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Archdiocese of Santa Fe’s Chapter 11 Bankruptcy is Another Link in a Long Chain of Financial Chicanery by Church Leaders

When Catholic dioceses file for Chapter 11 bankruptcy protection, Catholic Church leaders usually claim that it’s a “last ditch effort” to “fairly” address child sex abuse lawsuits and “make sure that current programs of the diocese/religious order stay funded.”

We want to make something clear: This is a well-rehearsed lie.

When the Diocese of Portland became the first Catholic diocese to file Chapter 11 in 2004, Catholic Church officials found that they had a sure-fire legal tactic to shield assets from survivors and stop potentially embarrassing civil trials. By filing for Chapter 11—usually shortly before or on the eve of a high-visibility trial or deposition—Church officials could rest assured that damning testimony exposing abuse and documents detailing its cover-up would most likely never see the light of day. But to use Chapter 11 as a consistently effective defensive tactic, Church officials needed a strategy to shield money from the pool of assets available to survivors who were sexually abused as children by clergy and other employees of the diocese well in advance of filing for bankruptcy protection.

What is their strategy? It’s easy: they move money, slowly, methodically and far in advance of any potential legislative reform that gives survivors civil rights. The easiest thing to do—as seen in a recent investigation of the Archdiocese of Santa Fe and their recent bankruptcy—is incorporate parishes as separate entities and move as much money as possible to the accounts of those individual parishes. This investigation showed that in the Archdiocese of Santa Fe this process started in 2012—six years before the Archdiocese filed for Chapter 11.

According to the report: “When the Archdiocese of Santa Fe filed for bankruptcy, it said that it had about $50 million in assets, which is a lot of money, but to arrive at that figure, they moved or re-classified about $178 million-$180 million off of their balance sheets saying either that money belonged to its parishes, or that money belonged to the Catholic Foundation, or that money was in a Wells Fargo account that the Archdiocese controls, but doesn’t own.”

This is not unique to the Archdiocese of Santa Fe, nor are the effects and impacts. In every diocese, Archdiocese and religious order across the country that has employed this tactic the results are essentially the same. Aside from new the bank accounts, nothing else changes in the way that a diocese does business; parishes still send money to the diocese every month, the bishop determines which priest is assigned to a particular parish, and every parish must adhere to the rules of the bishop and the greater Catholic hierarchy. It’s an effective maneuver, because once a diocese is flooded with lawsuits from survivors, a bishop can show the courts the diocese’s bank accounts and say, “We’re broke!”

But what if a diocese needs to collect money for diocese-wide projects like building a new cathedral, funding the seminary and the bishop, paying priests, and holding the monies that the individual parishes send each month? That’s where the “charitable foundation” comes in. By creating a foundation (which is not technically “owned by the diocese”) and encouraging donors to send their money there, the bishop can still have control and power over millions of dollars, none of which is available to the children who were hurt while under the diocese’s care.

We fight for survivors and their rights; for justice and accountability. These nefarious diocesan bankruptcy practices, under the guise of “financial responsibility,” are a disservice to the brave men and women who have stepped forward to expose abuse, as well as lawmakers who reformed laws to expose predators and help survivors heal. We urge everyone to see this Church strategy for what it is: chicanery that hurts survivors, keeps secrets hidden, and endangers children by not exposing abuse.