Church Bankruptcy Legal Bill Totals $18.8 Million

BY ASHBEL S. GREEN                                                                    
©2007 Religion News Service
 
awyers have submitted an $18.8 million final bill to the Roman Catholic Archdiocese of Portland for handling the church's bankruptcy proceedings.
 
The total includes only the lawyers and experts who worked on the case in Bankruptcy Court. Attorneys for priest accusers who filed the lawsuits that sent the archdiocese into bankruptcy in 2004 earned an estimated one-third of the $50 million in sex abuse settlements.
 
That puts the total payout to lawyers at about $35 million. The Portland Archdiocese emerged from bankruptcy in April by settling with about 175 people who claimed they were sexually abused by priests or other employees of the archdiocese.
 
The archdiocese also set up a $20 million fund for future lawsuits.
 
The archdiocese paid for the bankruptcy with about $50 million in insurance money, other assets, and a line of credit.
 
No parish assets were used, and parishioners were not asked to contribute toward the settlement. That's in contrast to places such as Spokane, Washington, where Catholic leaders sought contributions from rank-and-file Catholics to pay for settlements against priests.
 
The bankruptcy legal bill included $10.8 million in fees and $1 million in expenses charged by four law firms representing the archdiocese. The rest are expenses and fees charged by attorneys and experts working for other parties, including a committee of plaintiffs.
 
In Bankruptcy Court, the party seeking protection pays for everyone's lawyers.
 

Trial Opens in Alleged Church Kickback Scheme

BY JAMES F. MCCARTY                                                                 ©2007 Religion News Service
 
Ten years ago the chief financial officer of the Cleveland Catholic Diocese made a proposition to the co-owners of an accounting firm working for the diocese, Zrino Jukic testified Wednesday (Aug. 22) in U.S. District Court.
 
CFO Joseph Smith asked for a 10 percent cut of all the money the diocese paid the accountants. In exchange, Smith assured Jukic and his business partner, Anton Zgoznik, that he would give them more diocesan accounting work, Jukic said.
 
Jukic said he knew Smith's proposal was illegal, but Zgoznik relented. "I accepted it because (Zgoznik) wanted to do it," Jukic said. "I didn't have much of a say in the matter."
 
Jukic was the first witness for the prosecution on the opening day of Zgoznik's kickback trial in federal court. Smith, seated in the back of the courtroom, will stand trial later this year.

Smith was as good as his word, Jukic testified. The firm's diocesan workload increased, he said, and as the accountants got richer so did their kickback payments to Smith.
 
Over a seven-year period, Zgoznik's and Jukic's company, ZJ and Associates, collected $17.5 million from the diocese. They wrote checks totaling more than $784,000 to Smith.
 
In addition, Smith received $30,000 from the head of the Catholic Cemeteries Association and from an insurance broker who did business with the diocese, assistant U.S. Attorney John Siegel told the jury in his opening statement.
 
At the same time, Smith's predecessor, the Rev. John Wright, rewarded Smith with a secret bank account containing $270,000 that he could use at his discretion over a five-year period, Siegel said. The money was meant to keep Smith from jumping to the private sector, and was kept secret from then-Bishop Anthony Pilla, he said.
 
In all, Smith received more than $1 million in "executive compensation, in addition to his $120,000 annual salary, Siegel said. He failed to report most of that money on his tax returns, according to Siegel. 
 
The accounting scheme unraveled in 2003 when a whistleblower tipped off the diocese.
 
Zgoznik's attorney told the jury the money his client paid to Smith was not for kickbacks, but rather a longstanding practice by diocesan leaders to compensate employees off the books.
 
"The evidence will show that millions of dollars of receipts were not recorded by the bishops because that is the way they did business," said defense attorney Robert Rotatori.
 

Falwell's Financial Planning Leaves Liberty University Debt-Free

BY ADELLE M. BANKS                                                               ©2007 Religion News Service
 
Liberty University is now debt-free, thanks to the financial planning of its late founder, the Rev. Jerry Falwell.
 
The Lynchburg, Virginia, school announced it will receive $29 million from Falwell's life insurance. Falwell died May 15 at the age of 73.
 
"That was the goal," said Jerry Falwell Jr., the school's chancellor and Falwell's older son, in a university news release. "Dad wanted to leave the university debt-free. Dad used to joke that when he kicked the bucket, Liberty would be in high cotton."
 
The school, which was founded in 1971, has had a debt of between $20 million and $25 million for the last decade and will now have an endowment of $7 million or $8 million.
 
Falwell said his father wanted to be sure the school would not face financial constraints. "He thought that Liberty would be more likely to fulfill its mission if it didn't have financial pressures," he said. "He wanted to put Liberty in a position that it would not have to compromise its core beliefs at any time in the future."
 
More than 10,400 on-campus students are expected to attend the university this year. Thomas Road Baptist Church, which the elder Falwell founded in 1956, will receive $5 million from life insurance. Falwell's younger son, the Rev. Jonathan Falwell, is now pastor of the church, which also is in Lynchburg.
 

Ailing D. James Kennedy Resigns Florida Pulpit

BY ADELLE M. BANKS                                                      
©2007 Religion News Service
 
The Rev. D. James Kennedy, who used his Florida-based television ministry to establish himself as a leading voice for religious conservatives, has retired from Coral Ridge Presbyterian Church in Fort Lauderdale.
 
Kennedy, 76, suffered a cardiac arrest in late December and has not returned to his pulpit of more than 48 years since falling ill.
 
"We thank the Lord for his faithfulness to my father over nearly one-half century, through the impact this church has made in the lives of people in this congregation and community and the influence he has had on countless individuals around the world through radio and television," his daughter, Jennifer Kennedy Cassidy, said in a August 26 announcement of her father's retirement.
 
Kennedy started the congregation, which is affiliated with the Presbyterian Church in America, in 1959. He became a well-known Christian broadcaster through his presidency of Coral Ridge Ministries, which broadcast his sermons.
 
"As Dr. Kennedy retires from the scene of active ministry, I praise God for giving the church this man of vision so committed to the kingdom of God," said Frank Wright, president of National Religious Broadcasters. "With his godly wisdom, his courageous heart and his consistent example, he has inspired millions to love, follow, and serve Jesus Christ."
 
Leaders of Coral Ridge Ministries have begun plans to broaden its audience of 3 million to 30 million by 2012, by using Kennedy's teachings on television, radio, the Internet, and in print.
 
But other ministries founded by the ailing broadcaster have closed or gained new ownership.
 
Coral Ridge Ministries closed the Center for Reclaiming America, which fostered grass-roots action among conservative Christians, in April. The Center for Christian Statesmanship, a Washington-based ministry to Capitol Hill employees, closed at the same time, but reopened two weeks later under the auspices of Kennedy's Evangelism Explosion International.



 

 
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