Milwaukee Archdiocese proposes $4 million victim fund

Arthur Budzinski (R) and his daughter Gigi Budzinski pose outside the offices of the Milwaukee Catholic Church archdiocese offices on March 25, 2010, in St. Francis, Wisconsin. Budzinski was a student at the St. John's School for the Deaf in St. Francis in the 1960s when he alleges that he was molested by Rev. Lawrence C. Murphy, who ran the school and died in 1998.  Ernie Mastroianni /Getty Images

MILWAUKEE - The Archdiocese of Milwaukee has proposed setting aside $4 million to compensate the victims of clergy sexual abuse in its bankruptcy reorganization plan, according to a statement provided to The Associated Press.

The archdiocese filed for bankruptcy in 2011, saying pending sexual abuse lawsuits could leave it with debts it couldn't pay. Its creditors include hundreds of people who were sexually abused by clergy. They have accused the archdiocese of covering up priests' crimes while assigning them to new churches without warning parishioners.

Milwaukee archbishop Jerome Listecki said Wednesday morning that the bankruptcy plan will be filed later in the day.

The Milwaukee archdiocese is among more than a half-dozen to file for bankruptcy in recent years. Other dioceses have set aside much larger sums to compensate victims of sexual abuse.

Listecki acknowledged that some might be dismayed by the offer but said the archdiocese would provide therapy for the remainder of victims' lives.

"No amount of money basically is enough to compensate for the loss," he said. "So I think that's first and foremost to realize that."

Some of the $4 million could be used to sue the archdiocese's former insurers to get them to pay victims, according to the archdiocese statement. Listecki said it is too soon to say how the money might be divided up.

The archdiocese recently reached a deal with one insurer, Lloyd's, of London, to buy back its policies for an as-yet undisclosed sum. The deal relieves Lloyd's, which insured the church in the 1960s and 1970s, of liability in regard to the sexual abuse claims.

The archdiocese said the $4 million will come from funds not earmarked for other purposes. It also could use property as collateral for a loan, although Listecki said the archdiocese's assets are relatively small.

Details of the archdiocese's assets are expected to be included in the reorganization plan.

Clergy sexual abuse victims had hoped to be paid in part from a more than $50 million cemetery trust fund, but a federal judge ruled last year that the trust fund was off-limits. U.S. District Judge Rudolph T. Randa said that money could be used only to care for and operate Catholic cemeteries.

The creditors committee, which represents sexual abuse victims as well as others with bankruptcy claims against the archdiocese, has appealed that decision.

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