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Diocese of Stockton submits bankruptcy plan
$15 million will go to victims of sexual abuse
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The Diocese of Stockton has filed a reorganization plan with the bankruptcy court that, if approved, will allocate $15 million to the more than two dozen victims of sexual abuse that have come forward since 2014.

The Roman Catholic Bishop of Stockton filed for Chapter 11 bankruptcy protection in January 2014 after a series of costly sexual abuse settlements left them financially drained. Once the Diocese made the decision to file for bankruptcy they began a notification process that over the course of three months led to 34 new claims of sexual abuse. The new claims were filed with the U.S. Bankruptcy Court and the proposed plan will provide $15 million to 27 survivors of sexual abuse as well as non-monetary commitments such as therapy and counseling.

“The plan demonstrates the Diocese of Stockton’s continued commitment to providing for survivors of sexual abuse in a fair, just and equitable manner from its available resources,” the Diocese said in a released statement.

Locally, the Diocese oversees 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. However, the bankruptcy filing will have no impact on the parishes, schools and other ministries.

The Diocese of Stockton has paid out more than $14 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.

After admitting to sexually abusing an 11-year-old girl in Lodi, his first assignment, O’Grady was sent to Sacred Heart, 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.

Part of the settlement funds already paid by the Diocese was for a sexual abuse claim against a priest and a youth coordinator at Sacred Heart. In 2003, the Diocese agreed to pay $1 million to a 19-year-old man who claimed he was sexually abused by a priest at the church when he was 14 years old. The claim accused Oskar Pelaez, who served as a priest at the church from 1995 to 1998, of molestation. Pelaez pled no contest in 2002 to 12 counts of child molestation and was sentenced to three years and four months in prison.

In addition to the $15 million for abuse victims, the Diocese will set aside $750,000 for any remaining victims yet to come forward. Other key elements of the restructuring plan include paying general unsecured creditors at least 50 percent of what is owed, and restructuring secured loans.

The consensual plan, if approved by the bankruptcy court in October, is expected to allow the Diocese to exit bankruptcy by the end of the year.  The Diocese’s plan also will allow the Diocese to carry on its essential ministries and services, including ministry, education and charitable outreach.