7th Circuit Smacks Down Catholic Diocese on Abuse Claims

7th Circuit Smacks Down Catholic Diocese on Abuse Claims March 13, 2015

The Catholic Archdiocese of Milwaukee is one of the hardest hit from child rape charges, some stemming from a single priest who molested nearly 200 deaf children. They declared bankruptcy but first tried to hide $55 million by transferring it to a cemetery fund. An appeals court just smacked them down hard for it.

The Catholic Archdiocese of Milwaukee sought to insulate $55 million of its funds from lawsuits brought by victims of priestly sex abuse, according to a letter penned by then-Archbishop of Milwaukee Timothy Dolan, so it transferred those funds into a separate trust set up to care for the archdiocese’s cemeteries and mausoleums. Once the sexual abuse victims sought those funds in a bankruptcy proceeding, however, the archdiocese claimed that it had a religious liberty right not to use that money to compensate victims of abuse.

Though a federal district judge agreed with the archdiocese that its religious freedom includes this right not to compensate victims in 2013, a bipartisan panel of the United States Court of Appeals for the Seventh Circuit reversed that decision on Monday. The Seventh Circuit noted that “the issue of whether the Archdiocese actually made a fraudulent, preferential or avoidable transfer is not before us,” so it remains to be seen whether the abuse victims will be compensated out of the $55 million worth of funds. Nevertheless, the Seventh Circuit’s decision means that the archdiocese will not be able to hide behind claims of religious liberty in order to avoid liability for the actions of its clergy — or, at least, it means as much so long as it is not reversed on appeal.

At least 45 Milwaukee priests face allegations of sexual abuse, including one priest who was accused of molesting close to 200 deaf boys. The cemetery trust was created after the archdiocese agreed to a $17 million settlement involving ten victims who alleged that they were abused by priests in California, but the $55 million worth of funds were not transferred to that trust until after a Wisconsin Supreme Court decision which allowed other lawsuits by alleged victims of priestly abuse to move forward. Dolan, who is now a cardinal and the Archbishop of New York, wrote to the Vatican regarding the $55 million in funds that “[b]y transferring these assets to the Trust, I foresee an improved protection of these funds from any legal claim and liability.”

Suffer the little children, indeed.

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