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Abuse survivors call trusts ‘fraudulent’

Santa Fe Trusts ‘Fraudulent’

Title: Abuse survivors call trusts ‘fraudulent’
Author: Colleen Heild
Publisher: Albuquerque Journal
Date: 05SEP2020

Survivors of clergy sexual abuse are seeking permission from a federal bankruptcy judge to file lawsuits alleging the Archdiocese of Santa Fe engaged in a “massive and fraudulent” scheme to divert up to $246 million in assets to avoid bigger payouts to hundreds of victims.

The request comes as efforts to mediate a resolution have stalled in the 18-month-old Chapter 11 bankruptcy reorganization of the state’s largest Catholic archdiocese.

“Rather than fulfilling its fiduciary duty to maximize the assets of the estate for the benefit of creditors, the Archdiocese of Santa Fe’s primary goal is to protect the asset protection scheme it designed and implemented to put its assets out of the reach of the Survivors,” victims’ lawyers said in a court filing.

Archdiocese attorneys deny any fraud in setting up two trusts in 2013 to hold millions of dollars in real estate and cash. They say the trusts support the “religious, charitable and educational purposes” of its 94 parishes, the archdiocese and related entities.

The archdiocese calls the fraud allegations “unfounded” and says millions would be needlessly spent on attorney fees if the claimants were allowed to file the lawsuits. Because the case is in Bankruptcy Court, Judge David T. Thuma would have to allow the lawsuits to be filed.

Lawyers for parishes say that could be devastating.

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