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Malarkey

By Phil Lawler (bio - articles - email) | Feb 17, 2011

Archbishop Timothy Dolan of New York—formerly of Milwaukee--says that it is “malarkey” and “ridiculous and groundless gossip” to claim that he tried to hide millions of dollars in Milwaukee archdiocesan funds from potential lawsuits. As a matter of common sense he’s right; the funds are not at all hidden. As a matter of law, things might be a bit more complicated.

While in Milwaukee, Archbishop Dolan established the Faith in Our Future Trust to raise money for both the archdiocese and its parishes. The campaign promised that 60% of the proceeds would be reserved for parishes. These were, in effect, parish funds, being invested and administered by a central agency.

Many American dioceses have similar arrangements, in which parish monies are deposited in a central fund. As far as pastors are concerned, those funds belong to their parishes. But as a practical matter the funds are deposited in a central diocesan account. If the diocese is sued, the lawyers have a field day wrangling over the actual ownership of the account—especially if (as it often the case) all parish properties are legally owned by the diocese.

In Milwaukee the legal set-up is different. The Faith in Our Future Trust was established as a separate corporation, with its own tax-exempt status. Although the purpose of that corporation is to fund the needs of the Milwaukee archdiocese and its parishes, the funds that it collects are owned not by the archdiocese but by the Faith in Our Future Trust.

When the Milwaukee archdiocese filed for bankruptcy protection, the Trust issued a statement to reassure potential donors. “The Faith In Our Future Trust is not part of the Archdiocese,” the trustees of the corporation said. They elaborated a bit: “This trust is a separate legal entity and is not part of the Archdiocese of Milwaukee.” After emphasizing that the funds collected by the Trust could only be used for the purposes put forth in its mission statement, the trustees specified: “This campaign funds Catholic education and faith formation within the Church of southeastern Wisconsin." Notice that last phrase: the “Church of southeastern Wisconsin” rather than “the Milwaukee archdiocese.” Obviously the trustees were trying to establish a clear separation.

Yet among those five trustees, the first two listed were Milwaukee’s Archbishop Jerome Listecki and his retired auxiliary, Bishop Richard Sklba. And as one sharp-eyed observer noticed, if you check the domain registration for the Faith in Our Future Trust web site, you find that it is registered by the Archdiocese of Milwaukee. The Trust raises funds from the faithful of the archdiocese, for the needs of the archdiocese, through the parishes of the archdiocese, with the encouragement of the leaders of the archdiocese.

 So do these funds belong to the archdiocese? And if not, was the Trust the artful creation of lawyers who anticipated a lawsuit? Those questions will undoubtedly be debated in Wisconsin courtrooms as well as in the media. They cannot, unfortunately, be dismissed as malarkey.
  

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  • Posted by: mjarman7759049 - Feb. 18, 2011 2:53 PM ET USA

    A trust fund that was built by donors with the understanding that it was designed to protect their donations from the judgment creditors of the settlor is not a "legal artifice." But for the creditor claim insulation, the gifts would not have been made in the first place. This is hardly a fraud on the judgment creditors of the Diocese. That money would not have been given to the Diocese.

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