Dioceses Accused of Moving Assets to Avoid Paying Sex-Abuse Claims

The Roman Catholic bishop of Stockton has transferred title to the Cathedral of the Annunciation and 41 other church properties, triggering a court fight over whether people who allege they were abused by priests should be able to claim the land as damages.

Hayward, Calif., lawyer Rick Simons accused the diocese Tuesday of “shuffling and hiding assets the way they shuffled and hid molester priests.”

Attorney Paul Balestracci, who represents the Diocese of Stockton, denied the allegation. But he acknowledged in an interview that the church considered its potential liability in the four lawsuits then pending against it when the transfers were made.

The bishop still controls various church assets, including the chancery and insurance policies, Balestracci said.

Elsewhere, lawyers are looking into the transfer of $30 million worth of property within the Diocese of San Diego, and the creation of at least two new corporations within the Diocese of Orange.

“We are concerned that what we see in Stockton might be part of a systemic effort throughout the state to avoid the claims of the victims by transferring, obscuring or failing to disclose assets,” said Venus Soltan, a Costa Mesa lawyer whose clients are suing dioceses throughout the state for allegedly failing to protect them from predatory priests.

The review of church property in Northern California was spurred by last month’s bankruptcy of the Archdiocese of Portland, Ore., Simons said.

Church lawyers there have argued in bankruptcy court that local parishes and their property, though not separate corporations, should not be considered assets of the larger diocese.

In the neighboring Diocese of Baker, Ore., the bishop -- faced with a growing number of sex-abuse lawsuits -- also established separate corporations for each parish.

A judge has been asked to decide if those corporations were legitimately established or if the bishop was simply -- and improperly -- trying to avoid paying sex-abuse victims, according to attorney Kelly Clark, who represents several people who say they were victims in Oregon.

The Stockton Diocese transferred land into at least 23 newly created corporations Dec. 20, 2002, just days before a California law went into effect allowing older victims of sexual abuse by priests to sue the church, according to the plaintiffs’ motion filed in Alameda County Superior Court.

Simons has asked Judge Ronald Sabraw to also allow plaintiffs to amend their complaints to sue the Stockton Diocese for allegedly moving the property fraudulently.

The San Diego property transfers involve a corporation established to build parochial high schools in the area.

A representative of that diocese did not return calls Tuesday.

“Our position is that they should not have transferred property to a new corporation and changed title on it with these lawsuits and threatened insolvency on the part of the diocese,” said Andrea Leavitt of San Diego, who represents people suing the church.

Restructuring churches into separate corporations “recognizes the way parishes have operated historically,” Balestracci said. The new law, he said, was “a factor” in the transfers, but plans to formalize the changes had been around “long before this particular law was even proposed.”