Financial crisis uncovered on heels of sex scandal - in Santa Rosa, California Catholic Church

National Catholic Reporter, Nov 19, 1999 by Teresa Malcolm

As police concluded an investigation of a priest's accusations of sexual assault by the former bishop of Santa Rosa, Calif., diocesan officials now acknowledge they face a debt of nearly $17 million, leaving many local Catholics disillusioned and demanding greater accountability.

According to news reports, the debt was uncovered after San Francisco Archbishop William J. Levada became apostolic administrator of the Santa Rosa diocese July 22, following the resignation of Bishop G. Patrick Ziemann.

On Nov. 10, Santa Rosa police and Sonoma County prosecutors announced that no criminal charges would be filed against Ziemann, following a six-month investigation into charges by Fr. Jorge Hume Salas that the bishop coerced him into a two-year sexual relationship. Ziemann admitted to having a consensual sexual relationship with Hume, but denied sexually assaulting him, as Hume's lawsuit against the bishop and the diocese alleges.

Officials also said that no criminal investigation was planned into the diocese's financial problems, although they called on the diocese to disclose any evidence of financial wrongdoing.

Levada has appointed an 18-member finance council to draft a financial recovery plan for the diocese. The council met for the first time Nov. 4, joined by representatives from parishes throughout the diocese.

Council member David Robinson, president of the Bank of Lake County, told the Santa Rosa Press Democrat, "The people from various parishes were not shy. There were many things they wanted to get off their chests and they wanted Levada to hear... A lot of hard questions were asked."

According to a diocesan statement, the financial problems incurred on Ziemann's watch were due to expansion of diocesan programs, increasing subsidies to parishes and schools, diocesan loans to parish construction projects, sexual misconduct lawsuits and poor investments.

The chancery met these expenses by dipping into millions of dollars deposited by parishes and other entities into a consolidated fund. In addition, the diocese had stopped paying money into pension funds for lay employees and priests.

Under a new operating plan, the chancery will no longer be able to draw from the consolidated account. The diocese's Sept. 15 statement said that millions of dollars owed to local churches and schools will be repaid with interest. It also said that all lay pension funds have been brought to current funding levels and are in an independently administered trust account. The priests' pension fund has been segregated in a separate investment account.

In late August, Levada asked for the resignation of Msgr. Thomas Keys, who had served as financial officer of the diocese.

The diocese's statement said that contrary to news reports, the diocese's financial woes are not the result of massive sexual-misconduct lawsuit settlements. Sexual lawsuit settlements involving charges against priests of the diocese, including counseling costs, did, however, lead to a "net accumulated loss" of $3.5 million, officials said. Total settlement costs in recent years were $5.4 million, which was offset by insurance. The diocese reportedly has three unrelated sexual misconduct suits still in the courts, in addition to the suit filed against Ziemann.

The crisis resulted in the elimination of eight positions in diocesan youth ministry -- all of them half-time or less, a diocesan official said. In addition, there have been staffing cuts in detention ministry. Hispanic ministry and a prayer center program, and one school has been told construction of a multipurpose facility for which it raised $1 million has been put on hold.

The new finance council appointed Clem Carinelli, a Santa Rosa real estate developer, to head a subcommittee in charge of selling disposable diocesan property to raise cash.

Meanwhile, Hume has amended his civil lawsuit against Ziemann and the diocese, claiming that Ziemann, the diocese and five men conspired to defame Hume by making false allegations of sexual misconduct to police and to the press. Four of the named are Mendocino men who earlier this year alleged that Hume had made sexual overtures to them. The fifth is a Ukiah businessman who in January said he was sexually accosted by Hume, former parochial vicar at St. Mary of the Angels Church in Ukiah.

The civil case filed by Hume against Ziemann and the diocese has been on hold while police determined whether they had enough evidence to ask the district attorney to bring criminal charges of sexual coercion. At a Nov. 10 news conference, police officials said that while evidence indicated there was probable cause that Hume had been coerced into a sexual relationship, questions about Hume's credibility led the district attorney to conclude that the charges could not be proved beyond a reasonable doubt.

However, at the news conference, Santa Rosa Police Chief Michael Dunbaugh said, "At a minimum, [Hume] was a victim of sexual harassment in the workplace.... For this he has a legal remedy that he may pursue in the civil courts."