Boy Scouts, Catholic dioceses find haven from sex abuse suits in bankruptcy

A victim of child sexual abuse, who Reuters agreed only to identify by his first initial, C, is pictured here at a California state park, December 23, 2022.

by , , , and Disha Raychaudhuri

Lawmakers around the United States have tried to grant justice to victims of decades-old incidents of child sexual abuse by giving them extra time to file lawsuits. Now some of the defendants in these cases, including church and youth organizations, are finding a safe haven: America’s bankruptcy courts.<

In New York, nearly 11,000 cases flooded state courts, many seeking to hold Catholic dioceses responsible for sexual abuse by clergy, after a 2019 law suspended statutes of limitations that would have otherwise barred many of the lawsuits. In response, four New York dioceses that collectively faced more than 500 sexual-abuse claims filed for bankruptcy. That halted the cases — and blocked those from anyone who might sue later — and forced the plaintiffs to negotiate a one-time settlement for all abuse claims in bankruptcy court.

The pattern has taken hold across the United States, a Reuters review of bankruptcies precipitated by mass child sexual-abuse litigation found.

Many of the defendants turning to bankruptcy court are nonprofit organizations. In court filings dating back to 2009, the Boy Scouts of America, a New York boys & girls club and 13 separate Catholic institutions each have cited state laws extending abuse victims’ right to sue as factors in their decisions to seek bankruptcy protection.

Such bankruptcies are “the counterpunch” to the state laws enabling more victims to seek justice and compensation through lawsuits, said Stephen Rubino, a lawyer who’s represented clergy abuse victims for more than 30 years.

In all, 23 states, two territories and Washington, D.C., have passed laws that suspend statutes of limitations for sexual-abuse victims who were previously prevented from suing over older cases. The suspensions typically last a year or more, allowing plaintiffs to file new lawsuits involving old abuse cases during that period. California, New York and several other states passed such laws in 2019.

Bankruptcy courts are undermining the impact of the statutes, some legal experts and victims’ advocates say. Judges overseeing these Chapter 11 filings set their own deadlines to file a sexual-abuse claim for compensation from the bankruptcy settlement.

Victims who miss the bankruptcy claims-filing deadline receive nothing or are forced to compete for limited funds set aside for unknown future claimants, the Reuters review of bankruptcies found.

“As we dramatically increase access to justice through statutes-of-limitations reform, we have more organizations going into bankruptcy because, frankly, bankruptcy law favors the organizations,” said Marci Hamilton, the founder of Child USA, a group that has advocated for laws expanding sexual-abuse victims’ rights to sue.

Child sexual-abuse victims often don’t come forward until much later in life, sometimes past the age of 50, according to several victims’ lawyers and studies on abuse disclosure. Some are not aware of bankruptcy proceedings that affect them until it is too late.

Bankruptcy claims-filing deadlines can force victims to come forward before they are ready, Hamilton said. And abuse claimants have limited leverage in Chapter 11 cases that halt their litigation and shield organizations such as dioceses, schools or youth organizations from current and future lawsuits, she said.

“The federal bankruptcy law is just defective when it comes to sexual-abuse victims,” Hamilton said. “Their voice is just stolen from them.”

Reuters identified settlements in 23 bankruptcies precipitated by child sexual-abuse scandals that halted current and future lawsuits and forced claimants to seek compensation from a trust. The cases involved the Boy Scouts, 21 Catholic organizations and USA Gymnastics. The youth gymnastics organization filed for Chapter 11 protection in 2018 amid a surge of lawsuits alleging abuse by convicted child sexual abuser Larry Nassar. (Now in prison, Nassar could not be reached for comment.)

The Boy Scouts and USA Gymnastics did not comment for this story

The Boy Scouts and others have argued that their bankruptcy plans seek to pay claimants fairly and equitably, whereas civil litigation can result in some victims winning large jury verdicts and others receiving smaller judgments or nothing. USA Gymnastics has said it sought bankruptcy protection “to pave the way toward a settlement” with abuse survivors, who last year approved a plan paying them $380 million.

The organizations also often conduct extensive marketing campaigns to ensure that potential victims know they can seek compensation in the Chapter 11 cases, a review of the cases shows. The Boy Scouts, for instance, said on a website the group set up for restructuring that it launched a “comprehensive noticing campaign” in the media.

The Madison Square Boys & Girls Club in New York City referred Reuters to a bankruptcy-court declaration filed in June by its chief financial officer, Jeffrey Dold. Dold said the organization sought Chapter 11 protection after trying and failing to resolve about 140 pending claims of sexual abuse by club employees and volunteers between the 1940s and 1980s, all filed after the passage of New York’s claims-revival law. The club filed bankruptcy, Dold said, “to provide a forum to address those claims fairly and equitably.”

The U.S. Conference of Catholic Bishops had no comment on the new state laws or their impact nationwide on Catholic organizations facing sexual-abuse lawsuits. In a statement to Reuters, it said it defers to state and local catholic leadership organizations on state laws and bankruptcies. The conference noted the importance of “pastoral outreach” to abuse victims and said that local dioceses have victim assistance coordinators to “assist survivors and accompany them as they seek healing.”

The nonprofit organizations’ bankruptcies don’t protect the individual abusers themselves, whom victims can still sue. But they do grant lawsuit immunity to the entities that oversaw employees or volunteers accused of abuse.

Lawyers defending organizations targeted by sexual-abuse claims, along with some plaintiffs lawyers, say bankruptcy provides a fair way to compensate victims, many of whom want to avoid the ordeal of a lawsuit and a potential trial. Moreover, organizations and insurers paying the settlements won’t agree to any deal that doesn’t shield them from additional liability, said Susan Boswell, a retired lawyer who represented dioceses in bankruptcies from Arizona to Minnesota.

“If you can’t have finality,” she said, “then you are not ever going to be able to get one of these cases done.”

America’s federal bankruptcy courts play a critical role in justice and commerce by giving businesses overwhelmed by debt an orderly process to settle with creditors during a reorganization or liquidation. Those debts can include liability from lawsuits over deadly products, fraud, sexual abuse or other wrongdoing.

The power of U.S. bankruptcy courts to grant lawsuit immunity to organizations in bankruptcy, their leaders and affiliated entities has expanded over time. And so have the legal tactics of entities seeking Chapter 11 protection: Some corporations engulfed in scandals are now creating subsidiaries solely to absorb their lawsuit liability and declare bankruptcy.

Nonprofit organizations facing sexual-abuse lawsuits have pulled another page from the corporate bankruptcy playbook: In striking settlements, they typically seek “nondebtor releases” for their associated entities, such as religious schools and individual parishes. Such releases shield people and entities from lawsuits over issues taken up in bankruptcy settlements. By piggybacking on a nonprofit’s Chapter 11 filing, its affiliated organizations or leaders often get these liability shields without having to file for bankruptcy themselves.

Judges often appoint someone to advocate for the interests of potential victims who have not yet sued or made a claim in bankruptcy court. Known as future claims representatives, these appointees are often lawyers or financial professionals who are paid by the debtor and tasked with estimating the number of future claims and the funds needed to cover them. The reality, however, is that late filers often end up competing for smaller amounts than those who meet the deadline, according to court records reviewed by Reuters and attorneys involved in the proceedings. Unknown claimants become “numbers on a chart,” Rubino said.

JUSTICE DENIED

A former Boy Scout, C, alleges a Scout leader abused him when he was a teenager. Reuters agreed to identify the former Scout, now 40, only by his first initial.

He sought compensation in the Boy Scouts bankruptcy in June, long after a deadline of November 16, 2020 for filing claims. C is now unlikely to recover much, if anything, from the $2.46 billion settlement the Boy Scouts reached with claimants alleging sexual abuse, his lawyer said. That’s because claimants who miss the deadline face a gauntlet of additional hurdles and conditions, according to C’s lawyer and a review of the Boy Scouts settlement terms.

The Boy Scouts bankruptcy reorganization plan, approved by a judge in September, halts all lawsuits against the Boy Scouts, local councils, churches and other organizations that chartered scouting activities.

The bankruptcy’s claims-filing rules take precedence over a recent law passed in California, where C says he was abused, that expanded sexual-abuse victims’ rights to sue. The bankruptcy proceedings generally trump state laws because bankruptcy courts are federal, and typically have the power to override state statutes and halt state lawsuits or court orders.

Bankruptcy graphic
Reuters Image

U.S. Bankruptcy Judge Laurie Selber Silverstein reasoned in approving the Boy Scouts settlement that it was a better solution for victims than seeking compensation in trial courts.

Silverstein declined to comment for this story. In a July opinion approving aspects of the Scouts’ reorganization plan, she noted that insurance carriers, local Scouts councils and chartered organizations would not contribute to the settlement without receiving nondebtor releases from liability. She agreed with lawyers for the Boy Scouts and some claimants that the only alternative to a settlement was a “‘death trap’ of litigation with minimal recoveries in sight.”

“These boys–now men–seek and deserve compensation,” the judge wrote, for “abuse which has had a profound effect on their lives and for which no compensation will ever be enough.”

Beyond questions of fair compensation, C said the bankruptcy is preventing him from getting his day in court against the Boy Scouts to present what happened to him.

C grew up in an unstable home in northern California. His mother considered the Boy Scouts a safe environment for her son. For years after a Scout leader allegedly abused him and other boys, C struggled with acknowledging that what had happened to him was wrong, he told Reuters. He had trusted his Scout leader.

Within the past couple of years, he spoke at length with another former Scout about the leader’s behavior, he said. The emotional conversation prompted C to reflect on the damage in his own life stemming from the abuse. He said in an interview that his own struggles relating to others began to make more sense. C lives with his mother, sometimes sleeps in his car and has struggled to find a steady career.

“I’m waiting to stand in front of a judge,” C said, and hoping for that judge to say: “‘What happened to you was wrong.’”

‘THE PRIEST WOULD NEVER DO THAT’

Some plaintiffs’ attorneys say bankruptcy proceedings can provide a better way to compensate many sexual-abuse victims than trial courts. Victims often don’t want to go through the ordeal of suing their abusers or the organizations that may have enabled them, said Dan Lapinski, a Motley Rice LLC lawyer representing Boy Scouts claimants. For them, seeking compensation through bankruptcy can allow victims to file a claim confidentially and avoid reliving their trauma in open court.

“I have clients who fall into that category” in the Scouts matter, Lapinski said, noting that these victims might not have pursued their claim at all outside of bankruptcy court.

Financial coffers of individual dioceses are usually smaller than those of large corporations, said Boswell, the retired lawyer who has represented dioceses facing abuse allegations in bankruptcies. Expensive litigation cuts into the money available for compensation, she said, but a bankruptcy reorganization can attempt to pay all claimants equitably.

Still, there is often little left for claimants who come forward later, after bankruptcy filing deadlines pass.

In January 2020, a 59-year old former altar boy named Henry attended a church service in Minnesota on a visit back to the state to see family. After the service, Henry said, the priest spoke to parishioners about the financial impact of the 2018 bankruptcy of the local Winona-Rochester diocese, caused in part by sexual-abuse claims.

Henry knew the abuse first-hand. When he was 17, a priest assaulted Henry in a pool shower after swimming, he said in an interview. He had kept what happened to himself in part because he thought nobody would believe him, said Henry, who spoke on condition that he be identified only by his middle name.

Before clergy sexual-abuse scandals emerged worldwide, his community’s attitude was “the church would never do that, the priest would never do that,” he said. “You’re kind of squelched from the get-go.”

Finding out about the bankruptcy in church that day emboldened Henry to come forward, too, he said. Two days after the priest’s comments, he contacted a lawyer who filed a late claim on his behalf. But relatively little money — a maximum of $750,000 — had been set aside for claimants who came forward after a 2019 deadline. Henry received $20,000, which he described as “an almost laughable“ amount.

Henry could receive more money later, depending on how many additional claims are filed and how a trustee who determines payouts views his claim. But a final determination won’t be made until a deadline for filing late claims passes several years from now, according to documents Reuters reviewed. The judge in the case declined to comment.

By comparison, the settlement covering the 145 sexual-abuse claimants who filed on time was nearly $28 million. That would equate to about $190,000 per victim. The amount individual claimants might receive varies, depending on factors including the duration, severity and impact of their alleged abuse, according to court documents.

“What I don’t like is that they put some arbitrary cap on anybody who filed after” the deadline, Henry said.

Peter Martin, a spokesperson for the Winona-Rochester diocese, declined to comment on its bankruptcy proceedings. Martin did not respond to inquiries about Henry’s allegations of sexual abuse.

POWER AND TRUST

Statutes of limitations exist for good reason, some legal scholars say.

>Historically, states enacted them to encourage plaintiffs to file timely lawsuits based on “reasonably fresh” evidence, said Marie T. Reilly, a professor at Penn State Law in University Park, Pennsylvania. Reilly argues that allowing victims to sue long after their alleged abuse threatens the integrity of the legal system in the name of exacting retribution against institutions such as Catholic dioceses.

Over time, memories deteriorate, witnesses die and documents can go missing, she said. “The ability to mount a defense deteriorates with the passage of time,” Reilly said.

New York State Senator Brad Hoylman, a Democrat, sponsored the state’s bipartisan legislation reviving child sexual-abuse claims. He told Reuters he pushed the bill because it can be especially difficult for individuals to come forward with allegations against abusers who are often “in positions of power and trust.”

For thousands of victims with revived legal rights to seek accountability from institutions in trial courts, bankruptcy filings can be crushing.

Doug Kennedy was a teenage Boy Scouts camp staffer in upstate New York when a camp director raped him repeatedly and forced him to engage in other sexual activity, according to a lawsuit he filed. His case was halted by the Boy Scouts bankruptcy. In the years after the assaults, he told Reuters, he buried his memories of the abuse.

The man Kennedy accused of abuse, Bruce DeSandre, declined to comment through his attorney. In a court filing, DeSandre denied Kennedy’s allegations of sexual abuse and argued that New York state’s revival law was unconstitutional.

When Kennedy, now a college professor, finally came to grips with his abuse, the statute of limitations for filing a lawsuit had passed.

In January 2019, he retreated to his office at Virginia Wesleyan University, drew the shades and watched a streaming feed of the New York state legislature’s vote to change the law and allow victims like Kennedy to file lawsuits over abuse that occurred long ago.

“I broke down, completely broke down,” he said.

He thought he would finally get a chance to get accountability for what was allowed to happen to him. Later that year, in August, he filed his lawsuit against defendants including a Boy Scouts local council and DeSandre.

About six months later, the Boy Scouts filed for bankruptcy. Kennedy said his feeling of hope drained away when he heard the news.

“Bankruptcy is not justice,” he said. “Bankruptcy is business.”

Complete Article HERE!

Tensions rise over Santa Rosa Diocese’s plan to seek bankruptcy protection in face of more than 130 abuse claims

— Church’s effort to stay afloat while settling abuse cases is scorned as a cynical move to shield secrets and assets.

Rev. Robert Vasa, the new Coadjutor Bishop of Santa Rosa, closes his eyes in prayer during a mass for his reception at St. Eugene’s Cathedral in Santa Rosa, California, Sunday, March 6, 2011.

By MARY CALLAHAN

Scores of survivors of clergy abuse — people who had spent decades trying to escape the grief and trauma of childhood sex assault — have come forward over the past three years after deciding now is finally the time to seek justice.

At least 130 — likely many more, attorneys say — have filed or will file lawsuits against the Santa Rosa Roman Catholic Diocese during a special three-year window that allows adults of any age to file personal injury cases for childhood sex abuse in California. That window closes on New Year’s Eve.

But none of those cases is likely to go to trial.

The diocese announced to the court Nov. 30 that it would seek Chapter 11 bankruptcy protection early next year, a move that will suspend state court proceedings and leave the whole matter in federal bankruptcy court.

In effect, experts and plaintiffs attorneys say, that means the judicial process becomes less about finding the truth in each case and holding those in power to account for decades of horrific abuse and more about assigning dollars and cents.

The priority under Chapter 11 reorganization is the well-being of the church and its ability to carry on while the abused become just more creditors, “fighting for the same dollar” as, say, a roofer or any other vendor, said Professor Marci Hamilton. She is the longtime senior fellow in the Program for Research on Religion at the University of Pennsylvania and founder and chief executive officer of CHILD USA, a nonprofit think take dedicated to protecting children from abuse.

“The truth-seeking function of filing a lawsuit is sidelined, and the only issue that winds up being part of the discussion is, ‘How much money can we, the debtor, save by filing for bankruptcy?’ ” she said.

Assessing the claims, San Francisco plaintiffs attorney Mary Alexander said, also becomes a function of categorizing and counting different kinds of abuse “rather than actual harm,” and overall seeing “a huge case” turn “into a little tiny settlement.”

It’s also “taking away from their ability to find out what really happened — who at the church was responsible or at the school — and in exchange for a two-to-three-year delay and for far less money,” Alexander said. “And it’s still going to be the insurance companies that are paying.”

Months, likely years, will soon be spent fully assessing church assets and vetting claims to determine how church funds should be divided among the survivors.

Attorney Adrienne Moran, whose Santa Rosa law firm has long represented the Santa Rosa Diocese, said bankruptcy is a way to make sure whoever is first in the door doesn’t take everything and leave nothing for the rest.

“The purpose of filing for the bankruptcy is really to make sure that all of the survivors get a fair and equitable settlement,” Moran said, “and to ensure that Plaintiff No. 1, who might go to trial, doesn’t get all of the reward and then leave nothing for the remainder of the survivors.”

Santa Rosa Bishop Robert Vasa said the diocese really had no choice, given what he said were limited diocesan assets and “the overwhelming number of sexual abuse lawsuits filed against the diocese.”

Bankruptcy additionally would short-circuit the 2019 state legislation that expanded the time for survivors of childhood sexual assault to file civil cases.

Previously, child sex abuse survivors could file suit in California until they turned 26. The 2019 legislation, AB-218, raised the age cap to 40 and opened the three-year window for those 40 and older to file suits for childhood abuse.

But bankruptcy is a federal court proceeding, which supersedes state law, and would foreclose future claims for actions that occurred before the bankruptcy.

That means no one, even those under 40, would ever be able to sue the diocese again for past abuse, attorneys said.

“I’m sure that’s part of the reason they’re going into bankruptcy,” said Rick Simons, an East Bay plaintiffs attorney, who serves as liaison counsel for the Northern California cases generated by the three-year window, all of which are being coordinated through the Alameda County Superior Court.

“One thing the bishop wants to avoid,” said Sacramento attorney Joseph George Jr., “is to get sued two years from now and four years from now and seven years from now. They want to end this.”

The diocese, which runs from Petaluma to the Oregon border and includes 41 parishes and more than 178,000 parishioners, already had paid out more than $33 million in clergy abuse claims over the past three decades, some of it paid through insurance.

Complete Article HERE!

Old sex-abuse claims bankrupt a Bay Area Catholic diocese. Will others follow?

— Bishop cited an “insurmountable number of claims”

A composite photograph of 20 Catholic priests that have been identified by the Oakland Diocese as priests who has been credibly accused of sexual abuse of minors going back to Jan. 13, 1962.

By

Payouts for childhood sexual abuse claims have taken a financial toll on a host of venerable American institutions that provided youth programs where predators lurked, from the Boy Scouts of America to Penn State, Michigan State and numerous church organizations.

With a three-year window for new claims of decades-old abuse closing at the end of this month, the Diocese of Santa Rosa, one of five Roman Catholic dioceses serving the Bay Area, has announced it will file for bankruptcy protection early next year.

“It is the inevitable result of an insurmountable number of claims,” Bishop Robert F. Vasa wrote in an announcement last Friday that said the diocese is facing more than 130 abuse claims dating back to its establishment in 1962, mostly from the 1970s and 1980s.

The claims are made possible by AB 218, a California law that made it easier to file claims of decades-old sex abuse otherwise barred by the statute of limitations from 2020 through 2022. Attorneys representing the now middle-aged claimants said they expected more than 1,000 fresh lawsuits and that some dioceses would seek bankruptcy protection.

Vasa, whose diocese oversees parishes in Sonoma, Napa, Mendocino, Lake, Humboldt and Del Norte counties, said Chapter 11 bankruptcy protection will “bring all parties together in one place to resolve difficult claims fairly and finally, with the supervision of the bankruptcy court.” At the same time, he said, it “will provide a way for the Diocese to continue the various charitable ministries in which it is engaged.”

But SNAP, the Survivors Network of those Abused by Priests, said that dioceses across the country have used bankruptcy “to protect secrets, not assets.” Bankruptcy, they said, limits the claimants’ “discovery” process of seeking records and sworn testimony about the handling of reported abuse.

“It is a sad day for transparency and justice,” SNAP said in a statement. While acknowledging the Diocese of Santa Rosa is “one of California’s most impacted dioceses” by abuse claims, SNAP also questioned its insolvency, noting its charitable organization just reported its biggest year in donations.

The Diocese of Santa Rosa had no comment beyond the bishop’s statement.

What impact a bankruptcy might have on worshippers is unclear. Bishop Vasa in his statement said that “the parishes and Catholic schools within our Diocese are separate civil corporations or separate ecclesial entities and should not be parties to this filing.”

But he added that “there are many matters to be discerned by the bankruptcy court and so absolute certainty about the degree of participation by any other entities such as parishes and schools will be determined in the course of the proceedings.”

Whether other dioceses will follow Santa Rosa into bankruptcy court remains unclear. It is not the first California Catholic diocese to do so. The Diocese of Stockton filed for bankruptcy protection in 2014, citing $14 million in legal expenses over sex abuse claims. The Diocese of San Diego filed for bankruptcy protection in 2007 before reaching a nearly $200 million settlement with 144 alleged abuse victims.

The Catholic Church in the U.S. has paid more than $2 billion in legal expenses from the clergy sex abuse scandal that emerged in lawsuits, investigations and news reports back to the 1980s. Claims largely ended after U.S. Catholic churches adopted a zero-tolerance policy toward abusers two decades ago. But lawmakers in California, New York, Arizona and New Jersey recently allowed new claims to be filed by people who said they were abused by priests decades ago. In many cases those priests have since died.

The Bay Area’s other dioceses are the Archdiocese of San Francisco, covering San Francisco, San Mateo and Marin counties; the Diocese of Oakland, spanning Alameda and Contra Costa counties; the Diocese of San Jose in Santa Clara County; and the Diocese of Sacramento, which includes Solano County.

So far, none have indicated plans to seek bankruptcy protection, though they have not ruled it out.

The Diocese of San Jose said it isn’t considering bankruptcy “at this time.” The Diocese of Oakland said claims are still being processed and “it’s premature . . . to make a determination on future actions.”

The Archdiocese of San Francisco said “litigation-related issues, whether individual or in the aggregate, would be addressed through appropriate legal channels and not through speculation in media outlets.” The Diocese of Sacramento said “no decision or filing has been made.”

Complete Article HERE!

FBI investigating alleged financial wrongdoing at St. Peter Claver Church

Audit found that priest, who has also been accused of rape, may have misappropriated nearly $400,000.

The Rev. John Asare-Dankwah at St. Peter Claver Catholic Church in New Orleans Sunday, Nov. 10, 2019.

By STEPHANIE RIEGEL

An FBI probe involving the Archdiocese of New Orleans is investigating allegations that the former pastor of St. Peter Claver Catholic Church in Treme who was removed from his post last year after being accused of raping a child years earlier may have misappropriated nearly $400,000 in parish funds.

The archdiocese on Tuesday confirmed that in September 2021, it turned over an audit to federal investigators that identified some $368,682 in questionable payments allegedly made by the Rev. John Asare-Dankwah to himself or on his behalf while he was pastor of the church.

“In the months that followed Fr. Asare’s removal as pastor from St. Peter Claver, financial discrepancies at the parish came to light,” archdiocesan spokesperson Sarah McDonald. After the audit was completed, “the archdiocese turned over the findings in that audit to federal authorities for investigation and continue to assist with this ongoing criminal investigation.”

Earlier this year, the Associated Press reported that the FBI was looking into sexual abuse allegations in the archdiocese stretching back decades. The AP said the FBI was focused on whether clergy had taken children to other states to molest them, potentially in violation of the federal anti-sex trafficking law known as the Mann Act.

The archdiocese told the AP that it wasn’t aware “of any federal investigation into clergy abuse.”

A spokesperson for the FBI field office in New Orleans did not immediately respond to a request for comment Tuesday.

The allegations concerning Asare-Dankwah only came to light Friday when a federal judge overseeing the priest’s case — which is related to but separate from the archdiocese’s Chapter 11 bankruptcy proceedings — made the audit report public.

Complete Article HERE!

Former Dolphins chaplain Leo Armbrust accused of sex harassment

Leo Armbrust

By Jane Musgrave

Leo Armbrust was never your typical Catholic priest.

Serving as chaplain to the Miami Dolphins, University of Miami Hurricanes and even briefly for the Dallas Cowboys, on weekends he was as likely to be seen pacing the sidelines shouting at trash-talking linemen as he was preaching the word of God to devout followers at Our Lady Queen of Apostles in Royal Palm Beach.

Known for his quick wit and a penchant for off-color jokes, Armbrust rubbed shoulders with famous athletes, business tycoons and community leaders. His well-placed connections helped him when he set off on a multi-million-dollar fund-raising odyssey to establish a Father Flanagan-style village for troubled and neglected teens.

However, 15 years after he founded Vita Nova, a less ambitious, but well-respected agency that provides housing and other assistance to hundreds of young adults no longer eligible for foster care, Armbrust is being accused of all manner of wrongdoing.

In a lawsuit filed this month in Palm Beach County Circuit Court, a former Vita Nova board member claims Armbrust, who left the priesthood in 2009, used agency accounts as his personal piggybank to fund a lavish lifestyle. In her lawsuit, Barbara McMillin accuses Armbrust, 63, of spending his days at the office trolling the Internet for sexual partners.

Further, she says, he harassed employees with crude behavior, obscene photos and anti-Semitic jokes. In at least one case, she says in her lawsuit, the agency was forced to pay a worker $200,000 to settle a sexual harassment complaint.

Her claims are salacious, provoking strong denials from agency officials and Armbrust supporters. However, the Wellington woman didn’t merely lay out her claims and leave it at that.

As part of her lawsuit, she attached confidential reports and internal memos that appear to shore up at least some of her allegations. They reveal Armbrust’s relationship with a hip-hop musician as well as statements from top staff that he was undermining Vita Nova’s work. Further, she said, she plans to send the information to law enforcement officials in hopes they will investigate.

‘Obviously, not happy’

Attorney Jack Scarola, who is being sued along with Armbrust, Vita Nova and several others, scoffed at McMillin’s attack. He said McMillin is simply trying to get back at him and Armbrust for filing a lawsuit against her and other board members for attempting to boot the former priest out of the agency he founded. While the other board members in February agreed to settle the lawsuit, award Armbrust an undisclosed amount in back pay and give him his job back, McMillin refused. So, he said, the litigation against her will continue.

“She obviously is not happy about that circumstance and has responded in what appears to be a very irrational fashion by suing everyone in sight,” Scarola said.

Attorney Gerald Richman, who filed a different lawsuit against McMillin and other board members on Armbrust’s behalf, voiced similar views. “Barbara McMillin has been extremely antagonistic toward Leo,” he said. “It’s almost like a vendetta.”

McMillin, a former CEO of Kids Sanctuary who has worked for children’s service agencies for decades, said the lawsuits Richman and Scarola filed prompted her to do some serious soul-searching about what she witnessed during her five years on Vita Nova’s board.

While she signed onto the settlement of the lawsuit Richman filed, she became suspicious when she said her own attorney wouldn’t reveal the full terms of the agreement that was hashed out with Armbrust to resolve the suit Scarola filed. She said she was appalled by the idea of giving Armbrust $100,000 to $200,000 in back pay and allowing him to return to his job as agency fund-raiser when he had proved so inept at raising much-needed cash.

“They can call me a mean old lady or whatever they want to do,” the 67-year-old said. “I just wouldn’t have felt I had done what was necessary for the kids if I hadn’t thrown this out there.”

And throw out she did.

As part of the lawsuit, she released an investigation the law firm Akerman Senterfitt did in 2012 in response to a grievance former employee Terry Sullivan filed against Armbrust.

In interviews with Akerman attorneys, Sullivan recounted the unprovoked tongue-lashings she received from Armbrust. He forced her to mend his clothes, wrap Christmas presents and go with him to pick out presents during the work day. On at least one occasion, she saw pornographic images on his computer, she told investigators.

When he began a relationship with hip-hop artist and rapper Jeancarlos Correa, who uses the stage name Remynd, Armbrust told her to prepare packages at agency expense to promote the struggling musician’s career, she said in the report.

In one instance, he asked her to order T shirts to promote Remynd’s album, “Sex and Computers.” Featuring a blow up doll with the word “Censored” stamped between its legs, the album cover image was so offensive to the printer that the agency used that it refused the order. Sullivan also told lawyers Armbrust once called her into the office to look at a sexually laced music video of Remynd, featuring the musician trying to bed a Sarah Palin look-alike.

“Ms. Sullivan said that the video did not make her uncomfortable. She stated that she ‘is not a prude,’” Ackerman lawyers wrote in their report. “However, she felt the video should not be shared in the office.”

Top brass at the agency agreed. Vita Nova CEO Jeff DeMario told lawyers that when he learned Armbrust was circulating the image from “Sex and Computers” among staff and officials from other nonprofits, he told him to stop. He also told Armbrust to stop asking Sullivan to do sewing for him.

DeMario said there were other lapses as well. He said Armbrust sometimes dressed inappropriately, such as wearing a T shirt with a photo of one of the cops from the 1970s TV show “Chips”and the words “Spread ‘em” on it. He said he had heard Armbrust make “inappropriate” jokes about black and Jewish people.

The real problem, DeMario said, was that there was little he or Irvine Nugent, another former priest who was then president of Vita Nova, could do to rein in Armbrust. While both were technically his bosses, as the founder, he had the upper hand.

“If this was anyone else, they would have been terminated,” DeMario told the lawyers. “We have an agency that is predicated on virtues and we are not practicing them in house. What kind of agency are we?”

Scarola said he hadn’t read the report that McMillin attached to the lawsuit. He said he advised Armbrust not to comment for this story. But he said the depiction of Armbrust as a bigot or a sexist is simply wrong.

“There is not an anti-Semitic bone in Leo Armbrust’s body — not the slightest hint of prejudice about anything,” Scarola said. As to those who might have found Armbrust’s jokes offensive, he said: “That’s more a reflection of their over-sensitivity rather than any impropriety on the part of Leo Armbrust.”

Armbrust’s natural exuberance and occasionally flamboyant behavior are part of his charm and the reason he is a successful fund-raiser, Scarola said. “He has excellent community connections with high-profile people,” he said. “He has established these connections with the force of his personality.”

However, there are questions about Armbrust’s fund-raising ability. Before Vita Nova board members agreed to settle the lawsuit Richman filed on Armbrust’s behalf, their attorney described Armbrust’s fund-raising as “abysmal.”

“As the director of development for (Vita Nova Foundation), Armbrust has performed poorly and has failed to bring in sufficient donations that would cover his high salary, his benefits and his assistant,” attorney Roy Fitzgerald wrote. “Since at least 2006, Armbrust has failed to meet the fund-raising budget, although the fund-raising budget was significantly lower than what should be expected.”

According to Fitzgerald’s short-lived counterclaim to Richman’s lawsuit, Armbrust earned $150,000 annually, plus benefits. An assistant made $60,000-a-year. According to industry standards, he should have been bringing in three or four times the $210,000 the agency was spending on his office, roughly $630,000 to $840,000 annually. Records show its investment portfolio declined from $15.7 million in 2006 to $6.2 million in 2013. The agency also gets government grants.

“Armbrust sets his own schedule and does not invest the necessary time and energy into fund-raising or into the organization to understand the programs the organization offers,” Fitzgerald continued. “As such, Armbrust has failed at getting the necessary fund-raising and could do more.”

Since that lawsuit was settled, Vita Nova board members and executives have changed their tunes. They dispute the allegations McMillin is making in her recently filed suit.

“Much of what Ms. McMillin alleges in her complaint is substantially inaccurate,” DeMario said in a statement. “As an organization, we are saddened that Ms. McMillin has taken a path that may harm the very organization that she was once affiliated with and may impact the hundreds of young adults we serve.”

McMillin said that isn’t her intention. She said the organization is a good one and praised DeMario as doing good work against enormous odds.

“I truly hope and I pray that people will support the organization,” she said. “They are doing a fabulous job for kids who need their support. But it just isn’t right to allow Leo to go on and give that man money that should go to the kids.”

Scarola said McMillin may pay a heavy price for her actions. By releasing confidential information she may have put Vita Nova at risk. “Clearly, she had a fiduciary responsibility as an officer of the corporation to preserve the confidence of the corporation,” he said.

McMillin said she’s not worried. “Protecting Leo is not part of my fiduciary responsibility,” she said.

Further, she said, she’s not done. After Easter, she said she plans to ask the Palm Beach County state attorney, Florida attorney general and the IRS to look at the records she has collected. Not all of them are in the lawsuit, she said. She said she has credit card receipts that prove Armbrust was using agency money as his own.

“I’m not trying to destroy the foundation. I am trying to save the foundation,” she said. “He has been looting it for years.”

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