Catholic Diocese of Gallup Becomes Ninth To File For Bankruptcy Protection

Last week (Nov. 12), the Catholic Diocese of Gallup-- which encompasses parts of New Mexico and Arizona-- became the ninth Catholic diocese in the United States to file for Chapter 11 bankruptcy reorganization. As reported by the Albuquerque Journal, the diocese includes a large part of the Navajo Nation, as well as 6 other tribes and pueblos. The day before the filing, the diocese posted a letter (full text) from Bishop Wall reiterating a statement he made in September that bankruptcy reorganization is "the only way to equitably and mercifully deal with the mounting sex abuse claims, still meet our commitment to [parishioners] and continue the outreach mission of the Church." Two separate bankruptcy petitions, along with a motion for joint administration of the two cases, were filed in federal bankruptcy court in New Mexico since the diocese is organized through two separate entities-- a New Mexico corporation sole and an Arizona corporation sole.  The full text of all the legal documents involved are available from the Diocese's website. [Thanks to Douglas Carver for the lead.]

Private Foundation That Funds Milwaukee Archdiocese Is Respondent In Securities Fraud Case Supreme Court Agrees To Review

Yesterday, the U.S. Supreme Court granted certiorari in Halliburton Co. v. Erica P. John Fund, (Docket No. 13-317, cert. granted 11/15/2013). (Order List.) This is the second time the case is before the Supreme Court. (The Court's 2011 opinion was Erica P. John Fund, Inc. v. Halliburton.) Reports on yesterday's decision by the Court to grant review, such as this report by Reuters, all focus on the main issue involved-- whether the Court will back off of the so-called "fraud-on-the-market theory" that makes it easier for securities fraud class actions to be brought in federal court.  What few, if any, media are reporting is that the plaintiff-appellee, the Erica P. John Fund, was previously known as the Archdiocese of Milwaukee Supporting Fund.  In recent years it has donated some $600,000 per year to the Catholic Archdiocese-- which is now in bankruptcy reorganization. Here are excerpts from a somewhat unflattering March 2011 report about the Fund by the Milwaukee Journal-Sentinel:

The nonprofit Erica P. John Fund, which has given millions of dollars to the archdiocese and other organizations over the years, is among a number of revenue sources expected to be scrutinized by creditors in the archdiocese's bankruptcy.

Victims and their attorneys question the timing of the name change in 2009, suggesting it may have been intended to obscure the fund's true purpose - to financially support the archdiocese - and may have been part of a broader effort by the archdiocese to shield its resources from being used for sex abuse claims....

Archdiocese spokesman Jerry Topczewski said the John Fund, as a private foundation, cannot be tapped to pay sex church abuse settlements and that its grants obtained by the archdiocese are restricted to specific uses....

Proceeds from the fund - more specifically, from the sale of a property it donated - were used to pay $450,000 in hush money in 1998 to a man who claimed to have been sexually assaulted by then-Archbishop Rembert Weakland when he was a seminary student years earlier. Weakland, who abruptly retired after the payment became public in 2002, has maintained that the relationship was consensual.

[An Archdiocese spokesman] said the building was donated before Erica John dictated that no family funds could be used to pay sex-abuse settlements. And federal authorities investigated the allocation but found no wrongdoing by the archdiocese because the money had not been diverted from a specific purpose.