Federal bankruptcy judge orders external audit of San Diego diocese accounts

San Diego, Calif., Apr 13, 2007 / 08:49 am

A federal bankruptcy judge ordered an external audit of the Diocese of San Diego amid accusations Church leaders are trying to hide assets to avoid payment to sex abuse victims, reported The Associated Press.

Judge Louise DeCarl Adler threatened the diocese on Monday with contempt for misrepresenting facts and possibly violating bankruptcy laws. She criticized Church attorneys for failing to include 770 parish accounts in bankruptcy documents.

The diocese sought bankruptcy protection six weeks ago amid lawsuits, filed by more than 140 people who accuse priests of sexual abuse. Attorneys for the alleged victims have estimated that a fair settlement would total about $200 million. In March, the diocese proposed a $95 million settlement.

In an order, Adler cited a March 29 letter sent by a diocese parish organization to pastors. The letter urged them to get new taxpayer identification numbers and to transfer funds to new accounts.

The judge had said any post-bankruptcy transfers between the diocese and parishes outside of normal cash operations violate laws against shifting the diocese's assets while the bankruptcy case is pending. She said any transfers require court approval.

Adler said diocese attorneys Susan Boswell, Jeffry Davis and Victor Vilaplana appear to have "conspired with parishes" to create new bank accounts separate from the diocese.

Boswell apologized and said she had misinterpreted the judge's comments at a March 1 hearing concerning how the parishes should go about protecting their cash flow through the bankruptcy process.

Boswell agreed to file amended statements with the court reflecting parish accounts operating under the diocese's taxpayer identification number and to cooperate with an independent audit.