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Todd Neilson, the independent expert appointed by Bankruptcy Judge Adler to examine the cash accounting system of the SD Diocese following her contempt of court proceedings involving its lawyers, and certain priests of the diocese has filed his report today.
The Nielson Report reveals that Bishop Brom, his lawyers and consultants, have manipulated bank accounts, failed to adhere to the financial policy and procedures of the Diocese, and have made material misrepresentations to governmental agencies, the general public, and the Bankruptcy Court.
Prior to the filing of the bankruptcy the SD Diocese maintained what it called the Diocesan Bank. All parishes were required by the cash management policy of the Diocese to keep on deposit with this Diocesan Bank funds in excess of two months operating capital. Bishop Brom had exclusive control over the use of those funds and was not required to, nor did he, obtain any permission from any parish as to how he used that money. AFTER the filing of the bankruptcy, and in keeping with the charade the Diocese has been promoting in the bankruptcy (that it is a trustee for the benefit of the “separate” parishes), it changed the Diocesan Bank to what it now calls the PSDL Trust (Parish Savings Deposit and Loan) account. NOW the Diocese claims this Bank is not an ASSET of the Diocese.
YET, Bishop Brom made representations to its auditors, banks, state agencies and the public, that the funds on deposit with the Diocesan Bank are an unencumbered ASSET of the Diocese. Now, Bishop Brom has testified under oath to Judge Adler that these funds are not an ASSET of the Diocese, but belong to the parishes. Bishop Brom is either misrepresenting the facts to Judge Adler or he misrepresented the facts to his auditors, banks, government agencies and the public before.
The Nielson Report also reveals that there are substantial funds unaccounted for, or mischaracterized. $165 Million Dollars flows through the SD Diocese every year. YET, the Nielson Report reveals that there is a $19Million dollar deduction from the Diocesan Bank just prior to the filing of the bankruptcy that has been eliminated from the financial statements. The Nielson Report and testimony at the creditor’s examination reveal that an additional $12Million in excess earnings between interest paid and interest earned by the Diocesan Bank has been shifted out of the Diocesan Bank and booked into a restricted account clearly in an effort to hide these funds from the sex abuse victims.
These are only a few examples of the contempt that Bishop Brom and his legal advisors and financial consultants have shown not only to Judge Adler and the Bankruptcy Court, whose protection it has sought, but to the legal system generally. The behavior of Bishop Brom proves that he is not to be trusted, that he is not in control, and that nothing has changed. This is the same contempt for the law that allowed children to be raped and abused with impunity.
Whether Bishop Brom should be trusted to continue to operate this Diocese as a fiduciary of the creditors is a serious question.
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