access. Charity and government records show that Casita: *Assembled a small fleet of automobiles it values at $ 140,000, even though it does not run a transportation service for clients. Recent-model vehicles have been supplied for personal use to Father Lucio, who is executive director and board chairman; to his housemate, Casita maintenance worker David Villatoro; and to Mr. Granados, who is the No. 2 staff member. Casita told the IRS on its annual filing that it did not provide any goods to its leaders or employees. *Spent about $ 45,000 in the last two years on expenses listed as entertainment. Payments listed in its books include $ 4,400 to the Dallas Mavericks. Mr. Granados said the charity bought two season tickets that were raffled to clients as a fund-raiser. The organization provided no supporting documentation. The other entertainment expenses were paid with credit cards assigned to Father Lucio and Mr. Granados, according to Casita records. Billings for the first 11 months of 2002 show that Father Lucio spent several thousand dollars at restaurants, grocery stores, hardware stores and pharmacies, and at service stations as far away as Mr. Villatoro's native El Salvador. At its most recent meeting, last month, Casita's board stripped Mr. Granados and Father Lucio of their American Express cards and MasterCards, Ms. Granados said. She would not release minutes of the meeting, which occurred after The News asked to review credit card billings and other financial records. Board member Fred Fields said he had never been told about personal use of the charity's credit cards and vehicles. *Gave $ 10,000 bonuses to each of its top four top administrators in 2001, when Father Lucio's salary was listed as about $ 52,000. The board awarded the bonuses, as well as $ 3,500 apiece for the rest of the agency's employees, after hearing about long hours of overtime. Board members also voted unanimously to set up $ 100,000 retirement funds for Father Lucio, Mr. Granados and a third veteran employee, Maria Briones, according to minutes of their December 2001 meeting. The full amount was to be set aside immediately for the priest; the other two funds were to be built over five years. *Paid cash for a one-story office building that now houses a for-profit business Ms. Granados owns, Granados Notary Services. Casita clients are urged to use the business, which sells money orders and, for a fee, will send faxes, take ID pictures and translate documents. One phone number listed as Casita's rings to the business, which has no listed number of its own. The charity told the IRS that it had not furnished facilities for any of its leaders, and it did not list any rental income on its 2001 tax return. Ms. Granados said she pays $ 500 rent, but it was not itemized on the return because all of the revenue was lumped together. Mr. Fields, a real estate broker, said he advised on the purchase of the office building and was told that the organization needed room to expand. He said he "had no idea" that Casita wasn't using the building. Mr. Granados said the expansion plans turned out to be unnecessary. *Owns a house in DeSoto that it rents for $ 10 a month to Father Lucio, 59, and the maintenance man, Mr. Villatoro, 28. The two men originally bought the house themselves in October 2001 - with the charity's cash, Ms. Granados said - then transferred the title to Casita two months later. Ms. Granados said Father Lucio called her and her husband that October while they were in San Antonio, saying he wanted to borrow funds to pay off his house. She said they gave their proxy votes by phone, thinking he was referring to a duplex he owned in East Dallas. Father Lucio told them he had a board majority, Ms. Granados said, adding that she did not ask for details. There is no record of the vote, she said. She subsequently learned that he had used about $ 170,000 in charity funds to buy the DeSoto house. Board members, she said, later decided that instead of having Father Lucio repay the loan, Casita would take possession of the house and let him live there. At a December 2001 meeting, with the priest abstaining, directors approved the $ 10-per-month rent - after Ms. Granados warned that an accountant had advised caution because "if ever audited by IRS, this could look as a conflict of interest." The director who proposed the $ 10 rent was Mr. Pineda, the only lawyer on the board. He said in an interview that there was nothing wrong with providing compensation in the form of housing. "The part I find odd," he added, is that Father Lucio bought the house before getting board approval. Father Lucio still owns the East Dallas duplex, which is valued on the tax rolls at nearly $ 190,000. Asked why Father Lucio might need to quit living at the duplex, Mr. Granados said, "It's ugly." *Loaned tens of thousands of dollars to employees, including some who are board members. Casita reported the borrowing to the IRS, although it did not answer questions on the tax form about the purposes, interest rates or other matters. Ms. Granados said the Casita staff had not known about a state law against
lending to board members. The loans were considered interest-free salary
advances to employees and are being repaid with payroll deductions, she
said. Board members approved large loans, Mr. and Ms. Granados said. But some directors disagreed, and minutes documenting any approvals are missing. Mr. Fields, who has been on the board for several years, said the board was asked last October to lend $ 40,000. He said he raised concerns, the request was denied and members agreed that the charity should not be making loans. In 1998, Father Lucio owed the charity $ 10,000, according to the organization's tax return. And Mr. Granados owed nearly $ 50,000. At the time, his salary was about $ 36,000 and his wife had just bought a house in San Antonio from her relatives, without a mortgage. That property, which is publicly appraised at $ 65,000, is now co-owned by Mr. Granados. Mr. Granados said they borrowed the money mainly to pay off credit card debt amassed at a business they previously owned. His wife said they had bills for the criminal defense of their son, Eric Granados, who was charged in 1997 with raping the 12-year-old daughter of a Casita client. The son, who was 17, was doing volunteer work for the organization and took the girl there after hours. He has since gone to prison for violating terms of his original probation. Ms. Granados said the girl had pursued her son and told him she was 15.
He "was still a kid" and barely old enough to face adult charges,
she added. The same year as the rape, two other crimes were reported at Casita's Oak Cliff office. First, in June 1997, Father Lucio told Dallas police that one of the agency's vehicles had been stolen from its parking lot over the weekend - a Nissan pickup that Ms. Granados said had been assigned to Mr. Villatoro for personal use. She said insurance covered the loss. A police report said there were "no signs of broken glass where the vehicle was parked." The truck was never recovered, police said, and no one was arrested. In October 1997, Father Lucio reported that someone had stolen about $ 42,000 in cash and $ 6,000 worth of gold jewelry from an office safe. There was no sign of forced entry into the building or the safe. According to a police report and the minutes of a Casita board meeting, Father Lucio said that the crime was an inside job and that only one employee knew the combination to the safe. That employee remains on the job today, and the case remains unsolved. The police investigator assigned to the case said the safe may not have been locked, and others may have known the combination. Several employees were considered suspects, he said. "They've got a lot of money and very little paper trail," said Senior Cpl. David McWilliams. "Their accounting practices were just horrible." A couple who served on the Casita board then, lawyers George Rodriguez and Michelle Saenz-Rodriguez, were hired to oversee an internal investigation that included polygraph tests for all employees and volunteers. Mr. Rodriguez declined last week to comment on the results of the investigation. Minutes for more than two years of ensuing board meetings are missing, Ms. Granados said. She declined to provide a copy of the lawyers' report to the board. Mr. Rodriguez said he and his wife quit the board soon after completing their investigation. He would not say why. A few years earlier, Father Lucio told police that some employees had stolen about $ 20,000. Three people were accused of pocketing fees and issuing fake receipts; at least one pleaded guilty and was put on probation. Similar allegations arose against an employee last year, according to
board meeting minutes. Ms. Granados said the man quit and police were
not notified. Before his departure, the man defended himself before the board. According to minutes of the meeting, he said the only money he had kept from clients was that which he received on Fridays, when Casita is normally closed. He and Father Lucio split whatever came in on those days, he said. Ms. Briones, the No. 3 staff member, told the board about several other allegations against the employee. But she echoed his central assertion, the minutes show: "When there was excessive work, Fr. Lucio had approved that the representatives could keep the representation money from clients, because the reps. were having to work on their day off." There is no indication in the minutes that Father Lucio disputed this account. Monday: The sexual misconduct allegations against the priest. Correction: A front-page story on Jan. 12 stated that Dallas Catholic Bishop Charles Grahmann has assigned the Rev. Justin Lucio to ministry in a non-diocesan charity a decade ago. Bishop Grahmann's predecessor, Bishop Thomas Tschoepe, made the assignment. Bishop Grahmann later continued the assignment after he deemed Father Lucio unfit for parish ministry. [Photo Captions: 1. (FILE 1998/Staff photo ) The Rev. Justin Lucio, who founded Casita Maria in 1989 after losing his pastor's job, was later restricted to nonparish ministry and assigned full time to the unsupervised, nonprofit agency after the bishop of the Dallas Diocese deemed him unfit for parish work. (2-3EVANS CAGLAGE/Staff Photographer) 2. Tax returns show that Casita Maria, which has counseled thousands of undocumented immigrants, has gained all of its income in recent years from client fees and interest on them. 3. Casita Maria paid cash for this adjacent Oak Cliff building, which houses a for-profit business owned by a Casita employee who also serves on the agency's board. CHART(S): 1. (Staff graphic) A LOOK AT THE FINANCES 2. On DallasNesw.com] Sexual Abuse Allegations Haven't Kept Priest off Job He's Denied
Misconduct By Brooks Egerton [One in an occasional series] Dallas Catholic Diocese leaders insist that they have no priest on duty who has been credibly accused of sexually abusing anyone, child or adult. How, then, do they explain the case of the Rev. Justin Lucio, who has long been assigned to run his own ministry for undocumented immigrants? In the early 1990s, two immigrants testified that Father Lucio had used threats and promises to pressure them into intercourse. The priest admitted in a 1991 deposition that he had told people the young men were his nephews, although he is unrelated to them. And he acknowledged that he sometimes handled Latino parishioners' genitals - to help them, he said, with health concerns. Bishop Charles Grahmann didn't know about Father Lucio's testimony until The Dallas Morning News asked about it, spokesman Bronson Havard said. "The documents will have to be studied," he said. Yet the diocese was aware of the case in which Father Lucio was deposed. Other top church leaders, for example, were also compelled to testify. And the diocese's longtime attorney on sexual abuse cases has maintained records of the matter. Mr. Havard said a priest's handling of parishioners' genitals is "not anything condoned or practiced by the Catholic Church." He said he wasn't sure how to interpret Father Lucio's testimony, which he read Friday. The spokesman defended Bishop Grahmann's decision to keep the priest in ministry. "There's no cover-up here," Mr. Havard said. The diocese has paid more than $ 35 million to settle cover-up lawsuits involving other clerics. But the Lucio case was initiated by the priest himself: He accused a lay leader of slander for telling the diocese about accusations of sexual and financial misconduct. Bishop Grahmann thought that these allegations against the priest "were recanted and went nowhere," Mr. Havard said. It was Father Lucio, though, who backed down: He dropped his suit and agreed never to refile it. He denied wrongdoing at the time and recently declined to be interviewed. So did Bishop Grahmann and the man chosen three years ago to succeed him, Coadjutor Bishop Joseph Galante. Bishop Galante quit giving local interviews after incurring Bishop Grahmann's anger in November, when he took the rare step of publicly disagreeing with the diocesan leader. Bishop Galante told The News then that he could not persuade Bishop Grahmann to remove the head priest at Dallas' cathedral, despite allegations that the Rev. Ramon Alvarez grabbed the genitals of a man during a blessing. Grahmann aides have said that Father Alvarez had "inappropriate," but consensual, contact with the man, and that the bishop handled the matter appropriately. Last week, Mr. Havard said Bishop Galante now "recognizes that Grahmann's decision is the policy." The diocese's written policy says that sexual misconduct, with children or adults, "will not be tolerated under any circumstances." "You see what kind of influence I have," said Bishop Galante,
a spokesman for the nation's bishops and one of their most vocal advocates
for stricter sexual misconduct policies. "I'm keeping a very low
profile." The roots of Father Lucio's lawsuit reach to 1989, when lay leader Charles Wilson took two Mexican brothers to diocesan headquarters. Their accounts of sexual exploitation led to Father Lucio's removal from St. James Catholic Church, in east Oak Cliff. The matter became public when Father Lucio said he had been treated unjustly and his supporters picketed, demanded his reinstatement and accused diocesan leaders of racism. The priest went on a well-publicized hunger strike and started the immigrant ministry, called Casita Maria, that he still runs today. But media coverage dropped off after he filed his lawsuit against Mr. Wilson in 1990. Later that year, the diocese said the allegations against him were unsubstantiated and reassigned him to part-time work at another church. Bishop Grahmann rescinded the transfer after the priest sometimes failed to show up to celebrate Mass, Mr. Havard said. He remains limited to nonparish ministry today, the spokesman said. Asked why the priest would be assigned to work that the diocese doesn't supervise, Mr. Havard stressed Father Lucio's own wishes and strong support from some Hispanic leaders. "We have to have pretty good cause to remove a priest" from all ministry, he said. Bishop Grahmann "made the right decision" about Father Lucio "based on what the diocese knew and had at its disposal at the time." "The way out," Mr. Havard also said, "was to let him do
his own thing." Father Lucio pursued his suit for two years, in the face of an aggressive defense that contradicted his testimony. Both brothers testified that their sexual encounters with him began when they were at or near the age of consent in Texas, 17. The priest gave them shelter, sometimes paid them and sometimes threatened to turn them in to U.S. immigration authorities, they said. One of the men swore that Father Lucio also offered to "fix our papers" so they could stay in the country legally. He said the priest had tried to get the brothers to lie in their depositions by offering them part of the money he hoped to win in the lawsuit. "He told us if we win this thing, we're going to have a lot of money for everybody," the man testified. "If you want a house, just name the place, and I'll buy it for you." By then, the man's brother had already recanted - but only temporarily. Shortly before filing the case, Father Lucio had obtained a rambling sworn statement from the younger brother, who said he had lied to diocesan officials because the priest fired him from his job at St. James. The young man had been living there with the priest. Defense attorneys were not present to question the brother during his statement. He did not sign it and subsequently testified in a way that was consistent with his original statements to diocesan leaders. Neither brother has ever pursued charges in the matter, sought compensation from the diocese or commented publicly. They are related to a man named Joe Granados, who helped Father Lucio start Casita Maria and still works there with him. As The News reported Sunday, the charity has provided an automobile for Mr. Granados' full-time personal use and has given him loans that have sometimes exceeded his annual salary. An investigation by The News also showed that the ministry provides vehicles
to Father Lucio and a 28-year-old immigrant employee from El Salvador.
The two men pay $ 10 a month to live in a house Casita owns in DeSoto. In his deposition, Father Lucio initially said he didn't remember whether he had ever touched another man's genitals. Then, before acknowledging that he had, he said he couldn't answer a lawyer's question about the matter because "there's a lot of things that you, as an Anglo, do not take into consideration with our culture." Asked to explain, he said that Hispanics with health concerns have no inhibitions about showing "what's wrong and what needs to be corrected " "They simply go like this and they show you. And they say, look, what is - what is this?" he testified. "Yes, that's what my people do." Experts on Hispanic ministry questioned that account. "I've never heard of that," said the Rev. Virgilio Elizondo, a nationally known priest who founded the Mexican American Cultural Center in San Antonio, which trains church workers from around the country. A defense attorney also asked Father Lucio whether he had any medical training that would warrant his handling of parishioners' genitals. His response: "Are we - are we speaking the same language? I'm sorry, but when you say 'medical training,' be specific " Asked to estimate how many parishioners had asked him to inspect their genitals, he answered: "Oh my dear sir. I have served more people than you in another lifetime put together. Probably the whole priesthood put together. Millions of people." Prompted by his attorney, Father Lucio added that he was referring to service "in a general capacity." Asked whether he was circumcised, Father Lucio said he didn't know what the term meant. Then he offered to expose himself to the defense attorney who was questioning him. Mr. Havard said all priests should know, from their theological training, that circumcision "is a sign of a covenant with God." One of the Mexican brothers testified in his deposition that he served as Father Lucio's driver on a vacation to Houston when the priest took another man, summoned from an escort service, to a motel room. He said he soon had to take Father Lucio to an emergency room for treatment of severe genital bleeding. Father Lucio, however, testified that he had been celibate since becoming a priest and did not know the reason for the bleeding. The defense also obtained sworn statements from two women who worked with Father Lucio at St. James. Elvira Trevio, a former church secretary who also served on the parish council, said she once showed up at the rectory and saw a naked young man - not one of the Mexican brothers - walk from the bathroom to the priest's bedroom. Father Lucio occasionally had her write checks to young men she did not recognize, she said. And former housekeeper Teresa Hernandez gave a sworn statement saying
that she found a used condom in the priest's bedroom and Polaroids of
naked young men. The News' review of sworn written statements Father Lucio made during the lawsuit found several discrepancies regarding his education and career: *He said he attended St. Paul Seminary from 1974 to 1978, but that Minnesota school said he was there from 1969 to 1972. He left without graduating, the school said. *He said his priesthood was conferred between 1974 and 1978, but church records show he was ordained in 1972 by the Rev. Patrick Flores, who was an auxiliary bishop in San Antonio and is now archbishop there. *He said that in 1978-79, he had a pastoral education internship at a Baptist hospital in San Antonio and was an assistant clinical supervisor. The hospital said its only record of Father Lucio indicated that he was a chaplain intern in 1972-73. *He said he earned bachelor's and master's degrees from St. Louis University from 1970 to 1974. The university said he earned the degrees between 1965 and 1969. According to the Official Catholic Directory, Father Lucio began work as a priest in 1972 as a member of the Conventual order of Franciscans and lived in San Antonio. In 1973, he worked for a few months at a parish in Carlsbad, N.M., and then returned to San Antonio. The following year, the directory listed Father Lucio as being on a leave of absence from ministry. His name then vanished from the directory's national roll of priests for nearly a decade. By 1980, Father Lucio had come to Dallas. He began working for the Dallas Housing Authority at an apartment complex on Cedar Springs Road. He quit that job after a little less than a year, the authority said. His name reappeared in the Catholic directory in 1983, after he began working at the Dallas Diocese's immigration-assistance office. He was assigned to St. James about a year later. Asked in his deposition whether he had left the priesthood for a time and lived in the public housing project, he responded: "I simply cannot answer a question of yours on a yes or no answer. I have been, will be for all eternity, a priest by holy order." Under continued questioning, he said that no one could revoke his status as a priest - "not even God." IRS Has Eyes on Priest's Ministry By Brooks Egerton Federal and state authorities are moving against a Catholic priest's ministry that has spent large sums of money to benefit its leaders while charging poor people millions for help, sources say. The Internal Revenue Service, reacting to recent articles in The Dallas Morning News, has assigned a criminal investigator to scrutinize Casita Maria, a tax-exempt ministry that counsels foreigners on how to deal with the Immigration and Naturalization Service. The INS' Dallas office, in turn, is urging an end to government certification of Casita Maria as an organization fit to provide such counseling. Two Dallas lawyers who formerly served on the charity's board said such unprecedented action, which needs U.S. Justice Department approval, would put Casita out of business. INS spokeswoman Patricia Mancha confirmed that the agency's primary concern is that Casita improperly depends on client fees for income, instead of raising outside funds and offering free or nominally priced aid to the poor. She declined to comment further. The IRS would not discuss its investigation. Casita also faces inquiries from state authorities. The Texas attorney
general's office, which oversees the conduct of nonprofit organizations,
declined to comment. Casita board member Fred Fields said he was unaware of the developments. "There are so many things we need to change," he said. Other charity officials did not respond to interview requests Thursday. Some Casita officials have previously acknowledged that the charity made incorrect statements to federal agencies about its activities. They have described those as mistakes that can be corrected, with Mr. Fields saying he expected "we may have to pay the government money." The Rev. Justin Lucio, a priest in good standing with Dallas Bishop Charles Grahmann, controls the charity as executive director and board chairman. The charity receives no diocesan funding or supervision. Father Lucio has refused to be interviewed in detail by The News, but he did talk last week to WFAA-TV (Channel 8), saying: "There's nothing to hide." Asked about a suburban house that he and Casita's maintenance man bought with funds borrowed from the charity in late 2001, he initially gave an account that some of his former board members and others contradict. "When I became ill, the board gave me the house to live in for the
rest of my days," Father Lucio said in videotaped footage that has
not aired. "They tried to buy the house for me as a confirmation
of my life service." Guadalupe Granados, who recently resigned from Casita's board but remains on its paid staff, told The News two weeks ago that it was the priest's idea to buy the house in DeSoto. Father Lucio conceded that point when pressed by WFAA. Ms. Granados said that Father Lucio telephoned her to get a proxy vote approving a house loan, and that there is no record of the vote. Another board member who recently quit, Dallas lawyer Jose Pineda, said Father Lucio did not contact him about the decision. One of the sellers of the house, Rhonda Alvarado, said the priest and the maintenance man, 28-year-old David Villatoro, paid $ 179,000 in cash to close the deal. She said she was shocked to learn from recent articles in The News that the money had come from fees paid by undocumented immigrants. Ms. Alvarado said Father Lucio contacted her about three days before closing and said his loan had fallen through. "He called to assure me," she said, "that he had the cash, that he was going to borrow it from a friend." Father Lucio later transferred the house's title to Casita, and board members decided to charge him and Mr. Villatoro $ 10 in monthly rent. Board meeting minutes reflect no discussion of why Father Lucio needed housing, given that he already had a home - a duplex in East Dallas that he still owns. When WFAA asked why he needed the new house, the 59-year-old priest cited
poor health and said, "It seemed to me at the time that the house
in DeSoto was a little bit closer." In fact, it is several miles
farther from Casita's office in north Oak Cliff than the duplex is. Father Lucio started Casita in 1989 after Bishop Thomas Tschoepe removed him from his last pastor's job because of sexual and financial misconduct allegations. Bishop Tschoepe let the priest run the charity as a "special assignment," as Bishop Grahmann has done since taking over the Dallas Diocese in 1990. The priest has denied the misconduct accusations, which diocesan spokesman Bronson Havard has said were never substantiated. Mr. Havard has downplayed sworn statements by four people corroborating the allegations and the priest's acknowledgment, in a 1991 deposition, that he sometimes handled Latino parishioners' genitals when they had health concerns. The priest told WFAA that "I don't check the genitals of parishioners," and insisted he was celibate. "I have dedicated my life to service to the poor," he said. "I live by God's standards." Mr. Havard did not respond to interview requests Thursday. He has said Bishop Grahmann had been unaware of the 1991 acknowledgment, which was first reported in The News last week. Yet the attorney who defends the diocese in sexual abuse cases had a copy of the testimony in his files. And other diocesan officials had to testify in the case, a slander suit that Father Lucio filed against a lay leader who reported the sexual and financial allegations to the diocese. The priest ultimately dropped the case, agreed not to refile it and won no settlement. That accuser and one of his brothers later testified in depositions that the priest, using promises of immigration aid and threats of deportation, had pressured them into intercourse when they were about 17. The brother later testified that Father Lucio used similar tactics to try to get them to lie under oath. Mr. Havard previously said that Bishop Grahmann has restricted Father Lucio to nonparish ministry since the early 1990s, when he was supposed to work part time at an East Dallas parish and sometimes didn't show up to celebrate Mass. The News reported last week that Father Lucio initially testified that he didn't remember whether he had ever touched another man's genitals. Then, before acknowledging that he had, he said he couldn't answer a lawyer's question about the matter because "there's a lot of things that you, as an Anglo, do not take into consideration with our culture." Asked to explain, Father Lucio said Hispanics with health concerns have no inhibitions about showing "what's wrong and what needs to be corrected. " "They simply go like this and they show you. And they say, look, what is - what is this?" he testified. "Yes, that's what my people do." [Photo Captions: (WFAA-TV) The Rev. Justin Lucio, a priest in good standing with Dallas Bishop Charles Grahmann, was removed from his last pastor's job after sexual and financial misconduct allegations. ] Laymen Say Bishop Cut Deal in '97 to Go By Brooks Egerton Five and a half years ago, reeling from weeks of embarrassing testimony about cover-ups and the largest clergy abuse judgment in history, Dallas Catholic Bishop Charles Grahmann cut a secret deal to resign. It wasn't Pope John Paul II forcing his hand, however. It was a group of influential laymen threatening to publicly denounce him - a group that today, concerned about resurgent scandal in the diocese and the bishop's refusal to yield to his Vatican-appointed successor, is finally talking. This is not the way things ordinarily work in the hierarchical Catholic Church. "Telling a bishop what to do is very contrary to our mentality spiritually," says the group's leader, D magazine publisher Wick Allison. But that appears to be happening here and around the country: Lay people are organizing by the thousands, concluding that the men who managed them into moral and financial crisis cannot manage them out of it. Witness last month's events in Boston, where parishioners - openly backed by some priests - called successfully for the resignation of the nation's senior Catholic prelate, Cardinal Bernard Law. In Dallas, though, events took a less public path. Members of Mr. Allison's group of businessmen and corporate lawyers say they began pressing Bishop Grahmann in August 1997, starting with a meeting at the Tower Club, high above downtown. In addition to Mr. Allison, those present included lawyers Daniel Hennessy and William McCormack, investor Mike Maguire and James M. Moroney Jr., retired publisher of The Dallas Morning News and former chief executive officer of its parent company, Belo Corp. In recent interviews, they all confirmed various elements of the following account but largely deferred to Mr. Allison for elaboration. A jury had recently concluded that diocesan leaders conspired to conceal the Rev. Rudolph Kos' predations, and it assessed the church a penalty of nearly $ 120 million. Four things, the lay group said in a series of communications with the bishop's office, now had to happen, and three quickly did: The bishop dropped plans for an appeal. He fired Randy Mathis, the defense lawyer who had taken the Kos case to trial in the face of much damning evidence. (Mr. Mathis continues to represent the diocese in other abuse lawsuits.) And he removed the pastor of All Saints parish, the Rev. Robert Rehkemper, who had blamed parents for letting Mr. Kos molest their children. But Mr. Allison and other members of the group say Bishop Grahmann dug
in his heels on the fourth point, his resignation. Mr. Allison says stormy telephone negotiations ensued between him and Bronson Havard, the bishop's spokesman and adviser, and eventually produced a compromise. Almost immediately, said Mr. McCormack, "Wick called me and said he had agreement from the bishop. He said it's a done deal." To get to this point, Mr. Allison says, he had to pull out what he calls the group's atom bomb: a plan to deliver a condemnation of the bishop, to be signed by several dozen major lay leaders, to local media and the Vatican Embassy in Washington. Under the compromise, the bishop would not quit immediately, as the group had sought. He would keep his job for several months, then depart in a way that could be presented as unrelated to the Kos case. Mr. Havard, told late Friday of Mr. Allison's account, was silent for several seconds. "I don't want to comment on that," he said at last. "I have nothing to say." Nor would he respond when asked whether the Vatican had asked Bishop
Grahmann to resign. He would not make his boss available for an interview,
in keeping with the bishop's long-standing refusal to take reporters'
questions about his handling of abuse cases. Mr. Allison says his group became concerned when Bishop Grahmann failed to leave after a year but weren't sure how to proceed given that controversy had subsided. They took heart when the Vatican sent Bishop Grahmann a successor, Coadjutor Bishop Joseph Galante. That was three years ago. It's extraordinary for a bishop to remain in power for more than a year after a coadjutor arrives, said the Rev. Thomas Reese, an internationally known expert on American prelates and author of Inside the Vatican. Bishop Grahmann - who was a coadjutor himself for the first half of 1990 before he took over from Bishop Thomas Tschoepe - has said he intends to stay until he hits the mandatory retirement age of 75. That's in 2006. "Obviously you've got a serious problem," Father Reese said, "a real mess." Mr. Havard would not discuss his own assertion, made to Mr. Allison and others, that the Vatican's U.S. ambassador had imposed a successor by mistake. "Bronson blamed the papal nuncio," Mr. Allison said, adding that the spokesman's reasoning was that the diocesan leader had asked only for an auxiliary, or assistant, bishop to help him manage a rapidly growing population. Bishop Grahmann suffered some health problems that came to light after the trial, Mr. Havard noted, suggesting that this may have led the ambassador to wrongly conclude it was time for change. Archbishop Gabriel Montalvo, who as ambassador nominates this country's bishops, declined to comment. Father Reese, editor of the Jesuit magazine America, questioned Mr. Havard's
explanation. "This guy's not a lightweight," he said of Archbishop
Montalvo, who previously headed the academy that trains Vatican diplomats.
"I'd have doubts that the nuncio would make that kind of mistake." He said that only the Vatican may be able to fix the Dallas situation, "and the Vatican is very reluctant to do that except in the most extreme circumstances." Church leaders are highly sensitive to appearances, he said, and strive to maintain public reverence for the office of bishop. "This is not just a branch office where the CEO in Rome fires people whenever he wants," Father Reese said. He acknowledged that the Vatican now might be more hesitant than ever to act, for fear of the "domino effect" - the possibility that Boston's Cardinal Law was merely the first American diocese leader to fall because of abuse-related controversy. Bishop Galante said he could not comment on his situation. Although he speaks nationally as a representative of the U.S. Conference of Catholic Bishops, he quit doing local interviews last fall after tangling publicly with Bishop Grahmann. At the time, he said he had been unable to persuade Bishop Grahmann to remove the head priest at Dallas' cathedral, who was accused of grabbing a man's genitals during a blessing. The priest, the Rev. Ramon Alvarez, acknowledged "inappropriate contact" with the man. Grahmann aides called the encounter consensual and let Father Alvarez, who previously was the No. 3 staff member at diocese headquarters, stay on the job while undergoing counseling. Diocesan policy says that sexual misconduct with children or adults "will not be tolerated under any circumstances." The Cathedral Shrine of the Virgin of Guadalupe now boasts average Sunday Mass attendance of about 11,000, the second-highest in the nation after St. Patrick's Cathedral in New York. Many of the parishioners are Hispanic immigrants, whose influx has made Catholics the Dallas area's largest religious group. Bishop Grahmann has come under renewed scrutiny this month, when The Dallas Morning News reported on another priest who deals with large numbers of poor Latinos. For more than a decade, the bishop has barred the Rev. Justin Lucio from
parish work but has let him run a nondiocesan ministry that spends large
sums to benefit its leaders while charging needy people millions for immigration
aid. Father Lucio has denied any wrongdoing. Bishop Tschoepe had earlier
removed him from parish work after sexual misconduct allegations. The
diocese maintains that the allegations were unsubstantiated, although
the priest admitted in a 1991 deposition that he sometimes handled Hispanic
parishioners' genitals when they had health concerns. Mr. Allison, the magazine publisher, said he is opening up about the 1997 deal because of how the diocese has reacted to the reports and The News' recent editorials calling for Bishop Grahmann to quit. The bishop has kept the accused priests in good standing, and Mr. Havard has questioned whether The News should comment on diocesan affairs. "That," Mr. Allison said, "is what drove me over the edge." Before granting an interview, he wrote about the private deal in the current issue of D. In a column, he recalled how The News used to editorialize against the Ku Klux Klan, which terrorized not just blacks but also Catholics. He also noted that Mr. Moroney - who is father of James M. Moroney III, current publisher and chief executive officer of The News - is helping fund renovation of the cathedral. "The bishop would have us think The News is part of a secular media opposed to the church's mission," Mr. Allison wrote. "But that's not the case, as the bishop knows full well." His group's goal then is its goal now, Mr. Allison said: to bring new leadership and new hope to the Catholic Diocese of Dallas. They want not to usurp authority, he added, but "to restore the authority of the church to which we are devoted." Correction: A front-page article Jan. 26 stated that Bishop Charles Grahmann fired Randy Mathis, and attorney for the Catholic Diocese of Dallas, after the diocese lost a lawsuit filed by victims of pedophile priest Rudy Kos. The story should have said that the bishop hired another law firm to handle bankruptcy, appellate and settlement matters while Mr. Mathis did other post-trial work. As the story noted, Mr. Mathis has continued to represent the diocese in other abuse litigation. [Photo Caption: (FILE 1998/Staff photo) The Vatican sent Bishop Charles Grahmann a successor three years ago, but he has said he intends to lead the Dallas Diocese until 2006, when he reaches the mandatory retirement age of 75.] Keep the Faith Editorial Catholics do not easily rebel against religious authority. That characteristic distinguishes them from many other Christians. The church is very hierarchical, and Catholics tend to be supremely deferential to their pope, bishops and priests. So for prominent Catholic laymen to visit Dallas Bishop Charles Grahmann in 1997 to demand his resignation for clerical malfeasance and nonfeasance was not just a big deal. It was huge, and possibly unprecedented in the annals of the American Catholic church. The Dallas Morning News reported on Sunday that Bishop Grahmann acceded to the laymen's demand five years ago. He agreed, according to several of those who participated in the behind-the-scenes meetings, that he would resign after a few months, the delay being designed to distance the resignation from a jury's conclusion earlier that year that the Catholic Diocese of Dallas had concealed the sexual predations of the Rev. Rudy Kos. But months went by, and Bishop Grahmann did not resign. Today, he clings to his leadership of the 800,000-member diocese. He insists that he will remain until he reaches mandatory retirement age in 2006. This shouldn't sit well with Texas Catholics. In Texas, one's word is considered one's ineluctable bond. Bishop Grahmann was born in Texas (Hallettsville, to be precise). He should immediately do what a proper regard for both his religion and his culture compels. He should resign and thereby save his reputation from further staining and his long-suffering flock from more scandal. If he refuses, the Vatican, which three years ago named his successor, should remove him. If the Vatican hesitates to remove him because it fears a possible "domino effect" of other resignation demands, it should consider the greater damage that its inaction is causing to the spiritual lives of its Dallas faithful. It took courage for the laymen to confront their bishop and to expose the secret deal. Their actions appear even more right in light of The Dallas Morning News' recent revelations that Bishop Grahmann retains two priests in ministry who are credibly accused of having violated the diocese's policy against sexual misconduct. Bishop Grahmann should demonstrate similar virtue and thereby put his anguished diocese on the path of healing and rebirth. [Photo Caption: Charles Grahmann.] Protestant Leaders Standing by Bishop By Jeffrey Weiss and Susan Hogan/Albach Six prominent religious leaders in North Texas are standing behind the Catholic bishop of Dallas days after media reports that the bishop reneged six years ago on an offer to resign. In a statement to be published in Friday's edition of Texas Catholic, the diocesan newspaper, the leaders defended Bishop Charles Grahmann and attacked press coverage of him. "We deeply regret and challenge the recent unwarranted attacks on churches and religious leaders based on inaccuracy and bias, particularly those on Bishop Charles V. Grahmann," said the statement, signed by current or former local leaders of Episcopal, Lutheran, Presbyterian, United Methodist and Disciples of Christ denominations. The statement in Texas Catholic accompanied a story and separate statement in which Bishop Grahmann denounced a report in last Sunday's Dallas Morning News. That article described a 1997 meeting and series of communications between a group of influential local laymen and the bishop and his top advisers. Lay participants told The News that those discussions led to an agreement by the bishop that he would step down. Executives of The News said Thursday that the story was accurate. In his rebuttal, Bishop Grahmann also said he regretted the decision of Catholic lay leaders to publicly air diocesan business. He added that he intends to stay on as bishop. He also said that he never agreed to resign at that meeting and that two of the lay people who were present backed his version of events. The News' article did not say the agreement to resign took place at the
1997 meeting; rather, it said, the agreement grew out of that meeting
and subsequent communications. The religious leaders' statement in support of Bishop Grahmann did not single out any media outlet by name and did not provide examples of coverage deemed inaccurate. It was signed by the Bishop Emeritus Mark B. Herbener and current Bishop Kevin Kanouse of the Northern Texas-Northern Louisiana Synod of the Evangelical Lutheran Church in America (ELCA); Bishop William B. Oden of the North Texas Conference, United Methodist Church; the Rev. Robert Stewart, executive minister of the North Texas Area Christian Church (Disciples of Christ); Bishop James M. Stanton of the Episcopal Diocese of Dallas; and the Rev. David Wasserman, general presbyter of Grace Presbytery. The News' story on Sunday relied on statements by Wick Allison, publisher of D magazine, who was one of the laymen at the 1997 meeting. He described the meeting and subsequent negotiations with one of the bishop's advisers. Others in the group confirmed to The News Mr. Allison's recollection of events. Mr. Allison briefly outlined the agreement as part of his column in the February issue of D. He told the newspaper that he and diocesan spokesman Bronson Havard, a member of the bishop's cabinet, eventually negotiated the bishop's agreement to resign. Robert W. Mong Jr., president and editor of The News, said the statements by Bishop Grahmann in Texas Catholic mischaracterized Sunday's article. "The significant point of The Morning News story was Wick Allison's account of his negotiations with Bronson Havard that concluded with an agreement that Bishop Grahmann would resign," Mr. Mong said. "These negotiations, according to Mr. Allison and others, occurred after a meeting of Catholic lay leaders and Bishop Grahmann at the Tower Club in Dallas in August 1997. The statements from the diocese focus on the Tower Club meeting and not the subsequent events. Mr. Havard declined to comment for our Jan. 26 story." In Texas Catholic, Mr. Havard rebutted Mr. Allison's account, saying he never told the magazine publisher "that there was some sort of agreement regarding the retirement of Bishop Grahmann." Mr. Allison stood by his statements. "The bishop's people seem to have retreated into a bunker mentality that admits nothing and denies everything," he said Thursday evening. "The truth is, the bishop agreed to resign in '97. He should have resigned in '97, and he should resign tomorrow." The bishop did not refer to any lay Catholics by name in his statement. But he said he considered it an "inappropriate use of the media" for certain Catholics to "use their positions to take the internal affairs of the Catholic Diocese of Dallas into the public forum." Mr. Allison expressed no regrets about going public. "The bishop might prefer a world in which Catholic laymen behaved like obedient schoolchildren, but that world has now gone forever," he said. "There's a smell in the chancery building and sunlight is the best disinfectant and the more sunlight, the better and I think my fellow Catholics will agree." The statement of support from religious leaders emerged from a routine meeting among top representatives of local Christian denominations, participants said. At that meeting, "Bishop Grahmann said he never promised to resign," said Bishop Herbener, a longtime friend of Bishop Grahmann. "It is our hope that those responsible for decisions on media coverage will recognize the difference between legitimate news coverage of religious affairs on the one hand, and sensationalizing journalism on the other," the statement said. Bishop Herbener said the religious leaders drafted their letter as a way to express support for a respected colleague whom they believe is being unfairly tarred by the larger clergy sex abuse scandal in the Roman Catholic Church. "It appears to me that The Dallas Morning News is trying to make a 'Cardinal Law' out of Charlie Grahmann, and that's crazy," he said. "He's done the darned best job he could do." Under pressure from lay Catholics and priests, Boston's archbishop Cardinal Bernard Law resigned in December, becoming the first U.S. bishop to step down for mishandling of predatory priests. Bishop Stanton said the statement was a plea to the media to provide more balanced coverage. He and Mr. Wasserman declined to provide examples of unbalanced coverage. "We're people who share the same kinds of responsibility as Bishop Grahmann," Bishop Stanton said. "We have a fellowship. This was more of an effort to say we know Bishop Grahmann and want to be supportive of him." The others who signed the statement could not be reached for comment. Sunday's article reported on the aftermath of the trial of former priest Rudolph Kos. In 1995, a civil jury ruled that diocesan leaders conspired to conceal Mr. Kos' repeated molestation of boys, and it awarded victims nearly $ 120 million - the largest such verdict of its kind. According to Mr. Allison, the Catholic laymen began pressing Bishop Grahmann for changes in August 1997, starting with the meeting at the Tower Club. In addition to Mr. Allison, others present included lawyers Daniel Hennessy and William McCormack, investor Mike Maguire and James M. Moroney Jr., retired publisher of The News and former chief executive officer of its parent company, Belo Corp. They all confirmed various elements of Mr. Allison's account but largely deferred to him for elaboration. In a series of subsequent communications, the group outlined four things they said had to happen - including the bishop's resignation. The other three steps, which were taken fairly quickly, were that an appeal of the Kos case be dropped; that the diocese's lawyer be removed from the case; and that a priest who had blamed parents for letting Mr. Kos molest their children be removed from his parish. Bishop Grahmann, in Texas Catholic, said that there was never an agreement to fire the lawyer and that the decision to remove the priest was made after the meeting. Tensions between the diocese and The News have escalated since November, when a News editorial called for Bishop Grahmann's resignation. The editorial said that the bishop had exercised poor judgment in handling sexually abusive priests and that "his misjudgments have cost the diocese millions of dollars in payments to abuse victims and in legal fees, and they threaten to cost it still more." The call for the bishop's resignation was repeated twice in editorials this month. Mr. Mong said the paper's editorial stance has not influenced its news coverage. "The news and editorial functions at this paper are entirely separate," he said. [Photo Caption: (FILE 2002./Staff photo) Bishop Charles Grahmann says he intends to remain the leader of the Dallas Diocese. CHART(S): THE BISHOP'S WORDS] |
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