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Where's the Money? 

by KEVIN TAYLOR & r & & r & & lt;span class= & quot;dropcap & quot; & A & lt;/span & new era of "transparency and openness" hailed by Spokane's Catholic leaders last month appears to be much like the old one in which the phrase was spoken more than practiced.





Only this time the limits on openness are court-ordered.





It's an imperfect outcome after decades of scandal and more than two years of lurching through federal bankruptcy court to seek justice and compensation for people who were, as children, betrayed and raped by clergy.





But then, bankruptcy court is an imperfect tool to deal with cases of child sex abuse, those involved in the process say.





"All we ever wanted was to be heard," says Mark Mains, one of the first to bring charges of sexual abuse against the diocese.





He and others express frustration and dismay that simple goals often morphed, or that clear expectations became nuanced during the process that ended with U.S. Bankruptcy Judge Patricia Williams' approval of a $48 million settlement plan.





Mains and his brothers were only days away from a civil trial to address sex-abuse complaints against former Spokane Catholic priest Pat O'Donnell (who is now reportedly in hiding) when Bishop William Skylstad filed for Chapter 11 bankruptcy protection late in 2004.





As a result, victims seeking justice through lawsuits became creditors seeking compensation.





"We didn't ask for bankruptcy," Mains says.





All sides had to adjust to the many faceted bankruptcy - which, in varying degrees, set parishes against the diocese, survivors who openly revealed their sexual abuse against those who had not, charities against the bishop against the claimants against priests worrying about pensions.





"In most Chapter 11 bankruptcies -- like Northwest Airlines or Delta -- it's usually one hedge fund arguing with another hedge fund," says Ford Elsaesser, a Sandpoint attorney with national expertise in bankruptcy. Elsaesser represented the Association of Parishes pro bono. "In this one, every decision [Judge Patricia Williams] made had direct impact on real human beings in the Inland Northwest -- that's unique in the bankruptcy world."





"In some cases, our legal system is ill-equipped to handle situations like this," Spokane attorney Shaun Cross, who represents the diocese, told the online publication The Daily Deal recently. "Having said this, Chapter 11 affords the best possible means of achieving outcome and closure. ... Chapter 11 works by bringing everyone to the same place. ... Looking back, we couldn't have done without it."





"It is unique and different," says James Stang, a Los Angeles bankruptcy attorney who told The Daily Deal that bankruptcy may have been unnecessary "if the diocese was willing to make the sacrifices it is making now."





Stang represented the Tort Litigants Committee, those survivors of sexual abuse -- like Mains -- who had already come forward with claims against the diocese before it sought bankruptcy protection.





Stang told The Inlander the Spokane diocese appeared to have the assets to settle without bankruptcy.





"I want to put this the right way: Our feeling was the parish properties and the assets belonging to the 'related entities' -- that is, the cemeteries, Morning Star Boys Ranch and Catholic Charities -- were enough to cover a fair settlement number," Stang says.





"We basically said this is all one big enterprise," he adds. "But if you look at diocesan financial statements, Morning Star wasn't there. You never found cemetery cash or charity cash. I don't want to say there was anything nefarious, but you do have to think of this as a bigger institution."





& lt;span class= & quot;dropcap & quot; & A & lt;/span & t the start of bankruptcy, the diocese was claiming $11.5 million in liquid assets against an estimated $75 million in lawsuits.





Through bankruptcy, the diocese was able to obtain $6 million towards the settlement from related arms such as Morning Star, the cemeteries and Catholic Charities, Stang says.





In addition, each of the parishes is now incorporating and gaining title to its properties while pledging to raise $10 million towards the settlement.


Incorporation changes the previously vague structure of being held "in trust" by the bishop under church law, not civil law, and makes it easier to attract loans if needed to help raise the $10 million, says Spokane attorney Robert Hailey, who is helping spearhead the parish fund-raising.





Maybe, but as Stang told The Daily Deal, "bankruptcy makes you make the hard decisions."





People who had been sexually abused in the church but who had kept it hidden, had to make hard decisions, too.





When the diocese, after filing for Chapter 11, advertised nationally to try to get a fuller sense of how many claimants were out there, a second group of sex abuse victims, the Tort Claimants Committee, came forward.





This more than doubled the pool of claimants to nearly 200. Currently the diocese has agreed to settle 180 claims.





A May 5 article in the Spokesman-Review challenges the secrecy of details about payouts to victims and shielding identities of as many as 30 priests who have been accused of abuse.





Cross, angry with a story he calls unfair, says the confidentiality protocols came at the request of the Tort Claimants Committee.





"These were people already reticent about coming forward," Cross says. The privacy concerns were aired and revised during discussion by all parties to the bankruptcy more than a year ago, he says.





An attorney who is an advocate for victims was baffled by the story. "I didn't see any news peg to the big banner headline ... It's not like they just learned about it last week."





Attorneys for the diocese, the tort litigants, the tort claimants and a future claims committee are expected to file motions with the bankruptcy court objecting to the newspaper's motion to gain access to confidential documents.





& lt;span class= & quot;dropcap & quot; & B & lt;/span & ut the diocese is also being less than transparent in other matters. Skylstad, who is obligated to raise $6 million for the office of the bishop, has refused to specify where he may seek the money. In a press conference last month after Judge Williams approved the reorganization plan, Skylstad said only that he would seek assistance from "Catholic-syndicated entities" and refused to explain what those were.





Elsaesser, the Sandpoint attorney representing the parishes, offered this observation: "When (Hurricane) Katrina hit, all the dioceses in the country, including Spokane, chipped in to help. You might ask questions on that very topic."





During an interview last week, Skylstad would only say Catholic-syndicated entities, "... do not exclude dioceses but there are other entities as well. There is quite a diverse group of Catholic entities that might be able to help."





Pressed several times, he says, "I prefer to leave it general. We don't want to put potential donors on the spot."





Catholics in the 81 parishes across Eastern Washington are seeking to raise their obligation of $10 million. The massive fund-raising is a grass-roots effort, says Spokane attorney Robert Hailey.





"This is quite different. In the past the campaigns have been organized by the diocese and have been run by professional fundraisers," Hailey says. "Each parish is essentially running its own campaign."





All through the bankruptcy, church officials have called this a poor diocese. Early in the process, claimants were told not only was there no money but no savior on the horizon to lend money.





Some, like Mains, are dismayed. "It's all tactics. For five years they have been telling us they have no money. One of the hurdles to get out of bankruptcy is a feasibility report so they get up and say, 'Hey, it's a slam-dunk. People are lining up to give us money.' You can't believe any of it."





Hailey says the reorganization of the parishes changed the paradigm. Without incorporation and without clear title to properties, no parish was likely to get a loan, he says.





The question of ownership in a diocese with scant resources created tension between Catholics afraid of losing churches or schools, sex abuse victims making claims and the diocese.





Yet, Hailey says, there is "surprisingly little" resistance to the fund-raising. "You have a few folks who are not in favor of the bankruptcy, who are not in favor of paying a dime to victims and who wanted the diocese to fight everything," he adds. "The lion's share of people in this diocese believe it's time to close this chapter in the history of this diocese."





The $10 million approximates the amount raised in a year of Sunday collections, and it matches the amount raised a few years ago for a new seminary, Hailey says.





Both Hailey and Skylstad were asked if the $8 million or $10 million raised for the seminary should have been considered for the settlement. Both said that would have gone against the intent of donors and that tracking donors down to petition for a change would have been time consuming.





Some Catholics have told The Inlander such an effort would have shown a specific sacrifice on behalf of clergy, a symbol that church leaders and not just parishioners are bearing the cross.





Hailey says safeguarding money for a new seminary is symbolic of a still-vital diocese that seeks to train new priests who will not violate the trust of their congregations.
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