Priest Nursing Home and High Schools Among At-Risk Assets in Diocese of Harrisburg Bankruptcy | News
A federal judge has found that there are enough claims of alleged fraud against the Roman Catholic Diocese of Harrisburg and has ruled that attorneys representing survivors of sexual abuse can seek judgment to have approximately $95 million transferred. assets that the diocese transferred behind two different trusts transferred to its bankruptcy estate.
According to Chief Bankruptcy Judge Henry W. Van Eck’s Feb. 17 ruling, the assets include $50 million in real estate such as the diocesan campus, bishop’s residence and a nursing home for priests, all in Harrisburg, as well as eight cemeteries including All Saints. Cemetery in Elysburg and seven secondary schools including Our Lady of Lourdes Regional in Coal Township.
$45 million worth of furniture and appliances, cash and securities, religious artifacts and objects, vehicles, notes, records and books, according to documents filed with the U.S. Court of bankruptcies in the Intermediate District of Pennsylvania, are also at risk of being returned to the field of bankruptcy.
In an unsealed grand jury report in 2018, 45 officials from the Diocese of Harrisburg were identified as the alleged attackers. Many were included in a report released by the church released two weeks before naming 71 priests and seminarians accused in parish records of sexual misconduct with children dating back to the 1940s.
The Diocese of Harrisburg filed for Chapter 11 bankruptcy on February 19, 2020. It opened the trusts on November 13, 2009, as allegations mounted around widespread nationwide sexual abuse within the Catholic Church, according to court records.
Van Eck issued a decision in Federal Court granting a motion to the Official Tort Plaintiffs Committee to pursue fraudulent conveyance claims against the Diocese of Harrisburg. Allegations of the diocese’s attempts to defraud creditors through the trusts were “sufficient”, Van Eck concluded.
On Feb. 18, attorneys representing victims of sexual abuse filed separate new motions asking a federal judge to order that the assets of the trusts be earmarked for the bankruptcy of the diocese, which Van Eck did not do in his decision the day before.
The lawyers are asking the court to declare that the transfers were fraudulent, that the creditors are entitled to the assets and that the trusts are unenforceable.
Lawyers for abuse victims wrote in legal submissions that protecting trust assets has been a strategy pursued by Catholic dioceses in other parts of the United States, including Milwaukee.
As the current pope-appointed bishop, Bishop Ron Gainer is the administrator of each trust for the Diocese of Harrisburg, according to court records. However, Bishop Kevin C. Rhoades was a bishop at the time the trusts were established.
Van Eck’s opinion revealed that the diocese appears to be both the settlor and beneficiary of the trusts, “characteristic of a self-established trust” that would not protect the assets of creditors in this case, according to court records. .
Arguing against the Diocese’s defense, Van Eck concluded that state law permitted an unincorporated religious entity to hold title to property and that the statute of limitations was met because the plaintiffs could not reasonably have known that the assets had been transferred prior to the declaration of bankruptcy.