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A lawyer representing the creditor’s committee for sexual abuse survivors has accused officials of the Archdiocese of Santa Fe of moving assets prior to filing for bankruptcy protection.  The allegation is a serious one and if proven true, could lead to criminal charges.

According to Crux Now, “Attorney James Stang told a federal judge Monday that the committee may seek standing in the case to challenge the movement of assets, the Albuquerque Journal reports.

“The committee is ready to move forward on standing motions to avoid fraudulent conveyances that we believe occurred when the archdiocese corporately reorganized,” Stang said. “We believe there’s a basis for us bringing those fraudulent conveyance actions.”

This is not the first time the Catholic Church in the United States has been accused of moving or hiding assets in a federal bankruptcy proceeding.  Similar allegations surfaced in the Archdiocese of Milwaukee bankruptcy when it was alleged then Archbishop Dolan moved assets in order to hide them from the creditors in the bankruptcy proceeding.

Approximately 400 individuals have made claims against the Archdiocese in the bankruptcy proceeding.

In court filings, the committee says offers and counteroffers have been exchanged, but the archdiocese and creditors have not been able to reach an agreement on terms of a reorganization plan. A third mediation session is scheduled for next week.

The committee says one impediment has been a move by the archdiocese before filing for bankruptcy to incorporate all of its parishes and to transfer substantial property to a real estate trust of which the archdiocese and parishes are beneficiaries. A substantial amount of money was also moved into a trust, the panel says.

Most Catholic dioceses in the United States are organized as corporations sole meaning that all the assets fall under the auspices and control of the bishop and his successor.  The Third Plenary Council of Baltimore, held in 1884, urged each bishop and archbishop of the United States to have himself constituted a corporation sole.

The Santa Fe move, in attempting to incorporate each individual parish, may be interpreted as a way to shield assets from the bankruptcy creditors.

The archdiocese, the oldest in New Mexico, declared in the original bankruptcy filing it had nearly $50 million in assets, including real estate worth more than $31 million. The archdiocese also noted it had more than $57 million in property being held in trust for a number of parishes, and that property transfers worth an additional $34 million were completed over the past couple of years.

The claims filed will be sealed and remain confidential unless the claimant indicates he or she wants their information released. However, church documents related to abuse cases could be made public, and lawyers for some of the survivors hope the documents will reveal what has previously been a guarded process.

The judge has yet to make a ruling concerning the allegation or the reorganization plan as negotiations are ongoing between the Archdiocese and the creditors.

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