Stockton diocese considers bankruptcy

Ross Farrow
Lodi News-Sentinel
June 7, 2013

This week's $1.75 million settlement with a former parishioner who says he was sexually abused by defrocked priest Oliver O'Grady has Stockton Diocese officials seriously considering bankruptcy.

"No decision has been made," Sister Terry Davis said on Thursday. "But our reserve funds have been virtually depleted, and we have four more cases coming at us."

It will be three to five months before Bishop Stephen Blaire and other diocese leaders decide whether to file for bankruptcy, Davis said. The diocese's reserves are now less than $1 million, she added.

The diocese and a man who was reportedly sexually abused by O'Grady in the 1980s agreed to the settlement on Monday, according to a press release from the diocese. The diocese will pay the victim $875,000 of the settlement amount, with the remainder to come from the diocese's insurance, Davis said.

It doesn't appear that individual Catholic parishes — such as St. Anne's in Lodi, St. Joachim's in Lockeford and St. Michael's in Morada — would be affected, because each parish is a separate corporation, Davis said.

Entities such as Catholic Charities, St. Mary's High School in Stockton, Central Catholic High in Modesto and St. Anne's School in Lodi are also separate corporations from the diocese, she said.

O'Grady was a priest at St. Anne's from 1971 through 1978. He also served at parishes in Stockton, San Andreas and Hughson before being arrested in San Andreas. He served seven years at Mule Creek State Prison in Ione after pleading guilty to four counts of sexual abuse with children under 14 in Calaveras County while he a priest in San Andreas. He was paroled from Mule Creek in 2000 and deported to his native Ireland.

In late 2010, O'Grady was arrested on charges of possessing thousands of photos of child pornography. He was sentenced to three years in an Irish prison after pleading guilty to three counts of possessing child pornography.

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The diocese admits that O'Grady had sex with at least 23 children.

"It's such a terrible thing that this happened to our church," Davis said. "As it turned out, we had one of worst priests in the United States. No one doubts he did it."

Diocese attorney Paul Ballestracci declined to comment on the possibility that the diocese might file for bankruptcy. He deferred comment to the diocese office.

The Survivors Network of those Abused by Priests, issued a statement claiming that the Stockton Diocese is interested more in protecting their image than they are about money.

"It's a selfish cop-out when Catholic institutions misuse the Chapter 11 process to protect their secrets and deny child sex abuse victims a chance to expose predators in court," Barbara Dorris, SNAP's outreach director in St. Louis, wrote in an email to the media.

"Make no mistake about it: that's the real motivation here," Dorris said. "It's a lack of courage, not a lack of funds. It's to protect reputations, not assets.

"Recognize that we, the victims, are Catholic sons and daughters," Dorris said. "Talk of bankruptcy portrays victims as enemies of the church. Please bear in mind that we were Catholic children from Catholic families who were raped and sexually assaulted by trusted priests, nuns, bishops, seminarians and other church staff. Our lives and our faith have been shattered."