Archbishop Timothy Dolan, who is now head of the New York diocese, attempted to hide $55 million of funds in the Milwaukee diocese from sexual abuse victims when he was head of that diocese several years ago. He put the money in a trust fund for the care of cemeteries and mausoleums. Then the diocese declared bankruptcy.
When sexual abuse victims went after that money during bankruptcy hearings, the Milwaukee archdiocese claimed they had a religious freedom right not to hand that money over to the victims, and the lower court judge agreed to the Catholic Church’s claim in 2013. When the victims appealed to a panel of the U.S. Court of Appeals for the Seventh Circuit, the appellate court reversed the decision of the lower court. The Catholic Church’s religious freedom cover has been stripped for now, giving them no excuse to dodge responsibility for the 45 Milwaukee priests who are accused of sexual abuse.
Although the church argued they were fulfilling the religious objectors caveat specified in a Supreme Court decision for debtors and creditors, the appeals court ruled that the church’s stance ‘“would favor a dishonest debtor at the creditors’ expense,” by preventing courts from inquiring into whether a religious entity made a fraudulent transfer in order to dodge its debts. “This would undermine the compelling interest of the Code by allowing a debtor who has made preferential, fraudulent and avoidable transfers to intentionally harm its creditors.”’ Furthermore, the court held the opinion that ‘[i]f an exemption to the Code was created in the name of religious beliefs, we can envision scenarios in which individuals would join religious sects to circumvent the Code, all in the name of religion, and gain an ‘economic advantage over’ their secular competitors.”’
The archdiocese can still appeal this decision to the U.S. Supreme Court if they choose, but they haven’t given any indication yet as to what they will do.
Source: Ian Millhiser, Catholic Church Claims It Can Refuse To Pay Victims Of Sex Abuse Because Of Religious Freedom, ThinkProgress.org, March 11, 2015.