Abuse Victims Win Right to Sue for $245 Million of Church Assets

The federal judge overseeing the bankruptcy of the Archdiocese of Santa Fe granted a motion to allow lawyers representing a group of victims of clergy abuse to pursue over $245 million of church assets for their clients.

The Archdiocese of Santa Fe, the largest Catholic Church district in New Mexico, filed for bankruptcy in 2018 to deal with a large number of lawsuits filed by abuse victims.

Lawyers for the abuse victims filed a motion in May that accused the Archdiocese of “a massive and fraudulent scheme” to move hundreds of millions of dollars beyond their reach by transferring the assets from its balance sheets to its parishes or into two trusts that hold real estate and financial assets.

The motion seeks permission to file three lawsuits that would undo asset transfer to the parishes and the two trusts. With the ruling by Judge David T. Thuma on Friday, those lawsuits can now go forward.

“This opinion is the first step in recognizing that the church controls the parishes,” lawyer Paul Linnenburger, who represents abuse victims in the case, said in a phone interview Monday. “That has been a large roadblock in resolving this bankruptcy.”

Lawyers for the Archdiocese argued in an objection in June that none of its assets were ever transferred to the parishes or into trusts. The motion filed by victims’ lawyers was full of false allegations and unfounded claims and should be denied, Archdiocese lawyers said in their response.

“The Archdiocese disagrees with and is disappointed with the court’s decision,” said lawyer J. Ford Elsaesser, who represents the Archdiocese in its bankruptcy, in a phone call Monday. “We are still reviewing the decision and considering all options which may include appeal.”

At least six Catholic Church districts in the U.S. have filed bankruptcy this year to deal with lawsuits filed by victims of clergy sexual abuse.