THE PING!Posted on 08/13/2004 9:12:39 PM PDT by Salvation
Archbishop testifies on bankruptcy; disbarred lawyer nabbed in scam
08/11/2004 Ed Langlois
Portland Archbishop John Vlazny testified Aug. 6 before a federal bankruptcy court, saying it was ultimately his decision, not the Vatican’s, to file for the first-ever Chapter 11 reorganization of a Catholic diocese.
The same day, a federal grand jury in Portland indicted a con artist of inventing sex-abuse charges in an effort to bilk the archdiocese of more than $1 million.
During the four-hour bankruptcy hearing, attorneys for those who have claims against the archdiocese sought possible Vatican liability.
The archbishop, while allowing that he must comply with certain Church laws, asserted that talks with the Vatican before the filing were “appropriate, satisfactory and within the law,” but that “in the end, it becomes my decision.”
Archbishop Vlazny also discussed the archdiocese’s policies to prevent child abuse, held up for years as a national model.
He explained that the bankruptcy was seen as a way to satisfy all sex-abuse plaintiffs, not just a few, and allow the church to continue its mission.
“I thought it was a way of bringing everyone around the table and seeing what we could do,” he told the court.
The key issue of whether land, buildings and savings belonging to parishes and schools is part of what creditors can claim is due to be decided by the court in the coming months. But appeals are likely to make the process drag on, perhaps for years.
Despite objections by the archdiocese, U.S. Bankruptcy Judge Elizabeth Perris set a date for the tort claimants’ attorney to file motions on the relationship of parish property to the archdiocesan property. If she sides fully with plaintiffs on the issue, that would set an estimated $500 million for parceling out, more than 25 times the assets, the archdiocese now reports.
Thomas Stilley, an attorney for the archdiocese, had put forward a plan to negotiate settlements for current and future lawsuits before tackling the thorny issue of property ownership. The issue might have been moot, Stilley said.
Perris’ move surprised David Skeel, a bankruptcy expert and a professor at the University of Pennsylvania Law School.
“I had predicted that the judge would probably postpone ruling on the property issue, and would have waited to see if it looks likes the parties were able to work out settlements,” Skeel says. “That way she wouldn’t have to rule on a tricky and sensitive issue. The fact that there may be a ruling on the property issue is very interesting and important.”
Last month, the archdiocese filed papers claiming about $19 million in assets, saying that canon law holds that parish and school assets belong to the parishes and schools, not the archdiocese.
Money from parishes and schools deposited with the archdiocese is held in trust, church attorneys say.
Trust law, not church-state relations as some media reported, may well be the hub of the bankruptcy case.
Plaintiffs claiming sex abuse have so far sued for a total of $307 million. Another 41 cases do not yet have specific dollar amounts, and 20 lawsuits have yet to be filed.
One claim almost brought against the archdiocese is now thought to be a fraud.
Thomas Smolka, a 57-year-old disbarred lawyer from Virginia, is charged with doing research on a notorious Oregon priest to concoct a sex-abuse case.
Using the name of a dead New Mexico man and money from bank fraud, Smolka set up in a Pearl District apartment not far from St. Mary Cathedral.
With his apparently contrived tales about the late Father Maurice Grammond, Smolka contacted David Slader, a Portland attorney who has represented dozens of plaintiffs alleging sex abuse against priests.
Slader at first agreed to take the case. But when he learned about the fraud, he condemned it, saying the scam makes it hard for real victims to disclose their abuse for fear of not being believed. When federal marshals searched Smolka’s apartment, they found documents relating to the apparent fraud.
In 1991, Smolka was convicted of murdering his wife. But he was let out of jail in 1995 after an appeals court ruled that evidence was lacking.
The archdiocese praised the law enforcement work in the Smolka case and then turned back to settling believable claims.
“We appreciate the aggressive, vigilant action of the United States attorney in exposing potential fraud,” says Bud Bunce, spokesman for the archdiocese. “We hope that other fraudulent claims are not filed, because they only take away from the funds available to pay credible claimants.”
On Aug. 5, the national leader of a group for victims of sex abuse by priests visited Portland and asked Catholics not to regard sex-abuse victims as enemies of the church.
“We are the sons and daughters of Catholic families who have been raped and sexually assaulted by priests of the Catholic Church, and we are seeking healing,” said Barbara Blaine, president of Chicago-based Survivors Network of Those Abused by Priests.
Blaine, after a visit to the archdiocese’s pastoral center, said she is hopeful about relations between victims and church leaders.
She did call on the archdiocese to offer more information about allegations.
In a press conference in front of the archdiocese’s pastoral center, local leaders of the group said they know Archbishop Vlazny is committed to outreach to victims and urged even more.
**One claim almost brought against the archdiocese is now thought to be a fraud.**
Makes me wonder how many "frauds" have been perpetrated.
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THE PING!Is the precedent being set for the State to help itself to Church properties if/when other Dioceses around the country declare bancruptcy? Yikes!
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