Forensic accountant to review Milwaukee Archdiocese finances

A forensic accountant will be hired to review the finances of the Archdiocese of Milwaukee as part of its bankruptcy, and survivors of clergy sex abuse will have more time to file their claims, under an agreement reached Wednesday before U.S. Bankruptcy Judge Susan V. Kelley.

The agreement, hammered out in marathon negotiating sessions that began Friday, gives the creditors committee the go-ahead to hire California-based Berkeley Research Group as a financial adviser. 

Among its duties will be to scrutinize church finances to determine whether the church made fraudulent transfers as a way to shield assets from victims of clergy sex abuse, as at least one victims attorney has suggested.

The archdiocese had objected, saying it was an unnecessary expense. 

But church attorneys dropped their opposition Wednesday after the creditors committee agreed to strictly control costs and submit expenses to the court for review.

"We have to be sensitive to the fees, we absolutely do," Kelley said.

Also Wednesday, the parties agreed to extend the bar date, the deadline for victims to file claims for compensation as part of the bankruptcy, to Feb. 1, five months longer than the Sept. 15 date initially proposed by the church. The deadline for other claimants remains unchanged.

They also agreed on the specifics of an extensive, national advertising campaign to alert victims to the bankruptcy and the deadline for seeking claims. 

As part of the campaign, Archbishop Jerome Listecki will also ask churches and parishes to distribute notices.

The creditors' attorneys reserved the right to seek a later bar date if those churches and parishes decline.

As financial adviser, Berkeley is expected to focus on three main areas: the transfer of $55 million into a cemetery trust, and $75 million out of parish funds, and the creation of the Faith in our Future Fund to hold the proceeds of a $105 million capital campaign - all since 2004, said creditors attorney Jim Stang.

The archdiocese has defended those moves, saying the cemetery trust merely formalized what was always viewed as a trust; that the parish funds were returned to their owner-congregations; and that the Faith in Our Future Trust was created as a separate entity outside the control of the archdiocese.

The archdiocese filed for bankruptcy in January, saying it was the only way to compensate victims and continue the work of the church. 

It has said it has only about $7 million in cash and properties available for settlement; and that the vast majority of church assets, from parishes to trusts, are legally separate and cannot be touched.

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