Boy Scouts says it’s safe, and offers sex abuse victims just 80 days to file claim. Victims balk.By Blair Morris
March 29, 2020
Boy Scouts of America filed for bankruptcy after a flood of sex abuse cases, reports of declining membership, & legal battles with insurance companies.
Stealthily, in thousands of pages of documents filed in the dark of night, the Boy Scouts of America has planted the first seeds for a bankruptcy that is expected to grow into a dramatic and expansive fight.
Deep in the paperwork filed early Tuesday in federal court in Delaware is a time bomb: a proposal to give those who say they were sexually abused while Scouts just 80 day window to submit their claims.
For survivors and their attorneys, who want a public reckoning, that early posturing is ominous.
“Boy Scouts of America wants to see Boy Scouts of America proceed, if possible, as if this never happened and that the men who were abused as Scouts, their issues just have to be dealt with and let the Boy Scouts proceed,” said Paul Mones who has represented dozens of cases against Boy Scouts.
Mones said attorneys will be contesting the 80-day deadline as “way too short. People have waited decades to come forward.”
The country’s largest youth group took pains to present itself as a stand-up citizen in its filing, a guy with Scouts Honor charm who deserves to be trusted. The organization does much for society and has nothing to hide, it argues, and thus should be freed from the weight of 1,700 current and potential lawsuits for child sexual abuse.
The documents also lay a foundation for why the national organization should be the only entity required to cover the liability that landed the organization in a state of near financial collapse — not the 260-plus local Boy Scout councils.
A Victims Compensation Trust is proposed, but the not the amount of money that would be set aside for it. Bankruptcy experts expect Boy Scouts to argue that some of its assets will need to be reserved to help Boy Scouts emerge from all of this intact.
Central to the argument that Scouting should be trusted to continue serving kids is a thick report included in the court filings, commissioned last year by the Scouts. Key among its findings: Scouts’ safety measures are the strongest and most effective of any youth organization.
For years, victims have sought more than a corporate apology crafted by public relations professionals. Now, they fear the bankruptcy will deprive them of that.
“They said they believe all victims and they want them to come forward, and then they do this,” said a 51-year-old Riverside, California man who says he was abused between the ages of 11 and 15. “How can you say you want to give people justice when you file for bankruptcy?”
The survivor — USA TODAY does not identify victims of sexual assault without their consent — said he has mixed feelings about whether Boy Scouts of America should be disbanded, acknowledging that “they probably still do some good.” But if he had a son, he would not allow him to be a scout.
His lawsuit is now in limbo, along with 274 other suits, thanks to an expected automatic stay placed on civil litigation. That stay would apply to the local councils and all charter entities as well, meaning no one can sue Boy Scouts or any of its entities during or after the bankruptcy proceedings for anything that happened prior to the filing. Instead, all claimants will be funneled into the bankruptcy.
The process can take months, even years. Boy Scouts and bankruptcy experts say it can ensure equitable treatment for all victims. Advocates say it will result in pennies on the dollar for those who were abused.
Bankruptcy attorney Douglas C. Bernstein cautions that this is only the start of a series of negotiations that make up a bankruptcy. Tuesday’s filings are essentially the Boy Scouts’ opening arguments.
“What you see on day one isn’t necessarily what the end result is going to be,” said Bernstein, a fellow of the American College of Bankruptcy and member of Plunkett Cooney’s Banking, Bankruptcy & Creditors’ Rights Practice Group.
Bernstein is just as certain that people will walk away unhappy in the end, as is the case with most any bloodbath of a debate.
“Unless you’re paid 100 cents on the dollar of you claims, you’re never going to be happy,” he said, “and that’s the nature of bankruptcy.”
Who’s liable for abuse?
In its filing, Boy Scouts broke down its assets in ways most onlookers had never seen. Listed are a little more than $1 billion in assets, including $123 million in cash, $199 million in investments and $63 million in the national properties enjoyed by thousands of scouts.
That includes the iconic Philmont Scout Ranch, a 140,000-plus-acre park in the New Mexico mountains where an estimated 22,000 scouts backpack every summer.
Debts also are laid out, so massive debts that Eric Snyder, partner at NYC-based law firm Wilk Auslander and chairman of the firm’s bankruptcy department described them as startling.
“That they have $328 million in debt for a nonprofit; I was like, ‘Wow,’ ” Snyder said. “That’s going to complicate how distributions are made.”
Last year, Boy Scouts confirmed it had used Philmont Scout Ranch, a New Mexico property that the organization values at more than $40 million, as collateral for an existing line of credit for insurance.
Tuesday’s filings shed new light on other loans as well as secured creditors, who will have to be paid first, ahead of abuse victims. The Boy Scouts have about $222 million in secured debt, according to an analysis of the filing conducted by restructuring research firm Debtwire, such as JPMorgan Chase.
Any assets not considered security for debt could be vulnerable to sell to pay off creditors.
Much of the Boy Scouts’ assets, however, are owned by regional councils across the country. The national organization said in the court filing it had $70 million in land and buildings. The USA TODAY Network found $101 million in local councils’ property in the state of New York alone.
The national organization describes its relationship with local councils as similar to a franchise arrangement. The national group handles the development of Scouts content and structure, licensing, training, human resources, legal support and information technology. The local councils are separate legal entities.
Under the Scouts’ proposed reorganization plan, local councils would be “Protected Parties” not liable for sexual abuse claims filed against the organization.
Victims’ attorneys are gearing up to disagree, arguing that local councils should be forced to relinquish assets for sale to help pay off lawsuits since in many cases failures by the local groups contributed to abuse.
One victim, a 66-year-old Iraq veteran represented by Tim Hale, a California lawyer who specializes in representing victims of child sex abuse, said that after being abused as a 14-year-old, he informed his local council in a handwritten letter. He said the Ventura County Council, based in Southern California, never responded or acknowledged his abuse.
The veteran, who asked to be identified only by his first name, Rick, believes he deserves justice from both his local council and the national organization.
“I think the money should come from both of them,” Rick said. “The local council didn’t do their due diligence in weeding out perpetrators like this,” while the national organization “covered it up and tried to save face.”
Pamela Foohey, who has studied bankruptcies involving abuse cases, said she’s not surprised the national organization is trying to shield the assets of local councils.
The Scouts are taking advantage of corporate laws that “every other company takes advantage of,” said Foohey, an associate professor at the Indiana University Maurer School of Law.
That doesn’t mean the Boy Scouts can or should seek to minimize payouts through the Victims Compensation Trust, she said. Bankruptcy law requires Chapter 11 debtors to pursue the best interests of their creditors even as they try to stay afloat.
“Will the Boy Scouts try to minimize how much they put into that fund or will they truly work to maximize the amount that goes to those survivors?” Foohey asked.
Snyder, the New York attorney, predicted it’s going to be difficult for the Scouts to wall off local councils, especially if the national organization has been administering the real estate and acting as if it’s their own. Tim Kosnoff, an attorney with Abused in Scouting, agreed based on past litigation.
“Whenever we sue them, anybody I know that has, we named the local council,” said Kosnoff, who has worked on dozens of cases against the Scouts and the Catholic Church. “When you get into negotiations there’s no daylight between them. It’s the same insurance company that’s paying, same defense lawyers.”
“Under the bylaws of the Boy Scouts they have absolute control over the assets that may be titled to the councils… BSA national has a right to shut down a local council and to take their property and use it for some other purpose. So for them to say that it’s the councils’ is ridiculous.”
One of the safest youth organizations in the world?
Sandwiched within the bankruptcy documents is a 281-page “informational brief” in which a University of Virginia professor argues the Boy Scouts is “undoubtedly one of the safest youth-serving organizations in the world.”
Published in 2019, Janet Warren’s study looked at the contents of 7,819 ineligible volunteer files from 1946-2016 provided by the Scouts, which identified 9,554 total victims.
Warren argues that a small percentage of Scouts were abused compared to the overall number participating. While acknowledging it’s “startling” to discover the Scouts harbored so many abusers, Warren points to the “pervasive nature of child sexual abuse in America,” and cites other studies that make it clear “abuse in youth-serving organizations was a relatively rare form of child abuse, ‘dwarfed’ by abuse of family members and other adults.”
Mones, who tried a landmark 2010 case against Boy Scouts that resulted in a $19.9 million verdict, said Warren testified to similar findings back then.
“Janet Warren’s testimony during the 2010 case was not viewed as credible, as far as I saw it, by the jury,” Mones said, “or else they wouldn’t have rendered the damage verdict.”
Gilion Dumas, a Portland, Oregon-based attorney who represents dozens of sex abuse victims, also worked on the 2010 case.
“When Janet Warren says, ‘Oh the risk is everywhere, she’s missing the point,’” she said. “They had a duty to protect children within their own organization.”
Dumas characterized Warren’s argument based on the percentage of victims as “morally wrong.”
“It’s not the percentage that matters, it’s the very fact that children were molested, and the Boy Scouts knew and for decades they didn’t warn people of this danger,” she said. “They didn’t put policies in place to prevent it and they didn’t report anything to law enforcement.”
Though no one knows the full number of victims over the history of scouting, advocates and attorneys think the total could be enormous.
Michael Pfau of Pfau Cochran Vertetis Amala PLLC, which represents more than 300 people who say they were sexually abused by Scout leaders, estimated there could be tens of thousands of survivors.
“We know most Scout leaders who sexually abused children abused multiple children, sometimes dozens and dozens of children,” Pfau said. “We also know the Ineligible Volunteer Files are incomplete because BSA had a policy of destroying the files of Scout leaders when they died, and many of our cases involve sexual abuse by Scout leaders who are not in the files.
“We think a conservative estimate is 40,000 to 50,000 abuse survivors who are still alive.”
Secrecy around the ‘perversion files’ continues
A potential battle around confidentiality also appears inside the Boy Scouts filing, within a category of “Privileged Information” in its proposed reorganization plan.
As it lays out steps for how the Victims Compensation Trust would be created, the Scouts seem to anticipate the necessity to provide the “perversion files,” or Ineligible Volunteer Files, to the trustee overseeing the fund. But in quick succession, the group argues that such files, and other records about previous claims and settlements, should be considered privileged and thus not shared publicly.
That feels like déjà vu for victims’ attorneys who have been fighting for years for the full release of those files.
“They could have taken their motion from 2010 and xeroxed it and put it in their paperwork here,” said Mones. “They argue confidentiality and the protection not for the victims but really for themselves.”
“I think victims need to know if John Smith in Troop XXX is in the ‘Perversion Files’ for sex perversion, and you’re one of the members of Troop XXX and you’ve been afraid to come forward,” Mones said. “Justice demands that at the very least.”
Continued reluctance to open up those documents to the public worries victims’ advocates, who fear that the full scope of the Boy Scout abuse scandal will never be known.
Similar to both the Catholic Church sex abuse scandal that’s rocked the country for nearly two decades and the USA Gymnastics sex abuse scandal uncovered in recent years, victims of child abuse often wait decades before coming forward, after years of crippling shame.
According to CHILD USA, a Philadelphia-based think tank, the average age at which a victim discloses abuse is 52. Dumas, the Oregon attorney, estimates that the few thousand who have already filed suits are merely “the tip of an iceberg we will never see.”
One of Dumas’ clients, the 51-year-old Riverside, California resident, said it’s especially hard for men to talk about child abuse because “you’re taught to man up and just keep things bottled inside. There are a lot of victims who will go to their graves without ever revealing what happened … you’re just so scared: ‘will somebody believe me? Will they not believe me?’ “
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