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Diocese heading towards bankruptcy; Turlock priest costs church millions

POSTED September 6, 2013 9:12 p.m.

A series of costly payments to settle multiple claims of sexual abuse has the Diocese of Stockton moving closer to a decision to file for bankruptcy, church officials stated Friday.

The Diocese of Stockton oversees Catholic entities between Lodi and Turlock, including All Saints University Parish, Sacred Heart Church, and Our Lady of the Assumption of the Portuguese Church, all in Turlock, and St. Anthony’s Church in Hughson. It also includes Sacred Heart’s Turlock schools.

“The funds we have used to settle sexual abuse lawsuits have been almost depleted, and we have no apparent way to meet the expenses of pending lawsuits and possible future claims,” said Bishop Stephen E. Blaire in a released statement.

“We continue to investigate our options, and no final decisions have been reached. I feel, however, that it is important to tell you that options other than filing for bankruptcy protection have not emerged,” Blaire continued. “It appears likely to me that the Diocese will need to re-organize financially under the protection of the Bankruptcy Court.”

Blaire said all the local Catholic entities organized as separate corporations would not be subjected to the bankruptcy filing.

“Nevertheless, these separate organizations need to have an understanding of the decision-making process and the possible claims that may be made by creditors of the Diocese so they can be prepared in whatever way necessary,” Blaire said. “Experience from other diocesan bankruptcies indicates their status as separate corporations, not subject to the possible bankruptcy filing, may be challenged by creditors.”

Blaire said the bankruptcy filing was not an attempt by the Diocese to sweep aside any possible future allegations.

“It remains my commitment to find a way to meet our obligations: to the victims of sexual abuse who have not yet had their day in court, to the poor and vulnerable of our communities, and to you our people. This commitment will guide our decisions as we move forward,” Blaire said.

The Diocese of Stockton has paid out more than $15 million over the past 20 years to settle sexual abuse claims.

The majority of the claims were lodged against defrocked priest Oliver O’Grady, who spent several years at Turlock’s Sacred Heart Church.

O’Grady has admitted to sexually abusing at least 25 children of all ages and both sexes, and sleeping with two mothers to gain access to their children.

Born in Ireland, O’Grady joined the Diocese of Stockton in 1971. He first served at St. Anne’s in Lodi, where he molested an 11-year-old girl. O’Grady admitted to the offense, but charges were not filed when it was promised by the late Bishop Merlin Guilfoyle that O’Grady would be sent to a monastery. O’Grady was actually sent to Sacred Heart in Turlock, where he served from 1978 to 1982.

O’Grady was arrested in 1993 in Calaveras County on multiple sexual abuse charges. He pled guilty to four counts, including the molestation of two Turlock brothers, and was sentenced to 14 years in prison. He served seven years and was then deported back to Ireland in 2000.

In 2012, a court in Ireland sentenced him to three years in prison for possession of child pornography.

In the 2006 documentary “Deliver Us From Evil,” O’Grady details how he preyed on children and claims he was able to keep doing it because the church sent him from parish to parish.

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