Across the country, the Catholic Church has faced staggering monetary judgments and settlements in litigation filed by victims of abuse at the hands of priests and church workers. The growing legal liabilities have driven some dioceses to file for bankruptcy after determining that their assets could not cover the mounting legal costs. However, one diocese is being accused of hiding assets to avoid paying sex abuse victims.
A lawsuit filed against the Roman Catholic Diocese of San Diego claims the church transferred at least 291 real estate holdings to its parishes in an effort to fraudulently conceal assets in a potential bankruptcy filing. The suit seeks to undo those transfers, which are estimated to total $450 million.
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History of Sexual Abuse in the Catholic Church
Sexual abuse within the church has been a growing concern as more and more brave victims have come forward seeking justice. A groundbreaking 2002 report by the Boston Globe was among the first to reveal the extent of abuse by priests and church employees, as well as efforts by the church to cover up the problem by quietly transferring problem priests to new locations to avoid accountability for the illegal acts.
New reports continue to come out, including the recent release of internal documents in Maryland documenting what church officials there knew and how they responded to reports of sexual abuse.
How Survivor Lawsuits Affect the Church
Since the Globe investigation, many people have sued the Catholic Church and its dioceses for damages resulting from their sexual abuse, including numerous incidents involving child victims. These lawsuits have been made possible by states passing legislation that removed the statute of limitations on sexual abuse cases, either temporally or permanently. As a result, Catholic churches in the United States have paid out billions to accusers, according to the nonprofit Bishop Accountability. As lawsuits from survivors continue to be filed, dioceses and parishes throughout the United States are turning to bankruptcy protection in response to mounting judgments.
The San Diego lawsuit, among other legal filings, alleges that the diocese has moved assets around to avoid paying abuse victims. Additionally, Bloomberg reported that the Vatican has signed off on some of these reorganizations, although the legal structure of the diocese under U.S. civil law may not recognize the church’s religious dispensation to make these changes.
The San Diego Case
With Southern California real estate at a premium, the value of the San Diego diocese’s real estate holdings has become a central issue in the lawsuit. The Catholic Church itself holds millions of acres of property around the world, and each diocese or parish often holds valuable real estate separately. As dioceses are faced with active lawsuits or the threat of legal action, many have begun the process of creating separate incorporated entities for each parish. Part of this process involves transferring ownership from the diocese to parishes. But as the San Diego case illustrates, the timing of many of these transfers can raise concerns about fraud.
The San Diego lawsuit will seek to prove that the Roman Catholic Diocese of San Diego is trying to use parish incorporation to prevent paying sexual abuse survivors what they deserve.
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