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updated: 10/16/2012 7:38 AM

Milwaukee Archdiocese, victims fail to reach deal

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Associated Press

MILWAUKEE -- The Archdiocese of Milwaukee has failed to reach a settlement with victims of sexual abuse, sending both parties back to U.S. Bankruptcy Court.

The archdiocese and its creditors have been in court-ordered mediation since July 20. Most of the creditors are victims or alleged victims of sexual abuse by clergy or church workers. Nearly 500 men and women claim they were sexually abused as children.

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Both sides confirmed Monday the settlement talks had failed. But they declined to elaborate, citing the confidentiality of the proceedings.

Victims attorney Jeffrey Anderson said the creditors now will move to force disclosure of thousands of pages of documents under court seal and to scrutinize the transfer of millions of dollars off the church's books into trusts in recent years.

"This puts us back to where we were, ready to move forward with all the issues and battles that need to be fought," said Anderson, who represents 350 of the abuse claimants in the bankruptcy.

Archbishop Jerome Listecki's chief of staff, Jerry Topczewski, told the Milwaukee Journal Sentinel (http://bit.ly/TsyOmW) in an email that the archdiocese remains hopeful a settlement might eventually be reached.

The Survivors Network of those Abused by Priests. or SNAP, an advocacy group, issued a statement saying the archdiocese "has once again raised false hopes of a settlement with victim/survivors and a resolution to the clergy sex abuse and cover up crisis."

The archdiocese filed for Chapter 11 bankruptcy protection in January 2011 to deal with the sex abuse claims. U.S. Bankruptcy Judge Susan V. Kelley ordered both sides into mediation in July, saying the costs of the bankruptcy were "astronomical."

The archdiocese has asked Kelley to throw out claims that are beyond the statute of limitations for fraud; those that involve religious order offenders, teachers and others it does not consider its employees; and cases where victims received prior settlements -- a strategy creditors say could be used to eliminate the vast majority of claims. Those issues are now before U.S. District Judge Rudolph Randa.

Meanwhile, the creditors committee is in litigation to recover $57 million from a cemetery trust created by the archdiocese in 2007, and has asked Kelley for permission to pursue an additional $35 million in a parish fund established in 2005.

Victims allege the trusts were created to shield the money from victims, allegations the church has denied. Anderson has said that he would seek to depose New York Cardinal Timothy Dolan, who led the Milwaukee Archdiocese from 2002 to 2009, to question him about the transfers.

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