Judge orders external audit of diocese
By: TERI FIGUEROA --- Staff Writer | ∞
SAN DIEGO -- A federal judge on Wednesday said she wants an outside accountant to audit the finances of the Roman Catholic Diocese of San Diego, and criticized church attorneys for failing to include about 770 parish accounts in the diocese's bankruptcy filings.
"This is the most Byzantine accounting system I've ever seen," U.S. Bankruptcy Judge Louise DeCarl Adler said in court, two days after she issued a harsh order regarding concerns that church officials were trying to improperly transfer money from the diocese to the parishes.
Adler also said the court "has not been well-served" by the accounting information the diocese has provided in its bankruptcy filings.
"I want someone to study this and report to me," Adler said. "The court needs this information and it needs it independently."
Adler's comments came during a hearing in which she ordered the diocese and its attorneys to show why she should not penalize them for attempting to change taxpayer identification numbers on some 770 bank accounts while the diocese's bankruptcy proceedings are pending.
The diocese reportedly has more than 1,200 bank accounts, including the more than 770 accounts associated with the individual parishes.
"I've had multibillion-dollar corporations in my courtroom that didn't have 1,200 bank accounts," Adler said.
The diocese filed for bankruptcy Feb. 28, bringing a halt to sexual abuse litigation on the eve of the first trial of an abuse case in San Diego. The diocese, which covers San Diego and Imperial counties, has 98 churches, runs nearly 50 schools and has almost 1 million parishioners.
Wednesday's hearing was so packed that court officials opened up a second courtroom so that the overflow crowd -- including complainants and journalists -- could listen in on the proceedings via a phone line piped in through speakers. The second courtroom was also filled to capacity, and included most of the journalists in attendance.
During the hearing, Adler ordered the diocese to amend its court filings to include the bank 770 accounts belonging to the parishes.
The judge also ordered that the diocese leader, Bishop Robert Brom, personally sign the revised list of bank accounts and financial information so Brom can "attest to the veracity of the information."
Adler did not find the diocese or its attorneys in contempt of court.
Susan Boswell, an attorney representing the diocese in the bankruptcy proceedings, apologized to Adler "for any confusion we have created," and said the diocese will cooperate with the external audit.
Boswell told Adler she had misinterpreted Adler's questions at a March 1 hearing regarding how the parishes would protect their cash flow through the bankruptcy process.
"This was not a change of ownership or anything nefarious," Boswell told Adler of the move to change the taxpayer numbers.
Adler questioned five people -- Boswell and two other attorneys representing the church officials, as well as two clergymen -- to see why 98 parishes were told to change the taxpayer identification number on their bank accounts.
The taxpayer ID number for all parish accounts was the same number that the diocese uses, but attorneys representing the diocese repeatedly said in court that the diocese does not have control over those accounts. The money in those accounts belongs to the parishes, not the diocese, the attorneys said.
In ordering the external audit, Adler noted that the information will, for the time being, be used only as it relates to how the diocese spends money on day-to-day operations -- but she also said that the information could extend to other uses as the bankruptcy proceedings progress.
The diocese has offered to pay $95 million to settle the more than 140 sexual abuse claims filed against it, but attorneys for those who have sued in connection with alleged abuse by priests have said a fair settlement would be closer to $200 million.
-- Contact staff writer Teri Figueroa at (760) 631-6624 or tfigueroa@nctimes.com.
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A abuse survivor wrote on Apr 11, 2007 10:18 PM:Your reporting lacks certain facts, like names of priests (Gallagher and Osborne) and lawyers questioned by the judge. And the connection the judge made between the accounts not listed as Diocese Assets, by the request of the Diocese to have an order concerning those accounts on March 1. In Essence the Judge stated the Diocese is connected to the accounts, as they wanted an order concerning them, and have account numbers with amounts in them, while they say they have nothing to do with them. And it wasn't only the 770 accounts, but the additional 500 too, so that would mean there where 1200 accounts missing from the schedules. The expert will be a forensic accountant, that will report directly to the judge. Never before has the accounting system of a catholic church come under such scrutiny. Its obvious this newspaper is pro catholic, and contributes to the cancer within the church by reporting in such limited fashion. This is why the church has prolonged this settlement with the victims, because they have tremendous influence in the media in San Diego, and have come to believe they can get away with anything. Yes I was in the court room today, because I can't relay on you to tell the full story to the public, only your pro catholic slant.It's interesting the New York times reporter got it right, just not the T/A.
Are you kidding? wrote on Apr 11, 2007 10:25 PM:A multimillion dollar organization and they can't do basic accounting. Now you know where your donations go...somewhere else that you can't trace...easy to steal this way and even easier to conceal. Hope this judge throws the book of contempt at them.
MIKE IN LSM wrote on Apr 12, 2007 7:22 AM:No more money Bishop, until there are full,complete, audited and published Diocesan financial statements. As far as being pro-Catholic, it will be very interesting to see what the Diocesan newspaper, the Southern Cross, publishes.
Who's Your Priest? wrote on Apr 12, 2007 8:18 AM:So they want to "protect the cash flow" and not the people abused by the priests? It's time to turn over the money-changers' tables in front of the temple.
Concerned-1 wrote on Apr 12, 2007 8:23 AM:Vatican II, Mass in English, pedofile and sex cover ups, catering to illegals...this church has lost touch.
Not Concerned wrote on Apr 12, 2007 9:54 AM:This church proved it had lost touch when they persecuted Galileo. That wasn't their first crime against humanity and it certainly wasn't thier last.
ANOTHER VIEW wrote on Apr 12, 2007 10:27 AM:More drivel from Catholic bashers. "persecuted Galileo." GIVE ME A BREAK. Reaching back 500 years to pillory the Church says it all. Pure bigotry and anti-Catholicism and is completely irrelevant to this litigation. This bankruptcy proceeding is NOT about the merits of the plaintiffs' cases, but simply an accounting of the diocesan assets. At its conclusion the Diocese and the plaintiffs will be in a clearer position to settle the claims at hand. There is no evidence of chicanery on the part of the Diocese, only misunderstandings and excusable errors. "Adler did not find the diocese or its attorneys in contempt of court." Indeed, the court did not simply because there was no intentional misleading of the court or the plaintiffs. Nobody argues that the alleged victims should be denied their day in court. That is what courts are for, after all.
Gimme a break wrote on Apr 12, 2007 10:47 AM:"Pro-Catholic slant"??? How about addressing the clearly anti-Catholic bigotry of this judge? Or at least admitting to the pure and simple hatred in these comments?
Catholic wrote on Apr 12, 2007 10:58 AM:I've always said, I believe in the lord, but not people! These are people running the church they are not GOD. Therefore, they should be accountable just like all of us. The Church (that would be all Churches & religions) is a business. They always want $$$ and make you feel guilty for not giving it. As for the abuse,I don't trust Teachers to be alone with my kids so why would I trust a Priest? Because GOD said so? DUH, wake up & protect your KIDS!
It's a business wrote on Apr 12, 2007 12:01 PM:Enough of the pro- and anti-catholic drivel. This is about a business using a legal system to shield itself from debts. Period. If you look behind the church using this method,you should begin to understand that they do NOT practice what they preach. In my book hypocrits, no matter what persuasion they are, are disgusting and deserve to be exposed for that.
Interested in justice wrote on Apr 12, 2007 12:09 PM:So Judge Adler wants Bishop Robert Brom to personally sign the revised list of bank accounts and financial information so Brom can "attest to the veracity of the information." Careful, Bishop Brom; 'veracity' means 'truthfulness', a concept with which you are apparently unfamiliar.
religion wrote on Apr 12, 2007 12:54 PM:Do we really need churches in order to believe in and get in touch with God? Churches seem to me to be nothing more than businesses and political organizations that have very little to do with belief. Their main goal seems to be pushing their beliefs on everyone around them and condemning anyone who doesn't share those beliefs. Why don't we all just quit giving them money?
How many others? wrote on Apr 12, 2007 1:28 PM:Sadly, maybe thousands of other youngster (now grown up) have NEVER told that they were abused by a priest, teacher or neighbor, or even their own dad or uncle. They will never tell, only suffer silently. They don't want a million dollars to 'heal' - they just don't want a label on them; they will strive oh so hard to live a 'normal' family life. But the sad reality is abused children who don't heal may grow up to abuse others, to get it out of their system. Ask your child if anyone has hurt them approached them in a sexual way....warn them of signs. But also teach how wrong it would be accuse someone who was NOT guilty. There are many incarcerated for sexual abuse who NEVER abused, but a sweet young child’s story was believed. SAD. Sad all around that we live in a country where you have to be so cautious. At least be honest.
I agree with religion wrote on Apr 12, 2007 3:11 PM:I have believed in God all of my life but I have grown away from and do not believe in churches, any churches. they are simply another institution of man with all the trappings, corruption, and misgivings of man. You don't have to attend church to believe in God.
To Religion wrote on Apr 12, 2007 4:37 PM:Do we need churches? I don't know? That is each of our personal choices, as there are no trappings unless you allow to be trapped. No you don't have to attend church to believe but I go because I chose to believe in God and love to learn more about the Bible. I have never heard anyone at church telling me what to do, they make suggestions on how to live a Godly life and then we have choices to live by them. Church preaching are usually common sense on how to live a respectful and moral life. I was taught not to judge man as he is not God and all of us are not perfect. You don't have to give money, again that is your choice.
Not Concerned wrote on Apr 12, 2007 4:41 PM:Going back more than five hundred years to show a pattern of selfish arrogance is more like it. Which is very relevant to this story. They jailed Galileo for showing physical provable facts. They hid the perverts who did this to protect the church. Now they are shuffling money around during a bankruptcy to protect the church. I say it is a continuation of the pattern. No this bankruptcy proceding isn't about the merits of the abuse claims it is about limiting the funds available to setttle those claims befor they even get to trial. As far as I am concerned this is just a continuation of the pattern. Try this on for size, if half of the parishioners each gave an extra hundred bucks a month they would have enough to pay these victims a million dollars each in three months. I say extra because the church obviously isn't willing to give up one cent of what they are already getting every sunday. I think every person who knew about these perverts should be put in jail for for being accessories to child abuse. But that will never happen because none of those who knew would testify against each other.
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