Diocese of Oakland funneled millions into fund to avoid abuse payout, filing claims

CNA Staff, Dec 26, 2024 / 11:35 am

A bankruptcy court filing this month alleges that the Diocese of Oakland, California, poured tens of millions of dollars into a diocesan fund in order to avoid a payout to survivors of clergy sexual abuse. 

A Dec. 11 filing by attorneys on behalf of a committee of abuse survivors, lodged in U.S. Bankruptcy Court, claims the diocese “perpetrated a fraudulent scheme to funnel substantial assets away from what would soon become its bankruptcy estate” into the coffers of a “non-debtor alter ego,” the Oakland Parochial Fund (OPF).

In the months leading up to its bankruptcy filings, the claim alleges, the diocese “entered into a series of synthetic management and services agreements” with the fund, after which it “transferred approximately $106 million in assets” to the fund before borrowing $35 million back from it. 

Prior to those transactions, the fund “held no cash or investments and conducted no business of any kind,” the filing says. 

The filing, which is heavily redacted at times, claims the money poured into the parochial fund “included approximately $92 million in cash and investments and $14 million in net loans receivable.”

The transfers were “fraudulent under California state law,” the filing alleges, claiming it is “beyond dispute that all corporate property of OPF is operated, supervised, or controlled by the diocese.”

It further alleges that the diocese itself “is attempting to use its bankruptcy filing to obtain a litigation advantage over survivors of sexual abuse and to place the assets it owns and controls beyond the reach of those claimants.” 

The document requests that the bankruptcy court either disallow the loan arrangement between the diocese and the fund or else subject the funds to the terms of the bankruptcy proceedings. 

The Oakland Diocese did not immediately respond to a request for comment on Thursday regarding the filing. 

The diocese said last month that it would pay up to $200 million to settle hundreds of abuse claims filed against it. 

A proposal filed by the diocese in bankruptcy court would create a survivors’ trust “to provide compensation of between approximately $160 million and $198 million or more for approximately 345 claims.”

Just over $100 million of those funds were projected to come from the diocese directly, the announcement said, while up to $81 million would come from property in the diocesan real estate portfolio.