Bankruptcy court stacks odds in New Orleans church’s favor over abuse claims: ‘I’ve never felt so powerless’

Chapter 11 protection is designed to give an organization time to reorganize its finances to pay its debts but victims of clerical abuse feel frustrated by a lengthy and opaque process

By Jason Berry in New Orleans
Fri 1 Dec 2023 07.00 EST

This is the second installment of a three-part series exploring how the archdiocese of New Orleans’s bankruptcy stands apart from other cases of its kind. The first installment ran on Wednesday 29 November 2023.

In 2020, facing nearly 40 pending clergy sex abuse lawsuits, New Orleans’s Catholic archdiocese took Chapter 11 bankruptcy protection, giving the organization time to sell properties or reorganize assets to negotiate debt payment.

The number of people who have gone to bankruptcy court and file abuse-related claims has since eclipsed 500. A 2021 state law opened a “look-back window” enabling the 500 abuse survivors involved in the church’s bankruptcy case to seek redress without concern for previously existing filing deadlines. The law removed the church’s ability to offer low-ball settlements by arguing those claims are invalid simply for being filed too late, arming survivors with more leverage than they otherwise would have.

The church has released names of less than a third of more than 300 accused abusers, a disproportionately high number for what is the 41st US diocese in terms of size. The vast majority of those clergy, nuns and laypeople have never been criminally prosecuted.

Most of the files are deemed confidential by the bankruptcy judge, Meredith Grabill, though victims’ attorneys have filed a motion – pending for years – to compel the archdiocese to turn over all those records.

The archdiocese of Santa Fe, New Mexico, is the only one among more than 30 organizations of its kind to have gone through Chapter 11 and to release its clerical abuse files publicly as part of a settlement.

Yet, the New Mexico attorney Lisa Ford – who had many clients among the 400 survivors involved in the $128m Santa Fe settlement – said: “I have never felt so powerless as in bankruptcy court.”

The church wants all the relief bankruptcy affords with advantages commercial debtors don’t have
— Lisa Ford

In bankruptcy court, the ultimate tool that a judge has is “to force a liquidation of assets”, Ford said. But Catholic dioceses are non-profits. “You can’t liquidate a non-profit,” Ford added. “The church wants all the relief bankruptcy affords with advantages commercial debtors don’t have.”

Additionally, the archdiocese in New Orleans stands as an antithesis to its Santa Fe counterpart in terms of transparency.

In New Orleans, the Chapter 11 filing has kept most church clergy files secret.

The FBI has been conducting an investigation for more than a year, though how much information it has obtained is unclear.

A priest named Lawrence Hecker, 92, was charged and jailed in September. That was months after the Guardian revealed that Hecker confessed in writing to his church superiors more than 20 years earlier that he had sexually molested or harassed multiple children whom he met while working. He’s awaiting trial.

A few other clergymen have been prosecuted. One lay deacon died while under indictment. But most documents associated with the many abusers who have never been pursued by authorities are shielded by the bankruptcy court.

Bankruptcy opens a slow negotiation. The church pays its lawyers, the bankruptcy counsel and other professional fees. In New Orleans, that’s been more than $25m, about half of that to the archdiocese-hired Jones Walker firm.

James Stang of Los Angeles, a veteran bankruptcy attorney, guides the New Orleans creditors’ committee, reportedly billing $800 an hour. The Jones Walker attorney Mark Mintz, the leader of the church’s expansive legal team, bills $490 hourly.

Plaintiff lawyers such as Richard Trahant, John Denenea and Soren Gisleson, who represent about 80 of the 500 claimants against the church, work on contingency, typically earning between 30% and 40% of what cases finally yield.

So far, with no end to the bankruptcy in sight, that’s been nothing – for either them or their clients.

A cruel, though unintended, irony [is] the focus is on the wellbeing of the institution that covered up child sex abuse
Marci Hamilton

“The bankruptcy system was not established with child sex abuse victims in mind,” attorney Marci Hamilton wrote in 2021 as a co-author for a Norton Journal of Bankruptcy Law article. “Chapter 11, in particular, exists to manage assets for an organization going through difficult times.”

Hamilton, a University of Pennsylvania professor, is founder and CEO of ChildUSA, a thinktank promoting reform of laws on child abuse. She cites “a cruel, though unintended, irony, [that] the focus [of bankruptcy law] is on the wellbeing of the institution that covered up child sex abuse”.

Such a scenario emerged in an 11 October 2022 hearing before Grabill over a New Orleans Times-Picayune newspaper article on a local Catholic high school chaplain who unbeknown to school officials had previously molested a teen girl.

The chaplain, Paul Hart, resigned after Trahant warned the school principal – coincidentally, his cousin – that the clergyman had a stain in his past. The archdiocese ultimately disclosed what Hart had done. It also became clear that the archbishop had assigned him to the school after clearing the priest of abuse on a technicality: the girl fit the church-set definition of an adult at the time of the misconduct.

Nonetheless, the hearing before Grabill focused on “the leak” of information to the press that the judge insisted fell under the bankruptcy’s secrecy order. Grabill mentioned the possible dismissal of four abuse survivors – represented by Trahant, Denenea and Gisleson – from the creditors’ committee negotiating toward a resolution for the bankruptcy.

The four survivors on the committee “have never had their abusers brought to any type of justice”, a creditors’ group attorney, Rick Kuebel, argued, according to a publicly available transcript.

Kuebel added the survivors at that point had also been “serving on this committee for two years without compensation”, attending hours-long video conferences discussing court developments.

“They are frustrated that, unlike other cases, this archdiocese has chosen to be opaque or not transparent with all these various documents,” Kuebel said. “They’re very frustrated that this [leak] has become the focus of the case instead of trying to get [the church] reorganized and get through to” a resolution.

“Yes, I understand it’s a nuclear option,” said Grabill, in a striking turn of phrase. “But I have to protect the process and enforce court orders.”

Protecting the process

Several weeks later, when the committee members gathered at Kuebel’s office for a meeting that the New Orleans archbishop, Gregory Aymond, was supposed to attend to hear their statements, word came that Grabill had chosen “the nuclear option”.

She had removed Trahant, Denenea and Gisleson from involvement with the committee. She had sacked their four client-survivors – while later fining Trahant $400,000, an order he has appealed to the federal fifth circuit court of appeals.

Grabill aborted the survivors’ chance to address Aymond.

One attorney knowledgeable of the proceedings, speaking on background for fear of angering the judge, called the fine “an overreach” that unduly caused the committee a substantial delay.

Many of these bankruptcies deprived victims of their day in court and forced them into the settlement process
— Lindsey D Simon

The Emory University law professor Lindsey D Simon believes the shield that bankruptcy affords parties such as the Sackler family in the controversial opioid mass litigation becomes much stronger when wielded by Catholic dioceses. That reality warps the Chapter 11 laws’ intent, according to Simon.

“Many of these bankruptcies deprived victims of their day in court and forced them into the settlement process,” Simon writes in Bankruptcy Grifters, an article for the Yale Law School Journal.

Simon adds: “What sets the diocese cases apart … is the way they incorporate some of the most destructive practices that set up hurdles and deprive claimants of meaningful protections.”

Saved from coming clean

Some legislatures have been trying to correct the course at least slightly.

Acknowledging that child victims often go decades before confronting the impact of early sexual trauma, lawmakers have sought to prolong deadlines for survivors to initiate civil and criminal action.

California passed a look-back law in 2002 that led to mass settlements five years later. The Los Angeles archdiocese paid the largest settlement on record: $660m for 508 cases.

Religious orders contributed $200m. The archdiocese borrowed $175m from the Allied Irish Bank, which channeled Vatican funds to complete the settlement.

Dan McNevin, who received a 2007 settlement from the Bay Area diocese of Oakland, has been gathering names of clergy offenders as the diocese continues facing additional claims. “Survivors want information so they can reconcile what led to trauma, their personal stories,” McNevin told the Guardian.

“I wanted it thinking I could put together the pieces of what damaged me, and my brother, who cut off his hand” as a result of his abuse.

McNevin said he thought getting the files on his abuser, Father James A Clark, would help him heal and “erase that shame”.

But, as in New Orleans, the Oakland diocese – which is also in bankruptcy – has its documents under a protective seal, even as the diocese’s own self-reported number of child molester clergymen has steadily ballooned.

These bankruptcies are saving dioceses from ever coming clean
— Dan McNevin

In 2003, the diocese admitted to 12. The number doubled after publicity surrounding abuse lawsuits that the diocese had settled.

A 2019 update increased the number to 45, and these days it’s about 60, according to news reports.

The Oakland diocese’s bankruptcy involves accusations against 120 clergy with 330 victims. Citing his own research, McNevin argued the number of accused should really be 174 or so.

“I want the names listed as a form of contrition by the church. The list is proof of the crimes. And enough on the list is proof of the conspiracy to hide. The list keeps growing. These bankruptcies are saving dioceses from ever coming clean,” McNevin said.

The Milwaukee experience

Jeff Anderson, a St Paul plaintiff lawyer and pioneer in the clergy abuse litigation field, faults Chapter 11 as a “strategy to shield bishops’ complicity and incriminating priest files, and to suppress the value of settlements by delaying and wearing down survivors”.

Anderson had survivor clients in Milwaukee, where the archdiocese took Chapter 11 in 2011. Wisconsin had the most restrictive filing deadlines – or statute of limitations – in the US on the issue of negligent supervision, a key factor in church litigation.

Anderson over several years brought cases alleging fraudulent behavior by religious superiors, which the courts allowed. He had 350 clients among 578 survivors suing the archdiocese.

Archbishop Rembert Weakland had a cavalier history of recycling predators through different positions before his 2002 resignation after ABC News reported that he paid $450,000 in hush money to a former lover, a theology graduate student.

The bankruptcy under since-retired judge Susan Kelly took nearly five years in often bitter proceedings. One issue was $57m that the archbishop, Timothy Dolan, had diverted to a Milwaukee cemetery trust, keeping it off the table for settlements.

Dolan soon left for New York, becoming a cardinal.

Anderson saw the cemetery deposit as “fraudulent on its face” but managed to “claw back” some of the funds for settlement purposes. He said the prospect of having clients’ claims dismissed on statute of limitations grounds loomed over the negotiations, undercutting Anderson’s leverage.

Anderson filed 578 proof of claims documents by victims, detailing their abuse, at a time when the archdiocese had a published list of 48 sex offenders.

“The creditors’ committee wanted those files sent to the state attorney general,” according to the survivor and activist Peter Isely, a therapist with a master’s in divinity from Harvard.

The settlement was like an unconditional surrender
— Peter Isely

“We believed more than 100 alleged offenders were named in those documents, cataloguing thousands of instances of abuse. We wanted them seen by law enforcement to see if some cases could be prosecuted. Judge Kelly refused. She sealed those documents. The settlement was like an unconditional surrender.”

The bankruptcy ended with $21m for 330 claims: a meager $6,363 per person, with scores of survivors receiving nothing.

Anderson had a heart attack after the proceedings. He said the case “remains one of the most painful chapters in my career”.

Years later, however, Wisconsin’s attorney general, Joshua Kaul, reacted as other prosecutors have done to the shocking revelations of bishops’ coddling pedophiles in a landmark 2018 Pennsylvania grand jury report. He moved to gain access to the 578 proof of claim files which the bankruptcy judge put under wraps.

“The investigation improperly targets the Roman Catholic church and appears to be a product of anti-Catholic bigotry,” the archdiocese’s lawyer wrote Kaul in 2021, objecting to the files’ release.

Kaul’s request is still being litigated.

The often-glacial pace of litigation has driven victims’ lawyers to seek a wider scope of assets. One example is the targeting of the endowment of Gonzaga University, a Jesuit institution in Spokane, Washington.

At least 29 Jesuits were accused of abuse in Native Alaskan communities, which the order’s north-west Oregon province administered. The Jesuits and their insurers settled the claims in 2009, paying $50m to 110 victims.

The average settlement was $454,545. Gonzaga’s endowment was untouched.

In the New Orleans bankruptcy, the potential value of clergy abuse claimants’ individual cases hinges on whether the 2021 look-back window survives challenges to its constitutionality endorsed by the Catholic church. The law for now remains on the books.

‘I may live to regret it’

Richard Trahant’s life changed in 2018 when he joined attorney John Denenea in taking the case that still haunts both men.

In 1979, a boy of 16 worked part-time in the Salesian priests’ residence at Archbishop Shaw high school in the New Orleans suburb of Marrero. The boy, identified in court records as CJ Doe, cared for an invalid cleric.

One night, as CJ was about to leave, a priest named Salvatore “Sam” Isgro grabbed him by the neck, covered his nose with a cloth soaked in a chemical that stunned him, pulled down his pants and anally raped him. “Don’t tell anybody,” the now-late Isgro said, his breath reeking of garlic and tomato sauce.

On the bus, children laughed at his pants’ bloody rear. He got into the bath once back home with his aunt and uncle.

I missed 10 days of school and had to wear a sterile pad. I never went to [gym class] after that
CJ Doe

His aunt screamed over the bloody water. His uncle drove him to the hospital.

“They said I was ripped from the rectum,” CJ told the Guardian. “I missed 10 days of school and had to wear a sterile pad. I never went to [gym class] after that.”

Fearful of accusing a priest, CJ joined the army. Memories of the rape stalked him. After a mental breakdown, he received an honorable discharge and was subsisting on disability pensions – trailed by post-traumatic stress – when he dragged himself to see New Orleans’s archbishop Gregory Aymond in 2018.

Aymond’s habit of meeting with abuse survivors keeps with the US Catholic bishops youth protection charter of 2002. That document was enacted after the Boston Globe had exposed local bishops’ concealing clergymen who were child predators, igniting a chain reaction of similar media coverage in other communities.

Amid a resulting firestorm of criticism, the bishops pledged “not [to] enter into confidentiality agreements for grave and substantial reasons brought forward by the victim/survivor”. The promise was to halt the practice of negotiated settlements that muzzled survivors by barring them from disclosing the agreements’ terms, hoping to suppress publicity that could produce more litigation.

New Orleans’s archdiocese, however, maintained muzzle clauses long past that, as Kevin Bourgeois learned in 2019.

A therapist who was abused in the 1980s as a student at a New Orleans high school which primarily educated boys interested in the priesthood, Bourgeois is fond of Aymond, whom Bourgeois knew from attending a high school where Aymond once worked.

Bourgeois said Aymond personally and sympathetically listened to Bourgeois’s story of abuse – something the bankruptcy would prevent the archbishop from doing now.

“Now, Greg’s hands are tied,” Bourgeois said. “The frustration shows on his face.”

But the church’s out-of-court mediation of Bourgeois’s claim – which Aymond did not participate in – “was a miserable experience”, Bourgeois told the Guardian.

For that, he blamed Wendy Vitter, the archdiocese’s in-house attorney, for insisting he sign a non-disclosure agreement. Vitter has declined to publicly discuss her work with the archdiocese ever since becoming a federal judge in New Orleans in 2019.

CJ Doe told the Guardian that in his case, Aymond put him in touch with Salesian officials and insisted he go to a psychiatrist in Texas. “He told me be sure you don’t tell anyone,” CJ said, alluding to how Aymond and the Salesians put him through a metaphorical maze.

After meeting with CJ, Trahant drove home and sobbed in his carport, disturbed to his core by the details of his client’s abuse.

“I may live to regret it,” Trahant said. “But I am going into this darkness.”

That was four years before the $400,000 fine he’s facing today.

Trahant, Denenea and Gisleson have taken on CJ and 86 other clergy abuse survivors as clients. All of those cases hang in limbo as the archdiocese’s bankruptcy grinds on, with no clear signs as to what a settlement may look like – or when one might be feasible.

  • This series will conclude on Sunday, when Jason Berry explores two infamous abusive orphanages whose darkest secrets have been kept buried with help from the New Orleans church bankruptcy.