And you thought the Boy Scouts were bad...

Jesuits in Northwest face more than 500 sex-abuse claims
By The Associated Press
December 06, 2009, 6:50PM

SPOKANE -- More than 500 people have filed claims accusing Jesuits of sexually abusing children across the Northwest.

The claims vary in severity and span decades and geography, from Native Alaskan village children to students at Gonzaga Prep.

People were required to file their claims by Nov. 30, a deadline imposed by the federal judge overseeing the Chapter 11 bankruptcy of the Oregon Province of the Society of Jesus. That organization includes Jesuits in Oregon, Washington, Idaho, Montana and Alaska.

The Jesuits have settled 200 additional sex abuse claims. Among them were claims by 110 Alaska Natives, who settled for $50 million last year. Insurers paid about $45 million of that.

The Jesuits say they have so far spent about $25 million from the province treasury. In bankruptcy documents, the Jesuits say they have $4.8 million in assets and $61.8 million in liabilities.

Many of the 500 claimants seeking settlements say the province remains a wealthy organization that misstated its financial standing in bankruptcy court records. They contend that the Jesuits control and own Gonzaga University, Gonzaga Preparatory School, Seattle University and other schools and properties.

Much like the parish ownership dispute that played out in the now-closed bankruptcy of the Catholic Diocese of Spokane, the ownership of Gonzaga and the other schools could be the dominant issue in the Jesuit bankruptcy.

Attorney James Stang, who represented a creditors committee in the Spokane Diocese case, represents a similar committee of claimants in the Jesuit case.

He has won court approval to take limited depositions and conduct some discovery of internal documents.

"The judge gave us a toe in the door," he said. "We'll see what happens and if we can develop a viable theory" that Gonzaga and other properties are owned by the province and thus part of the financial estate available to pay claims.

Gonzaga University is fighting every attempt to link its fortunes to the province. The private college with 7,200 students, which was separately incorporated and registered 125 years ago, will not volunteer money or other resources to settle the bankruptcy, said Mike Casey, Gonzaga's corporation counsel.

"We are not willing to either participate in this bankruptcy nor help resolve it," he said.

The claimants and their attorneys are employing what Casey called the "big tent theory," which uses the threat of big-dollar payouts against organizations with any hint of liability to coerce smaller payments.

"Creditors have run this play before with success. But not this time," Casey said. "Sorry, but we won't fall for it."

The university denies any liability for the actions of Jesuits who sexually abused children, including former university President John P. Leary, who sexually abused boys until Spokane police gave him a 24-hour ultimatum in 1969 to leave town or face arrest.

Leary fled and the Jesuit hierarchy relocated him.

It took the Jesuits 37 years to reveal the scandal and coverup. Leary died in 1993, and the Jesuits have acknowledged paying money to settle allegations brought by his victims.

On a separate legal front, the Oregon Province is engaged in a dispute with insurers regarding the scope of policies.

It has hired James R. Murray, who was widely credited with wringing $20 million from insurance companies to help settle the Spokane Diocese bankruptcy.

That money, together with $10 million from parishioners, the sale of diocese assets, bank loans and promissory notes collateralized by parish property, brought the diocese bankruptcy to a close in 2007.

-- The Associated Press
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What currency did the bankruptcy involve... monetary or moral?