In 2007, when the Diocese of San Diego declared bankruptcy for the first time, it had argued that parish properties were only held in trust by the diocese, according to Zalkin. He said this argument did not gain traction in legal proceedings and the argument was not fully tested. The bankruptcy was dismissed after a $198 million settlement between the diocese and plaintiffs in sex abuse lawsuits.
According to Zalkin, if a court were to cancel the property transfers, there would be at least $450 million available for a legal settlement.
The diocese is again considering bankruptcy, citing the potential cost of sex abuse lawsuit settlements. Though a bankruptcy halts any pending lawsuits, Zalkin said his lawsuit would be incorporated into the larger bankruptcy case and then resolved, the San Diego Union-Tribune reported.
Eckery told CNA the diocese has “a profound obligation and moral duty to use its own assets to equitably compensate survivors.” He cited the letter Cardinal Robert McElroy of San Diego sent parishioners earlier this month about possible bankruptcy, in which the cardinal said:
“The sexual abuse of minors by priests and the way it was handled in the life of the Church constitute the greatest sin of our Church in the last century. We must and will continue to protect minors with even deeper vigor, provide healing resources to those who have been abused, and use our diocesan assets to compensate those who were victimized. And we will never forget the harm that we have done.”
San Diego Superior Court Judge Eddie Sturgeon will be handling lawsuits from alleged victims. The first case is scheduled to go to trial in July.
Three bishops have headed the San Diego Diocese since 2010: Bishop Robert Brom, who retired in 2013; Bishop Cirilo Flores, who died in 2014 after less than a year in office; and McElroy, who took office in 2015.
Allegations of unethical or illegal financial transfers have been made against other dioceses that have faced sex abuse lawsuits.
In 2011 attorney Jeff Anderson of St. Paul, Minnesota, who has filed many abuse lawsuits against Catholic dioceses, accused the Archdiocese of Milwaukee of transferring $75 million out of its bank accounts. He also inquired about the transfer of a separate $55 million into a cemetery trust fund created in 2008.
Cardinal Timothy Dolan of New York, who was a former archbishop of Milwaukee, rejected the claims. In a 2011 response, he said he could not have hidden such a sum given the “rigorous supervision” of the financial council. The $70 million belonged to the parishes of the Milwaukee area and were on deposit with the archdiocese, just as the assets of the cemetery trust fund were.
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