About a month before filing for bankruptcy last year, attorneys representing the interests of clergy sex abuse survivors allege the Diocese of Oakland transferred $106 million into a non-profit called the Oakland Parochial Fund that hadn’t been active for years.
The victims and their attorneys are slamming the transfer as a blatant attempt to shield the church’s assets in the ongoing bankruptcy case. The money, they say, should be available to victims as compensation for the abuse they endured by various East Bay priests, many of whom never faced jail time for their crimes.
“I think any bankruptcy judge would recognize that you can’t take $100 million out of the debtor and then say, ‘my pockets are empty,’” said Rick Simons, an attorney representing alleged child sexual abuse victims currently suing the Diocese in state court.
The revelation came out in a recent court filing objecting to the Bishop’s proposed reorganization plan, alleging the transfer is part of a broader effort to mislead abuse survivors, undervalue their civil claims, and hide funds that could go towards a potential settlement. Attorneys representing survivors recently filed a complaint with the court in an effort to force a reversal of the transfer.
“The Supreme Court recently reminded us that only a debtor placing virtually all its assets on the table for its creditors is entitled to a release,” said Brent Weisenberg, an attorney representing the Official Committee of Unsecured Creditors in the bankruptcy case, in an email to NBC Bay Area. “The Committee does not believe the Diocese has done so here. Rather, under the recently filed Plan of Reorganization, the Diocese fails to use hundreds of millions of dollars of cash, investments, and real estate from which to pay survivors of sexual abuse.”
Corporate records show the Oakland Parochial Fund, created in 2014 by the Diocese, is under the direct control of Bishop Michael Barber. Its articles of incorporation state the fund was “formed, and shall be operated, supervised or controlled by the Roman Catholic Bishop of Oakland.”
Records show the fund went dormant in 2017 and was listed as suspended by the California Secretary of State’s Office. Last year, however, a few months before the alleged $106 million transfer, the Diocese’s chief financial officer revived the fund. In their complaint to the court, attorneys representing survivors contend the fund had no cash or investments of any kind before the $106 million hit the non-profit’s books.
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It’s now drawing the ire of victim advocates with the Survivors Network of those Abused by Priests (SNAP).
“In other words, this ‘fund’ was nothing more than a corporate shell until shortly before the bankruptcy was filed,” the group said in an email to NBC Bay Area. “Now, that shell has $106 million in liquid assets that Bishop Barber claims is off limits to victims who have sued the Diocese.”
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In a statement, a spokesperson for the Diocese of Oakland wrote:
“The Roman Catholic Bishop of Oakland (RCBO) rejects the Committee's allegations which are the subject of litigation between RCBO and the Committee in the chapter 11 case. The Committee's allegations you reference are not supported by the facts and RCBO is fully addressing the allegations in response to the litigation filed by the Committee.”
The Oakland Parochial Fund is among a network of non-profit corporations affiliated with the Diocese of Oakland, such as the Roman Catholic Welfare Corporation, which oversees dozens of East Bay Catholic schools. Attorneys representing the Bishop argue the assets of those affiliates aren’t available to pay survivors. Attorneys representing victims, however, strongly disagree, stating in a recent court filing that “The Bishop, as the leader of the Diocese, exerts unmatched authority and control over all entities within his jurisdiction, including each of the Non-Debtor Affiliated Entities.”
“Each and every one of those corporations is totally controlled by the Bishop,” Simons said. “The Bishop enterprise is not just one corporation. It’s a group of corporations controlled by the Bishop.”
Last month, the Diocese filed a proposed reorganization plan with the court. The proposal includes a fund for more than 350 abuse survivors the Diocese estimates is worth more than $150 million. But victims and their attorneys argue the Diocese can, and should, pay far more considering all the cash and property it controls, and the extent of the harm done by predator priests.
They say the Diocese’s plan is riddled with confusing language that survivors will have a hard time understanding, an assertion Judge Lafferty seemed to agree with in court.
They also argue the Diocese has hundreds-of-millions of dollars’ worth of real estate that could be sold off to pay survivors, and that California juries would likely award far more on an average basis than what the Diocese was offering in its proposed settlement.
“He’s just watching out for his finances,” said survivor Sherry Waterworth outside of a court hearing this month. “I think we need to hold Bishop Barber accountable. He needs to come to the table and be honest.”
Attorneys for the Diocese contend the proposed settlement provides equitable compensation for abuse survivors while also allowing a reorganization that will ensure it can still carry out its mission.
At last week's hearing, they said they planned to amend their reorganization plan to address some of the feedback from Lafferty and the Diocese’s creditors.
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