Federal Court: Trust Fund Not Off Limits In Milwaukee Archdiocese Bankruptcy Case

Archdiocese Had Claimed Trust Fund Was Protected Under Religious Freedom Restoration Act

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A federal appeals court ruled on Monday that a $58 million Catholic cemetery trust fund may have to go into a pool of money available to clergy abuse victims in Milwaukee.

The Chicago-based U.S. 7th Circuit Court of Appeals said that Milwaukee-based federal judge Rudolph Randa was wrong to keep the cemetery trust fund out of the four-year Milwaukee archdiocese bankruptcy case.

Peter Isely of the Survivor’s Network of Those Abused by Priests said the appellate ruling is like hitting the reset button for the bankruptcy case.

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“We’re hoping that this decision, and what’s going to come from it, is going to reverse the direction that we’ve seen so far, which has been very, very against survivors,” said Isely.

He said he also hopes the ruling will help shed more light on why New York Cardinal Timothy Dolan and the Vatican set up the trust fund when Dolan was Milwaukee’s archbishop.

A lawyer representing the cemetery trust says the appellate decision casts a shadow over religious freedom.

Said Timothy Nixon: “The trust has a duty to protect the Catholic cemeteries in Milwaukee so that they can be maintained for their sacred purpose and for the families of the deceased who put funds in the trust to provide for this perpetual care.”

The appellate court is returning the cemetery case to another federal district judge, but not Randa, who failed to disclose he has relatives buried in Catholic cemeteries maintained by the trust fund.

The fund says it is reaffirming its offer to make a loan to the Milwaukee archdiocese to keep moving forward a proposed church bankruptcy reorganization plan. But Jeff Anderson, an attorney representing abuse victims, said the decision allows survivors to go back to court to argue that all $55 million in assets the archdiocese transferred to the trust should be available to compensate survivors in the bankruptcy case.

Marci Hamilton, an attorney representing the bankruptcy creditors committee, said the appeals court found that the Religious Freedom Restoration Act is not a sword to be wielded against private parties and that religious organizations do not have immunity from the bankruptcy laws that apply to everyone else.

Hamilton said the ruling is a win for survivors of sexual abuse.