LOS ANGELES (RNS) — A law firm representing alleged sexual abuse victims in California is suing the Roman Catholic Diocese of San Diego, claiming the diocese fraudulently moved around real estate assets in an attempt to hide its wealth and avoid paying child sex abuse claims.
The suit, filed Tuesday (Feb. 21) by the Zalkin Law Firm in San Diego County Superior Court on behalf of more than 100 plaintiffs, alleges that the diocese transferred at least 291 real estate parcels, with a total tax-assessed value of more than $453 million, to parish corporations in order to defraud creditors at a time when the diocese was aware of “significant claims” by victims of childhood sex abuse.
These transfers, according to the lawsuit, “were done as part of a scheme created, masterminded, and designed” by the diocese and parishes so assets could not be “reachable” by creditors and those filing claims.
The lawsuit claims that the diocese made these transfers beginning in September 2019, the same month the California Legislature passed Assembly Bill 218, which, with Gov. Gavin Newsom’s endorsement, lifted a statute of limitation on childhood sex abuse claims. The law opened a three-year window beginning in 2020 that allowed alleged victims of child sexual abuse to file lawsuits without age limitations.
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The suit comes days after Cardinal Robert McElroy, bishop of the Diocese of San Diego, announced that the diocese may declare bankruptcy as it faces “staggering” legal costs in dealing with hundreds of lawsuits alleging priests and others sexually abused children.
Kevin Eckery, spokesman for the diocese, defended the transfers, saying they predate the Assembly bill. “Under canon law the assets of each parish have been separate and independent from the Diocese,” Eckery said. “Over 10 years ago, long before Assembly Bill 218 was introduced, the Diocese began the process of formalizing in civil law the separate legal status of each parish and its assets. This included recording proper legal title for each parish to its own real estate.“
He added, “The Diocese has a profound obligation and moral duty to use its own assets to equitably compensate survivors.”
Earlier, according to The Associated Press, Eckery said the cost of settling the outstanding cases against the diocese, which have not gone to trial, would amount to $550 million. Most of the diocese’s assets, McElroy said in a letter, were used to settle previous allegations, ending in a $198 million payout in 2007.
Attorney Irwin Zalkin, in a news conference on Wednesday, said the “diocese and its parishes have engaged in a conspiratorial enterprise to defraud child abuse victims and to deny them the justice they deserve.”
Zalkin noted that if the diocese files for bankruptcy, it would have to identify and disclose its assets. “The question would be whether these properties that got transferred are assets of the diocese or not,” he said.
He said the lawsuit seeks to reverse those transfers. He wants the properties to revert to diocesan ownership as “assets of the diocese as they are and they should be.” Zalkin said his firm will pursue the matter through the civil court or through bankruptcy proceedings if the diocese files for bankruptcy.
Zalkin said the filing of the lawsuit wasn’t timed to coincide with Ash Wednesday, “but it speaks volumes as to the moral conduct or lack of moral conduct of this diocese.”
“They have developed a PR spin on how they’re concerned about victims, and they want to do the right thing by victims, but at the end of the day, it’s all about the money and protecting their assets,” Zalkin said.
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The lawsuit also claims that the diocese created an “Independent Compensation Fund,” in which survivors’ claims would be reviewed by an independent claim evaluator. If the claim qualified, a final settlement offer would be made.
But the lawsuit alleges that the fund “was designed to draw out individuals who would otherwise be eligible to bring a lawsuit pursuant to AB 218 and settle their claims for pennies on the dollar.”
“At the same time that the ‘Independent Compensation Fund’ was becoming operational and the Senate was passing AB 218 on to the Governor in mid-September of 2019, the Diocese was engaged in a massive effort to transfer title to hundreds of millions of dollars of real property for no consideration,” the lawsuit reads.
The lawsuit states that “this fraudulent scheme” was meant to defraud “plaintiffs and others with claims based on clergy sexual abuse.”
The Associated Press contributed to this report.