Secret accounts kept clergy misconduct quiet but left archdiocese finances exposed

Secret accounts kept clergy misconduct quiet but left archdiocese finances exposed

The Rev. Stanley Kozlak served nearly three decades in the Archdiocese of St. Paul and Minneapolis. But then he fathered a child and the archdiocese needed him gone.

Removing Kozlak quietly wouldn’t be cheap, but church leaders knew how to move money discreetly. The archdiocese held two secret accounts, controlled by the archbishop, designed to make problems like Kozlak disappear.

To get him out of active ministry, Archbishop Harry Flynn agreed in 2002 to pay the fallen priest $1,900 a month cheap jerseys “disability” for life, plus $800 a month in rent for life, and $980 a month “to replace the social security payment until Father Kozlak reaches age 67 when he would receive his full social security.”

Kozlak’s package was part of a secret financial system that let archdiocese leaders divert millions of dollars away from traditional church work to deal with clergy misconduct.

The system allowed archdiocese leaders to remove priests who had committed child abuse or other infractions without attracting attention. Lax accounting controls let church leaders cut checks to make problems go away.

The secrecy, however, also left the church vulnerable to embezzlement.

Today, the archdiocese is facing a slew of lawsuits over clergy misconduct that threaten to cripple it financially at a time when schools and churches are closing, donors are aging and there’s concern over two major fundraising campaigns.

The archdiocese says it can weather a financial storm. Local parishes, however, could be hardest hit over time. Pastors are already feeling the financial pushback from Catholics who donated to the church believing their money went to benevolent causes.

Millions, however, went for very different purposes.

Thousands of pages of private, internal archdiocese documents analyzed by MPR News detail a stealth financial system that included payments to persuade priests to leave active ministry, financial support for children fathered by priests and money for legal settlements.

Archdiocese leaders made payment decisions with little consideration of how they might hurt the church’s budget, said Scott Domeier, a former top archdiocese accountant who exploited the secrecy to steal more than $650,000 from the archdiocese.

The clergy misconduct budget was so well concealed that a trained eye wouldn’t notice the spending, Domeier said.

Payments associated with clergy misconduct came from separate, secret accounts, depending on the type of behavior involved. One such account, numbered 1 515, paid costs connected to priests accused of sexually abusing children. Account 1 516, meanwhile, paid costs related to the abuse of adults, or to financial misconduct. Items with these codes included expenses for therapy costs for victims and priests.

Money was spent for legal fees for priests and for settlements for their victims. The documents also show that the archdiocese paid a private investigator $112,000 over 10 years. The archdiocese used private investigators to conduct its own inquiries into abuse allegations.

“Disability” pay on the books became code for improper behavior. A don’t ask culture kept archdiocese employees from probing deeper.

Church records show Kozlak’s child was born in 2000 while he was pastor at St. Ignatius in Annandale. Internal memos obtained by MPR News show archdiocese leaders tried to persuade Kozlak to retire from ministry in April 2002.

If Kozlak refused to step aside, the Rev. Kevin McDonough wrote in a memo, the archdiocese was prepared to “involuntarily remove him.” McDonough was vicar general at the time, the archbishop’s top deputy.

Kozlak, 72, declined to discuss his retirement agreement in an interview Tuesday with MPR News. “These are matters that I have dealt with and I have taken care of in my life,” said Kozlak, who still lives in Annandale. “Believe me; I paid a price for it.”

He said that he and church leaders lived up to their “ends of the bargain” regarding his retirement agreement. Kozlak also insisted that the matter was a private issue between him and the archdiocese.

That’s exactly how top church leaders crafted such settlements, said two former top officials inside the chancery. “Everybody knew not to ask questions,” Domeier said, referring to the payment system. “Because what was behind those requests for payments never got into our files, and that was on purpose.”

The archdiocese declined an interview request but issued a statement saying that Thomas Mertens, brought on board as chief financial officer in December 2012, had started implementing procedures for greater transparency.

“Mertens made recommendations regarding best practices, including measures to improve transparency regarding financial data of the archdiocesan central corporation,” the statement said.

Church leaders didn’t provide specifics except to say they’ll release full, audited financial statements for fiscal year 2013 in February.

One such case the Rev. Corey Belden offers a stark yet vivid example of how money was used to fix problems.

Court records show roughly $30,000 disappeared from the account of an elderly woman named Marian Macaulay. Belden, a parish priest today serving at the Church of St. Anne in Hamel, Minn., oversaw those funds as her conservator.

Haselberger said Nienstedt agreed to repay Macaulay’s estate after investigators started examining Belden’s involvement with her funds.

Church leaders decided to repay the estate to avoid further scrutiny, Haselberger said. She called it an “extraordinary act.”

“It’s well outside of the scope of what would happen on a regular basis, and there’s a lot of questions about the ethics of using church funds for something like that,” she said.

Court records show the money was paid back, and Belden was dismissed as Macaulay’s conservator. Macaulay’s family, however, still isn’t happy with what happened.