Is Boston Archdiocese Committing Fraud?

Dictionary.com defines “fraud” as “deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage.”

For those following the saga of how the Archdiocese of Boston is cutting promised pension benefits to former employees and religious, we may now have a new word to use in discussing what is going on.  We are not sure what the answer to the question in the title is, but are just posing the question for consideration.  You decide.

Here is the situation in a nutshell:

The archdiocese promised certain benefits to employees when they were hired, and the Archbishop of Boston also promised that when parishes were closed and sold, the funds from property sales would pay off employee pension obligations, among other debts and obligations.  But today, some six years after parishes were closed, even though $5M exists in unpaid pension obligations from closed parishes that has never been paid back, instead of tapping the closed parish “reconfiguration funds” to pay off the debt as promised, the archdiocese is sticking it to former employees by cutting their pension benefits.  Worse than that, even as the archdiocese is cutting pension benefits saying they do not have the money to pay them, $2.5M from those closed parish reconfiguration funds was siphoned off from reconfiguration funds to pay for powerbroker Finance Council member Jack Connors’ pet school project in Brockton instead of going to pay back the pension funds.

Take a moment to re-read the first sentence of this blog post.

There is so much to say about events of the past few days, including the meeting at the Pastoral Center last night with former employees, that time simply does not permit a full discussion today.  Here are just two highlights, and the basis for the subject of this blog post.

1) Despite initial promises made to employees about pension benefits when they started working for the archdiocese, Carol Gustavson, the plan administrator, repeated last night that if former employees do not take their lump-sum payments now, there is no guarantee they will get their money later. 

 We all know by now, of course, that it is a conscious choice and decision by the archdiocese and plan trustees to not uphold the prior commitments, while still choosing to pay millions of dollars in excessive six-figure salaries to multi-millionaire employees. By the way, no one seems to mention that there is approximately $1 billion in real estate assets on the books, which the Chancellor and archdiocese seem perfectly content to sell off when they need the money for certain other things, but not for funding pension plan obligations.  So much for good faith in prior promises made by the Archdiocese of Boston.

2) A question asked last night deserves immediate investigation by the archdiocese and by legal authorities.  Why has the 2004 promise by the Archbishop of Boston that reconfiguration funds from parish closings would be used to payoff parish debts not been honored to retire $5 million owed by closed parishes towards the pension fund? 

Here is the promise, which we first wrote about in our September 22, 2010 post,  Moving Money, Building Distrust. You will find the promise made twice.  See page 4-7 of this document distributed at the March 2006 Archdiocesan Pastoral Council meeting, presided over by Cardinal Sean O’Malley.  Note how the document coincidentally opens on page 1, “Communication Builds Trust.”:

From letter dated February 13, 2004: The Archbishop has chosen this approach so that many issues may be addressed…The proceeds from the assets of suppressed parishes will provide monies due employees of suppressed parishes for past work and separation assistance, for vendors who are owed monies from suppressed parishes, for amounts for past employee benefits and parish insurances due from suppressed parishes…

Here is a graphic of the same passage:

If you keep reading in the .pdf, you will see a second letter, dated July 24, on pages 6-7 that reiterates the promise:

“The funds raised from the sale of suppressed properties will be used to address past due obligations and employee benefits of the suppressed parishes, including:

1. Monies due employees of suppressed parishes for past work and separation assistance;

2. For vendors who are owed monies from suppressed parishes;

3. For amounts for past employee benefits and parish insurance due from suppressed parishes;.

4. For covering unfunded pension liability for lay employees and clergy of all parishes

Promise was clear.  Was it upheld?  No. 

In this 2010 actuarial report on the pension plan, you can clearly see on page 9 a number of employers have unpaid obligations to the pension fund.  Open parishes owe nearly $40 million, and closed parishes have a $5 M debt to the pension plan.  Here is a snapshot of the page:

Despite that $5M debt to the pension plans from closed parishes, in the 2008 annual report we see this:

“On August 13, 2007 as part of the parish reconfiguration process $2.5 million was transferred to Trinity Catholic Academy Brockton, Inc.”  a newly formed related organization that consolidated the operations of certain parish schools in Brockton.”

We asked this last September and will ask it again.  How did Jack Connors’ new Catholic Schools project magically become part of the previous “parish reconfiguration process”? 

How is it that funds originally promised by the Archbishop to parishes, employee benefits, and the unfunded employee pensions were instead redirected to the Brockton project?

Then of course in 2009, when the Campaign for Catholic Schools, Inc., another separate but “related” corporate entity, needed cash to pay construction bills, somehow $26 million in Revolving Loan funds–some of which probably came through the revolving door from Reconfiguration–revolved right back out the door to Jack Connors’ pet project.  We keep going through the list of promised usages for reconfiguration funds and must be missing something.  Can anyone point out how building new non-parish-affiliated archdiocesan Catholic academies by a different but “related” corporation fits into the list of priorities above the promise to repay unfunded pension plan obligations? 

And  where exactly did the gain of about $40 million from sale of properties reported back in the 2006 Annual Report and  2006 audited results go after the Revolving Loan Fund was paid-back $14 million?

Dictionary.com defines  “fraud” as “deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage.”

Objective reality from their own actuarial statements is that $45 million of the funding shortfall is actually owed by open and closed parishes, but former employees are being coerced into taking the hit in their pockets to let the archdicose off the hook.  This paves the way for a new fully-funded plan in the future for everyone making six-figure salaries currently working at 66 Brooks Drive.

Do the actions of the Archdiocese of Boston correspond to the practices in the dictionary definition of “fraud”?  We are just asking the question.  What do you think?

29 Responses to Is Boston Archdiocese Committing Fraud?

  1. Dave says:

    Bernie Madoff committed fraud. Bernis says, and he may be right, that he took advantage of a bunch of greedy folks. How much worse is it for a Cardianl Archbishop to rip off people who gave thier lives in service to the Church.
    Perhaps they could share a cell?

    • Carolyn says:

      Given what we know about Jim McDonough and how he got the job of Chancellor, a canonical office of remarkable accountability according to the Code of Caanon Law, today’s radio news brought a real stunner. McDonough has the job through a little sleight of hand, total conflict of interest, and I would opine fraud (based on the fact that the fix was in while faithful Catholics were told there was a diligent search underway). The chancellor’s selection and hiring was managed by Jack Connors and Bryan Hehir through Ann Carter, who chaired the search committee in one of the more stunning examples of conflict of interest documented on this blog.

      So grab the anti-nausea tablets before you listen to today’s report on WBZ radio. Grab the anti-nausea tablets before you listen:

      http://boston.cbslocal.com/2011/03/08/ceo-of-rasky-baerlein-ann-carter-on-mentoring-young-women/

  2. JRBreton says:

    AMDG

    A small point which no one seems to appreciate. Technically, in 2000 Cardinal Law embezzeled 3 million dollars. You may remember the time. In the spirit of the jubilee year he “forgave” some debts of poorer parishes (which he never hoped to collect anyhow.) We now know publicly the forgiven debts amounted to 3 million. Where did the money come from?
    Actually it didn’t come from anywhere. He simply wrote off the debt against the parish assets the Archdiocese was holding in pooled bank accounts. His intention was to make up the money in his 300 M$ capital campaign. But then the sex scandal fell on him. The money remained unpaid. Like many other embezzelers he had good intentions, but it was still an embezzelement. The money was finally made up by sales from parish closings as revealed some years later in the Pilot. (You need to look at the fine print here). OK, but is this what the closings were about? repaying Cardinal Law’s embezzelement? Seems to me Cardinal O’Malley should be asking Cardinal Law to make up some of the embezzeled money in justice. The money coming from Cardinal Law should go to replenish the reconfiguration funds which then might be used to help with pension debacle.

    Or does simple justice apply no longer to cardinals?

    • A Priest says:

      The whole subject is bad and I feel for those who are hurting, as I am with regards to a pension…but to characterize the Jubilee Year forgiveness as embezzlement is just plain wrong. The idea of offering forgiveness in a Jubilee year is ancient and the Cardinal was doing a good thing. If he had taken the money and used it for his own gain you might have a point but otherwise you are making a leap that one cannot do logically. Sorry but your anger towards Law on this issue is unfounded.

      • Disgusted Boston Priest says:

        I agree – it was not embezzlement. But it falls somewhat short of forgiveness.

        The debts “forgiven” by Cardinal Law were not actually his to forgive. The debts were not owed to the central administration but to the Revolving Loan Fund, which means they were owed to other parishes in the archdiocese, not to Cardinal Law or “Corporation Sole.”

        This may be a fine point, but Bishop Lennon, the then Vicar General, along with other members of the Finance Council (who had more skin in the game than Himself) strenuously objected to Cardinal Law’s great show of largesse, principally for two reasons:

        First, it was bad fiscal policy; the Revolving Loan Fund was a barely-making-it non-profit and couldn’t absorb this huge $3 million hit.

        Second, you can only forgive debts owed to yourself. One cannot be thought of as generous who only gives away the money of others.

        Now, if you want to talk about fraud and conversion of funds, let’s discuss the Clergy Benefit Trust and the fact that this selfsame Cardinal Law saw fit to convert monies donated by the People of God explicitly for the purpose of supporting sick and retired priests to other uses – for sixteen years! Now THAT’S fraud!

      • A Priest says:

        DBP, I can agree with you on that…I also believe he probably thought the Promise for tTomorrow would take care of everything too. And it probably would have, but then the bleep hit the fan and it was all over.

        The other issue is this…I have no problem with folks withholding money from the Catholic Appeal and what not, but in the end, when we do this we only hurt the Church. If we could somehow get folks to give, we might be able to get out of some of this financial mess. There should be cuts made for sure, but the level of giving needs to go up, not down. The real estate everyone talks about is parishes, do we really want the RCAB to liquidate it’s property in that way? I don’t think so. If they ever just closed parishes and sold the land to fund a pension system they never should have set up in the first place, all heck would break loose.

      • Angry Parish Council Member says:

        I am trying to reply to Disgusted Boston Priest.

        Are you and other priests saying that the big study done by AAF published in 2009 that concluded monies from the clergy pension fund were NOT misdirected was not valid? Clergy were on the review team. You seem to forget the big increase in clergy benefits approved in the 2001 timeframe, just before the sexual abuse crisis hit that impacted the plan adversely.

        http://www.bostoncatholicdirectory.net/uploadedFiles/BostonCatholicorg/_Utility/News_And_Press/Press_Releases/2009_Press_Releases/Clergy%20Fund%20Study%201972-2008.pdf

        [edited by BCI]

        I am not defending Cardinal Law, but cannot see where exactly your claim has been substantiated that money from the people intended for sick and retired clergy was diverted elsewhere for sixteen years.

      • Disgusted Boston Priest says:

        Dear “Angry Parish Council Member”:

        I’m not saying the study wasn’t valid, I’m saying that it didn’t address the real question(s) and has been utilized as a smokescreen by McDonough et.al. to divert attention from the real question.

        Read, in the penultimate paragraph on Page 1 of the report, the following telling statement by the folks at AAF:

        “We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion, on the “Consolidating Statement of Changes in Net Assets”; accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.” (emphasis mine)

        I invite you also to read the final paragraph on Page 5 of the same document, where it is reported that the lack of internal controls prevents the firm from “stating any absolute conclusion” as to whether all transactions “were in accordance with the trust agreements.” Additionally, the author of the report goes on to say, “although there may have been internal approvals and supervisory oversight within the Clergy Benefits Office itself, we were unable to locate written indication of such approvals of individual transactions.”

        There’s plenty of evidence in the report to indicate that things during those sixteen suspect years were not right – mostly, the numbers just don’t add up.

        Look at Page 34 (Appendix B). The per year contribution from the Christmas & Easter collections from 1976-2002 and 2006-2008 averages $4 million, whereas the average of the three years from 2003-2006 averages $6.5 million. Hmmmm…..I wonder what accounts for that difference? Did people give more during the “scandal” years?

        Also notable on that same page is the fact that they only tested the fiscal years 2001-2008 for whether all the Christmas and Easter collections went into the Clergy Benefit Trust. WHAT??? Nobody was claiming that they didn’t go in under Bishop Lennon or Cardinal Sean – only under Cardinal Law’s regime has there been alleged to have been a discrepancy – – so why didn’t they check THOSE years????

        In short, my friend, the report that’s been used to “reassure” folks about the sixteen-year discrepancy is much more notable for what it DOESN’T say than for what it does. There are plenty more examples in the report. Read it again, for the first time…

  3. Former teacher says:

    It sure sounds like fraud. We (Archdiocesan pensioners) are being robbed.

  4. anonymous says:

    It is pretty clear that the Archdiocses has no intention of attempting to fund thi plan. While the trustees have stated that full funding is their goal, unless they open up thier own wallets, there is nothing they can do from the billing side. The Archdiocese, especially under McDonough, has a history of shafting the employees. From no raises to an increased work week to the elimination of holy days and even free coffee, McDonough is bad news.

    Also, it is my understanding that Cardinal O’Malley does not even attend Pension meetings nor does McDonough attend many.

  5. Hoodwinked Priest says:

    There is no justification for siphoning off reconfiguration funds to the Brockton Catholic academy when the pension fund was still owed money from the closed parishes. Sounds like fraud to me. At minimum, the Chancellor should be fired for breach of fiduciary responsibility. The clergy fund mismanagement is an even bigger issue. I pray that my fellow priests on the Presbyteral Council have the courage to tell the Cardinal to terminate the Chancellor before his term is renewed.

  6. Patrick O’Malley says:

    The Catholic Church had to pay out $2 billion dollar in settlements for child rape. That’s Billion with a “B”, or 2,000 chunks of a million dollars.

    Because they raped children.

    And most of those rapes weren’t reported.

    This will be the end of the Catholic church, as it should be.

    • Little Red Hen says:

      You are wrong. Jesus promised that the gates of hell would not prevail against the Church. I believe Him.

    • A Priest says:

      Patrick, you are throwing a lot of innocent people under the bus my friend, and why? What has the Church done for 2,000 years other than be the largest charitable organization in the world…other than bring the sacraments to billions, yes that’s with a b…other than do everything it could for the poor and the helpless. The Church didn’t rape anybody, individual MONSTERS did. At least get that right

      • Thank you, “A Priest” for your response and as well to “Little Red Hen.” BCI has been offline and would have removed Patrick’s comment if caught earlier.

        Patrick, we all have issues with individuals who committed sexual abuse against children, but to attribute those abuses and crimes to the Roman Catholic Church as a whole is imappropriate to say the least.

        Lastly, this blog post is about the topic of pensions and possible fraud in management of money. If you have further comments about sexual abuse of children, we suggest you make them in another forum at a website or blog focused on that topic.

      • Patrick O’Malley says:

        bostoncatholicinsider,

        Thank you for supporting my comments. I try to stand up for the children that the church raped, and you plan to remove the comment.

        [edited by BCI]

      • Patrick,
        As you know, we have left up all of the comments you have made on the blog–until you continued down a path not relevant to the topic of the post, and started making what we saw as personal attacks on “A Priest.”

        We are deeply troubled by a number of issues going on in the Church, including the abuse of children by some priests and a range of other issues. Unfortunately, since we have other obligations, BCI is not able to cover every topic that we may be concerned about, have opinions on or that may be of interest to our readers. Readers ask us to cover all kinds of situations important to them, and since we are not a paid publication with a paid staff, we just cannot write about everything. When we write a blog post, we ask readers to stick to that topic in their responses, and if they do not stay with that topic, after a gentle reminder, we do moderate comments that are off-topic.

        BCI lived through the daily drumbeat of the horrible news about the sexual abuse of children starting in 2002, and other organizations, blogs and venues have taken up this issue as their dedicated focus. We cannot do justice to the issue here as others are already doing as their focus, and we have enough difficulty keeping up with the narrow area where we do focus. As you and other readers know, there are Catholic-authored blogs that focus on apologetics, liturgy, sexual abuse, the Church and American politics, the Vatican, Catholic media, and other topics.

        We are not “silencing” you. Rather, we are simply suggesting that if the matter of clergy sexual abuse is a topic you are passionate about discussing further, there are other venues that are better suited to that topic than BCI.

        On 2/25, you said, “You aren’t as radical as I am, but you address the truth. The church needs more like you as their spokespeople.” Sorry to hear that you have apparently changed your mind so quickly when all BCI has done is continue to do what we were doing before.

    • A Priest says:

      BCI,
      Is this fellow really someone that should be given any credence. He’s clearly anti-Catholic and has no other apparent motive other than to promote his business and bash the Church. It is not helpful dialogue. Just my opinion.

      • Boston Catholic Insider says:

        A Priest,
        Though we try to give everyone the benefit of the doubt, BCI thinks you are probably right. We apologize–in hindsight, BCI should have caught that earlier, but this is one of the challenges of trying to allow an open forum. The URL links promoting his business have been removed.

  7. Michael says:

    Getting back to the issue of “Fraud” … don’t you think that word (fraud) is a bit harsh? Don’t you think it really is not the type of word that a good Catholic would use.

    It seems so stark. It seems so confrontational. Judge not lest ye be judged. What woud Jesus do? Don’t you think judging the Cardinal or Connors, McDonough, et al is a bit … well let’s say … not Catholic.

    Good people don’t commit “fraud.” Aren’t these poor innocent slobs (Connors, McDonough, Grassa O’Neil, etc.) just trying to make their $325,000/year salary (in addition to a public pension and other income sources) and just live their lives … Don’t you think they hurt every time you accuse them of something as serious as “fraud?” Don’t you think Cardinal O’Malley would rather not be Cardinal? … that all of this makes him sad and makes him want to go back to Ireland for another trip (where he can really help out some poor bastards (the Irish tort lawyers)? Don’t you think it is tough to be him? … to be them (o’Neill, Connors, McDonough, et al)?

    Really … in the future please stop and think before making such harsh and well founded criticisms like this. Stop worrying about the priests and longtime committed / poorly paid former employees. They’ll do just fine on their own without you butting in and calling this “fraud.”

    Your insensitive blogging really hurts the people at the top and it is very un-Christlike. You ought to be ashamed of your lack of tolerance for the creative accounting, slight of hand, and gymnastic attempts at legalise that these phonies have been up to for the past several years. Seriously, there are more important issues to address (like ensuring tolerance, diversity and a bullying free Catholic School system) than going around accusing (no matter how true) good people of fraud.

  8. Anonymous says:

    It’s interesting that O’Malley has expressed concern for federal budget cuts relating to fuel assistance to the poor, yet does not seem to care about his own employees.

    During the height of the abuse crisis, on more than one occasion, the employees were praised for their good work and loyalty to the Archdiocese. They were rewarded by being systematically let go by McDonough and Erickson. Now this.

    It is fitting that during the holy season of Lent that O’Malley has chosen to emulate Pontious Pilate and “wash his hands of the entire pension problem.” This is more than fraud, it is social injustice.

  9. […] If you are new to the saga of how the Archdiocese of Boston is cutting promised pension benefits to former employees and religious, you may want to first catch-up by reading our most recent posts on the pension plan  issue, as well as “Is Boston Archdiocese Committing Fraud? […]

  10. […] $5M owed to the lay pension plan by closed parishes from reconfiguration funds and $39 million owed to the fund by open parishes […]

  11. […] Why is it no one will answer THAT question?  Why will no one from the archdiocese acknowledge the promise made by Cardinal O’Malley in 2004 to repay $5 million still owed to the pension plan b…? Why won’t the Chancellor at leastadd that $5 million to the pool of funds and recalculate […]

  12. […] would repay employee pension obligations due from closed parishes using reconfiguration funds.  $5 million is due, but that has not been repaid, while $2.5 million from reconfiguration funds was d…. Why is it a problem for BCI to call attention to this, or to the lawsuit by the Daughters of St. […]

  13. […] Repayment of Employee Pension Obligations from Closed Parishes.  7 years and 2 months have passed since Catholics were promised on February 13, 2004 that the archdiocese would repay employee pension obligations due from closed parishes using reconfiguration funds.  $5 million remains due, but has not been repaid, while $2.5 million from reconfiguration funds was d…. […]

  14. […] 2. From the 2010 Annual Report (p.35), we know that in the year ended June 30, 2009,  $126,000 was transferred to Trinity Catholic Academy, Inc., a related organization that in 2007 consolidated the operations of certain parish schools in Brockton.  That is on top of the $2.5M that was given to Trinity Catholic Academy in August of 2007 (as we described in (“Is the Archdiocese of Boston Committing Fraud?”) […]

  15. […] to repay the pension fund not being kept, when some of that money was directed elsewhere? See: https://bostoncatholicinsider.wordpress.com/2011/03/11/is-boston-archdiocese-committing-fraud/ Response from […]

%d bloggers like this: