SAN DIEGO — A lawsuit was announced Wednesday alleging the Roman Catholic Diocese of San Diego fraudulently transferred real estate to dummy corporations in order to avoid paying out legal settlements to hundreds of victims of childhood sexual abuse.
The suit alleges that due to the impending passage of a bill that extended the statute of limitations for alleged sex abuse victims to file lawsuits, the diocese transferred at least 291 real estate parcels to its parishes in a bid to conceal assets. The suit, which seeks to undo those transfers, states the total assessed value of the transferred property exceeds $450 million.
The lawsuit follows an announcement from the diocese earlier in February that "the staggering legal costs" of hundreds of sex abuse lawsuits it faces could force it to file for bankruptcy.
Earlier this month, Cardinal Robert McElroy wrote in a letter to parishioners that most of the diocese's assets were "depleted" due to settling abuse claims. With hundreds of new lawsuits in the pipeline, the diocese may look to bankruptcy as an avenue to compensate victims, he wrote.
McElroy's letter states, "Bankruptcy would provide a pathway for ensuring that the assets of the diocese will be used equitably to compensate all victims of sexual abuse, while continuing the ministries of the church for faith formation, pastoral life and outreach to the poor and the marginalized."
During a Wednesday news conference, attorney Irwin Zalkin alleged the diocese made false claims regarding the state of its assets.
"This diocese and its parishes have engaged in a conspiratorial enterprise to defraud child abuse victims and to deny them the justice they deserve," Zalkin said.
Representatives from the Diocese of San Diego did not immediately respond for comment regarding the lawsuit.
The lawsuit also alleges Assembly Bill 218's passage prompted the diocese to enter into an "Independent Compensation Fund," which provides settlements to victims whose claims first must be approved by a claim evaluator. The suit alleges those victims would have been eligible to file lawsuits due to AB 218, but instead were coaxed into submitting claims through the Independent Compensation Fund and settled "for pennies on the dollar."
Zalkin said, "They have developed a PR spin on how they're concerned about victims and they want to do the right thing by victims, but at the end of the day, it's all about the money and protecting their assets, protecting their brand, over protecting the safety and welfare of children."
In a statement regarding the lawsuit announcement, Kevin Eckery, Communications Director for the Catholic Diocese of San Diego said:
“Since the founding of the Diocese of San Diego in 1936, under canon law the assets of each parish have been separate and independent from the Diocese.
Over 10 years ago, long before Assembly Bill 218 was introduced, the Diocese began the process of formalizing in civil law the separate legal status of each parish and its assets. This included recording proper legal title for each parish to its own real estate.
The Diocese has a profound obligation and moral duty to use its own assets to equitably compensate survivors. As Cardinal McElroy said in his recent letter announcing that bankruptcy was under consideration: ‘The sexual abuse of minors by priests and the way it was handled in the life of the Church constitute the greatest sin of our Church in the last century. We must and will continue to protect minors with even deeper vigor, provide healing resources to those who have been abused, and use our Diocesan assets to compensate those who were victimized. And we will never forget the harm that we have done.’”
Back in 2007, the Catholic Diocese of San Diego filed for bankruptcy in the face of 144 sex abuse claims. A federal judge ultimately dismissed that bankruptcy case, though, after a $198 million settlement was reached.
WATCH: Roman Catholic Diocese sends out letter from Bishop amid possibility of bankruptcy: