Tuesday, August 14, 2007

San Diego Diocese Risks Dismissal of Its Bankruptcy Case After Misrepresentations

In the Chapter 11 bankruptcy proceedings of the Diocese of San Diego, a California federal district judge on Friday issued an order described by the San Diego Union-Tribune as "rare and blistering". In the order (full text), Judge Louise DeCarl Adler orders the parties to show cause why the bankruptcy proceedings should not be dismissed in light of a July 30 report by court-appointed expert R. Todd Neilson. The report concludes that (1) some parishes are hiding assets and not depositing cash with the Diocese, (2) the Diocese has failed to properly account for all its land and fully disclose its bank accounts, (3) the Diocese has reported its assets at assessed valuation instead of fair market value, and (4) the Diocese failed to disclose material facts about its cash management system. Meanwhile, a federal mediator is working this week with the Diocese and attorneys for abuse victims to attempt to reach a settlement in some 150 pending claims. The report was ordered in April after Judge Adler threatened the Diocese with contempt for misrepresentations and shifting of assets. (See prior posting.) [Thanks to Rachel Steamer for the lead.]