Bend Bishop Denies 'Shell Game'
Plot to Avoid Big Priest-Abuse Damages
Plaintiffs in Case Involving Now-Dead Priest File Motion to Block Asset Transfer to Local Churches
By Barney Lerten firstname.lastname@example.org
January 22, 2003
January 22 - The bishop of the Bend-based Catholic Diocese of Baker on Wednesday rejected as “outrageous and outlandish” charges by alleged priest-abuse victims that he recently incorporated each of 35 parishes, and now seeks to transfer church assets to them, to avoid liability in a $60 million-plus civil lawsuit.
The Oregon chapter of the Survivors Network of those Abused by Priests (SNAP) has filed a motion to block the church’s asset transfers, now scheduled for Feb. 10, alleging the move is being done fraudulently, due to the pending suit. A hearing on the matter is scheduled for Feb. 3 before Deschutes County Circuit Judge Michael Adler.
“I don’t have the ability to pay (such large damage awards) anyway. The assets are simply not there, so it’s not a question of hiding the assets,” said the Most Rev. Robert F. Vasa, bishop for the past three years of the nearly 67,000-square-mile Diocese of Baker (http://dioceseofbaker.org/), which marks its 100th anniversary this summer.
A total of 16 plaintiffs have joined in a lawsuit filed against the diocese in December 2001 and amended last summer to add a dozen victims. They allege that a former Eastern Oregon priest, the Rev. David Hazen, molested them between the late 1950s and late 1970s. Hazen, who died 20 years ago, served in at least a dozen parishes over a career that spanned almost 30 years. Each plaintiff is seeking $3.8 million in damages.
Bill Crane of Portland, Oregon coordinator of SNAP (http://www.survivorsnetwork.org/) and an alleged priest-abuse victim as a child in New Jersey, branded Vasa’s recent actions involving diocese assets as illegal. He claimed they “appear to be an obvious attempt to avoid civil accountability and the potential of compensating clergy sexual abuse victims for the church’s involvement in covering up the abuse.”
According to documents provided by the organization, Hazen confessed to abuse in 1959, but the diocese failed to warn families or remove the priest from contact with children. As a result, the alleged victims say, Hazen subsequently abused at least 16 children in Pendleton, Klamath Falls and the Portland area.
“The Diocese of Baker is engaged in the revictimization of dozens of children who not only suffered sexual abuse, but who were the victims of an obvious cover-up by the hierarchy that led to even more abuse,” Crane claimed. “Now, they have started an illegal shell game that is nothing more than another pursuit by a Catholic bishop to sidestep accountability for the sexual abuse of children by priests.”
Crane noted that Vasa recently was elected to the U.S. Conference of Catholic Bishops’ ad-hoc committee on sexual abuse. “So it is particularly disturbing that he is clearly violating the spirit of the Dallas Charter to promote healing and well-being for victims and their families. In addition, the Baker Diocese would be slamming the courthouse doors shut on all the victims that have yet to come forward.”
“We would expect a decision like this to come from the leaders of Enron and not from the spiritual leaders of the Catholic church,” the group’s coordinator said. “Decisions like Bishop Vasa’s are further examples of embracing scandal, rather than reform.”
David Clohessy of St. Louis, the national director of SNAP, claimed, “The promises and assurances every bishop has made to handle the sexual abuse crisis better ring hollow in the face of this deceptive legal move … (which) like premature talk of bankruptcy in Boston will ultimately
They have started an illegal shell game that is nothing more than another pursuit by a Catholic bishop to sidestep accountability for the sexual abuse of children by priests.
Coordinator of Portland group representing priest abuse victims
backfire, and further erode the trust devout Catholics once had in their bishops.”
Bishop says structural change not ‘underhanded’
Vasa said the plaintiffs’ and group’s allegations and their move to block the assets transfer “comes as no surprise.” But he insisted he simply was seeking to conform the local diocese structure to that used in much of the country, and which, in his view, more closely follows the church’s intentions.
“They are so outrageous and outlandish,” Vasa said of the charges. “I have not said a single unkind thing about the plaintiffs.”
“We didn’t do this (change) in an underhanded sort of way,” the bishop said, noting that he had been contemplating such a revision of the diocese organization since he first arrived in Bend from Nebraska in late 1999 – more than a year before the legal action was filed.
“One of the first things I asked our attorney … was, ‘How is our diocese incorporated?’” Vasa said. “I come from a place where the parish is incorporated individually. The (church’s) Code of Canon Law indicates that the property that is owned by the parish belongs to that parish. And you look at any local church that takes contributions, they write their check to ‘St. Patrick’s Catholic Church.’ They pay the property insurance. They pay all the maintenance on the particular building. They are solely responsible for the upkeep of that building.”
“The difficulty in Oregon is, we were incorporated as ‘incorporated sole,’” he said. “I, as bishop, legally, officially hold title to that property. This has been a discussion that has been going on among diocesan attorneys for 20 or 30 years.”
“Let’s say our pastor, in a parish clear across the state, needs a new roof, and wants to enter into a contract with a roofing contractor,” Vasa explained. “Then he writes to me, sends the contract to me, to negotiate. I’m not there. I don’t know what the bids are.” Under the previous system, the priest, as “administrator of that parish, couldn’t perform any legal functions,” the bishop said, adding, “This is foolish.”
Since 1985, 29 Catholic clergy members – 16 of whom have died – have been accused in lawsuits of sexually abusing children in Oregon. A 1999 Oregon Supreme Court ruling has made it easier to sue churches in sex abuse cases, resulting in lawsuits that in total demand almost $380 million in compensatory damages on behalf of more than 100 plaintiffs.
The Portland archdiocese has settled with at least 32 plaintiffs since 2000, The Oregonian reported, and earlier court records for the late 1980s showed the archdiocese paid almost $500,000 each to settle two priest-abuse claims.
Bishop says suit delayed, not hastened changes
Vasa said he has copies of letters to different diocesan attorneys which confirm his intention to transfer assets to the individual parishes arose many months before the Hazen lawsuit was filed.
“As a matter of fact, I have consulted with our attorney, since the lawsuits were pending, and he’s said, ‘Let’s delay this,’” Vasa recalled. “This action is in no way stimulated by the lawsuits.”
The bishop pointed out one example of the problem he seeks
(The allegations) are so outrageous and outlandish. ... We didn’t do this in an underhanded sort of way.
The Most Rev. Robert Vasa
Bishop of the Diocese of Baker
to rectify: A man who wished to donate $100,000 to his local parish “walked away from that gift” when he learned it would go to the diocese instead, because the parish itself was not a separate legal entity.
Despite the added attention regarding the pending lawsuit, and possible delay in the assets transfer, Vasa said he was glad a hearing would be held on the matter, though he is seeking a delay because of a long-scheduled trip.
“I would love a legal opinion: Am I empowered, as president of the diocese corporation, to confiscate property and gifts given by parishioners, expressly for the use by churches, to be given over in a court settlement?” he said.
“It’s sort of like if you had a friend who came and parked a car in your garage,” Vasa said. “Then the Internal Revenue Service comes and says, ‘Gosh, you owe back taxes,’ and they confiscate the friend’s car. They say, ‘It’s on your property – it’s part of your assets.’ That’s what we’ve told people in the diocese for 100 years: Your gifts go to the parish, although legally, technically, they are owned by the diocese.”
“I don’t have a $50 million endowment fund that I can just tap into and pay millions of dollars, to pay for anyone who comes forward, claiming to be abused,” the bishop said. “I have a stewardship, an obligation to all the parishioners of the diocese who have given donations in good faith, for the spread of the Gospel.”
“If I don’t have the assets, I don’t know what the alternatives are,” Vasa said. “The alternatives are to slam the door on every church in the diocese, and tell the parishioners, ‘You no longer have a place to worship. Everything you thought you were giving for specific purposes has been a lie.”
“I have to stand in the breach,” the bishop said, “and say, ‘I want to be sympathetic to those who can manifest some proof that they have been abused, more than just, ‘I say I was – give me $1 million’ Even if I had a million dollars, the payments that are made are done legitimately.”
“It’s unfortunate that this lawsuit is commingled with this,” he said. “If the lawsuits hadn’t started in the middle of 2000, I would have done this a long time ago. I wanted to avoid any semblance of hiding assets, because that’s not what it’s all about.”
“It’s a state law issue: How do I verify that I am accountable to the donors for their gifts, in the fashion demanded by the parish and by state law?” Vasa said. “I’m making sure that every parishioner of the diocese doesn’t become the victim of the ruthless confiscation of their property. It is not a desire to defraud.”
Plaintiffs claim diocese property worth $19 million-plus
In a motion filed last week, seeking an injunction to block the move, plaintiffs’ attorney David Slader of Portland claimed the transfer of diocese property to the new parish corporations would violate the Fraudulent Transfers Act.
Slader said that while the diocese has claimed assets of only $2 million, “a search of real property records revealed property with a tax-assessed value of in excess of $19 million. … If the diocese succeeds in transferring to these new corporations all of its property used for parish
As a practical matter, it is not the diocese’s money. The assets don’t belong to the diocese.
Attorney for Diocese of Baker
business, it will effectively divest itself of all but a tiny percentage of its assets, rendering it ‘insolvent.’”
“By any of the criteria … the diocese’s intended transfer of property to the new parish corporations would be fraudulent, for it would convert a multi-million dollar corporation into an empty shell.”
As for the possibility of insurance paying for settlements or such large damage awards, Greg Lynch, attorney for the Baker diocese, said, “Some insurance carriers have denied coverage, and there’s another lawsuit that’s going to be filed. It’s an absolute mess.”
Still, Lynch said the diocese “will be ready to respond” to the allegations at the upcoming hearing.
“As a practical matter, it is not the diocese’s money,” the lawyer said. “The assets don’t belong to the diocese. When you put it in the context of an (IRS code) 501 (c ) 3 nonprofit corporation, when people make charitable contributions to charitable entities, the money has to go to the specific purposes of the contribution – otherwise, it’s a violation of federal law.”
“The bishop tells me it’s a Northwest phenomenon for the diocese to hold the assets, more or less as a trustee for various parishes in the diocese,” Lynch said. “All throughout the Midwest, the East Coast, each individual parish is the legal owner of the assets of that parish, whether it’s real estate or bank accounts or what have you.”
Abuse issue ‘much bigger than Catholic Church’
Vasa noted that the diocese recently distributed “statutes for the protection of children and young people” to all of its members. He also said he has signed a $30,000 contract with VIRTUS, a program of National Catholic Services for its program, “Protecting God’s Children,” which focuses on education and training of adults on how best to protect children.
“We have instituted a program of doing criminal background checks on every employee,” at a cost of about $50,000 – “a lot of money” for a diocese that claims total unrestricted assets of $500,000, Vasa said.
“To say that I’m not concentrating on protecting kids – I am, to the best of my ability,” the bishop said. “I also recognize that part of my mission is to educate the broader community. In Oregon, last year, there were 9,000 accusations of child sexual abuse. None of those, as far as I know, were done by priests, and yet all of the emphasis, targeting is on priests and bishops. I don’t mind that. Hopefully, it brings to light the severity of the problem. It’s much bigger than the Catholic Church, and many are harmed. If I have to give up all my assets, I can’t do anything.”
“The judge very well may bar me from transferring the property – if so, I’m fine with that,” Vasa said. “Then the next contention is, since the property was donated, essentially, can I (sell) the property to settle lawsuits? Can I legitimately do that? Or what happens when I file bankruptcy?” (Vasa said he’s unaware of any diocese that has taken such a step since the 1930s.)
“Nobody wants to do that,” he said. “When a person mentions it, the (critics) say, ‘Aha, now you’re really hiding assets, through bankruptcy (proceedings). The fact is, I don’t have $60 million.”
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