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By MICHELE M. BETTI | b&a opinions | http://bettiandassociates.com

Attempting to shield assets, Archbishop of Milwaukee Timothy Dolan and the Vatican created a cemetery trust before the Archdiocese declared bankruptcy, and then tried to argue the First Amendment protected this fraudulent transfer.

The 7th Circuit overturned a previous decision by controversial Federal Court Judge Rudolph Randa in Milwaukee.  Judge Randa had barred any examination of Dolan’s transfer of the money into a new cemetery trust before the Archdiocese of Milwaukee declared bankruptcy.

In a major victory for Milwaukee clergy abuse survivors, 7th Circuit Federal Court ruled against New York’s Cardinal Timothy Dolan’s transfer of $58 million dollars stating that a $58 million dollar cemetery trust while he was Archbishop of Milwaukee is not protected by the first amendment.

The 7th Circuit stated in its opinion:

“We do not understand the Archdiocese to be arguing the transfer of the Funds is a religious matter that this court cannot adjudicate, nor could it make that argument because those cases relate only to intrachurch disputes.  Here, we have what was alleged to be a fraudulent or otherwise avoidable transfer, and the court need not interpret any religious law or principles to make that determination, nor must it examine a decision of a religious organization or “tribunal” on whether or not the transfer was fraudulent.”

In a letter by Dolan to the Vatican seeking permission from the Pope to create the trust, Dolan states that, in part, the trust was being created in order to prevent United States courts from compensating victims of clergy sex crimes, which is evidence the trust was created for purposes of fraud.  Because of the fraudulent transfer, the $58 million would be put back into the Archdiocese’s coffers and used to pay creditors in the current bankruptcy.  This fraud also raises questions of criminal misconduct.

The 7th Circuit stated:

“Moreover, it is unclear whether the intrachurch doctrine is even applicable where fraud is alleged:  [T]his Court never has suggested that those [“intrachurch”] constraints similarly apply outside the context of such intraorganization disputes. … Such considerations are not applicable to purely secular disputes between third parties and a particular defendant, albeit a religious affiliated organization, in which fraud, breach of contract, and statutory violations are alleged.”

Because Dolan sought permission from the Vatican and then Pope Benedict XVI to create the trust, the Vatican, and not the Archdiocese of Milwaukee is ultimately in charge of local church finances, which has been contended by lawyers who represent child sexual abuse survivors for years.

The ruling by the 7th Circuit would allow the creditors committee to take the depositions of Dolan and other top Vatican officials including Pope Benedict himself opening the door to the long contested relationship between local bishops and the Vatican, and the control the Vatican has over Bishops.

Filing for protection under the bankruptcy code has always been a tactic of the Vatican and the Bishops to shield assets of the Church from victims.  The ruling by the 7th Circuit opens up billions of dollars of church money.  No longer can the Church turn to the bankruptcy court to hide its assets from creditors.

Read the full opinion here:  http://bettiandassociates.com/wp-content/uploads/2015/03/7th-Circuit-rules-against-Cardinal-Dolans-transfer-of-58-million-dollars.pdf

Copyright 2015, b&a opinions.

–Michele M. Betti of the Law Offices Of Betti & Associates is an advocate for survivors of childhood sexual abuse.