Abuse payments sap diocese fund, putting churches at risk

The Catholic Diocese of Spokane is broaching a consequence of its bankruptcy once thought unthinkable – the sale of churches to pay victims of clergy sex abuse.

New claims of abuse that occurred decades ago continue to be filed, approved and paid, draining a special $1 million fund that now needs replenishing as part of the legal settlement the diocese signed to end its bankruptcy.

If the diocese and a select group of parishes fail to raise the necessary new funds, the trustee in charge of carrying out the bankruptcy settlement is duty-bound to begin the foreclosure process to collect the money.

The scenario poses an immediate challenge for incoming Bishop Blase Cupich, who will be installed Friday.

He has been apprised of what is a rapidly evolving set of circumstances as the diocese wrestles with how to satisfy its financial obligations, while at the same time arguing that many of the new claims are bogus and should not have to be paid.

The diocese has filed a series of appeals in federal court with the aim of rejecting the claims and stopping the payments – especially those relating to the Morning Star Boys’ Ranch.

Many of the claims being paid accuse the ranch’s former director and retired priest the Rev. Joseph Weitensteiner of abuse. The ranch and Weitensteiner deny the multiple accusations.

Weitensteiner remains in good standing with the diocese, which has not found the allegations to be credible. And a jury this year ruled in favor of the ranch and Weitensteiner, rejecting the first of what could be more than a dozen abuse trials.

As the multitude of issues wends through various courts, all sides note that the diocese is struggling to make the finances work.

“These are very trying times,” said John Munding, an attorney who joined the diocese legal team in the aftermath of bankruptcy.

“The reality is the funds have been depleted. The reality is the diocese is obligated to replenish those funds. The reality is this is something that is going to have to be addressed. Soon,” he said.

He said returning to parishioners for more money may not work. Church members have already contributed $10 million to the initial $48 million settlement designed to pay about 180 sex abuse claims. Insurers contributed to the settlement, and the diocese sold property including its chancery, farmland and even its bishop’s residence.

Parishioners also agreed to put up four of their larger properties, including Our Lady of Lourdes Cathedral in downtown Spokane, as collateral to ensure that new abuse claims would be paid. Other parishes listed as collateral in this first grouping are Assumption of the Blessed Virgin Mary, along Indian Trail Road; St. Augustine, on the South Hill; and St. Mary, in Spokane Valley.

A second group of Spokane parishes also are listed as collateral: St. Patrick, St. Thomas More, Our Lady of Fatima, St. Charles, St. Ann, Sacred Heart, St. John Vianney, St. Peter, St. Aloysius, Mary Queen, St. Joseph, St. Paschal, St. Anthony, and St. Francis Xavier. If it came to foreclosure, the process gives the diocese and the parishes the right to decide within the second grouping which six would be sold first.

Gloria Nagler, an attorney from Seattle whom all sides in the bankruptcy agreed to appoint as trustee, has called for a bankruptcy court hearing next week to clarify some issues.

She notified the diocese in late July of the money shortage and the need to replenish the fund.

“I have yet to hear from them how they plan to proceed,” she said. She declined to elaborate.

Munding said the diocese is evaluating its options.

“Unfortunately one of the realities may be that the funds can’t be raised,” he said.