Boy Scouts bankruptcy filing stalls local sex abuse lawsuits in Kentucky

By Andrew Keiper | Fox News

The pursuit of justice for several sex abuse victims in Louisville, Ky., has been long and litigious. Now, the former members of the local Youth Explorer career mentorship program may have their lawsuits stalled in the courts while the national parent organization navigates a bankruptcy filing.

In an attempt to consolidate the organization’s financial liability after years of costly lawsuits filed by those abused in their program – and potentially hundreds more to be filed in the coming years – the Boy Scouts of America have filed Chapter 11 bankruptcy. In the filing, the organization said it “intends to create a Victims Compensation Trust that would provide equitable compensation to victims.”

In the bankruptcy filing, the Scouts said their assets are between $1 billion and $10 billion, and their liabilities are between $500 million and $1 billion. The New York Times reported that in their most recent tax filings, the Scouts had nearly $700 million in stocks and bonds, more than $50 million in cash and over $100 million in property.

The organization has not reported how much they intend to set aside for victims in their proposed trust. The issue will likely be litigated in bankruptcy court.

Critics say that if the BSA bankruptcy is successful, victims will have a smaller window to file claims and have to do so through a bankruptcy court in Delaware, regardless of where the abuse occurred. It could potentially limit the timeframe for past victims to come forward and deny them the due process of a civil lawsuit.

The bankruptcy claim, filed in Delaware federal court, follows the asset-saving model set out by the Catholic Church when it had to navigate hundreds of lawsuits stemming from years of sex abuse against young people involved in the institution. The filing attempts to separate the assets of the national Scouts organization and its affiliates, often known as regional councils, and ensure the beleaguered program can maintain operations beyond the lawsuits.

“It means that while sex abuse victims come forward in their own time frame, the Boy Scouts are trying to cut off any potential future victims from being able to come forward and file claims.”— Tad Thomas, attorney for Louisville sex abuse victims.

The Boy Scouts of America, which has had to navigate hundreds of lawsuits that have followed the release of internal documents that corroborated decades of sex abuse allegations against adult leaders in the nationwide program, is the parent organization of the Youth Explorers career mentorship program. Like the BSA, the Youth Explorer program has faced allegations of sex abuse by adult leaders against teen members of the program.

Recently, two former Louisville Metro Police Department officers pleaded guilty to multiple sex abuse charges. Kenneth Betts and Brandon Wood are currently serving prison sentences of 16 and five years, respectively. Their victims, seven of whom filed civil lawsuits, have fought the city of Louisville, its police department, local and national Boy Scout organizations, the local Youth Explorer chapter and numerous individuals in court for damages.

Fox News previously reported on the abuse and allegations in a four-part investigative podcast.

“It means that while sex abuse victims come forward in their own time frame, the Boy Scouts are trying to cut off any potential future victims from being able to come forward and file claims,” said Tad Thomas, the lead attorney in the seven Louisville Youth Explorer lawsuits.

A key issue, and one that is sure to be litigated in bankruptcy court, is whether the regional and local Scout organizations are at risk of having their assets used in the bankruptcy filing and included in the resources that would fund the Victims Compensation Trust.

“The Boy Scouts are trying to say in bankruptcy court that the Lincoln Heritage Council should also be protected as part of their bankruptcy,” said Thomas.

The Lincoln Heritage Council is one of many regional organizations owned by the Boy Scouts of America. It operates across Kentucky, Indiana, Illinois and Tennessee. Based in Louisville, the council’s CEO, Jason Pierce, recently boasted about its membership and revenue.

“Our program is thriving, safe and will continue uninterrupted, regardless of any announcement by the National BSA,” Pierce recently told the Louisville Courier-Journal.

The council pulled in more than $4.3 million in revenue in 2018, the most recent year figures are available for the Lincoln Heritage Council. There were nearly 10,000 Cub Scouts and more than 4,000 Boy Scouts that year. According to the annual report, 255 participated in the Youth Explorer program, which was shut down in Louisville after the sex abuse scandal became public.

“Those [lawsuits] are all going to be suspended because they’re under the rubric of the Boy Scouts of America,” said Paul Mones, a lead attorney on several notable sex abuse lawsuits against the Scouts. “… The BSA is ultimately the program that has control over those affiliate entities.”

In court and statements to the press, the national Scouts organization has tried to argue that local councils are “legally separate and distinct organizations.” The contradiction is that the local Councils would be shielded under the bankruptcy filing and any ongoing lawsuits they’re named in would be stalled.

The attempt to protect themselves from national insolvency while shielding the local council’s assets in bankruptcy court is a necessary legal strategy for an organization hoping to survive beyond years of costly lawsuits. The dual threat of expensive settlements and a steady drop in national participation levels have proved an existential threat for the organization that has been around for more than a century.

The Scouts membership peaked at 6.5 million in 1972, according to figures compiled by Public Broadcasting Service. By 2016, membership had fallen to 2.3 million, according to the Scouts annual report from that year.

“Yes, the Boy Scouts are partially responsible for what happened to my clients. They know this and this is why they filed bankruptcy to halt the claims of other victims with potential claims.”— Tad Thomas, attorney for Louisville sex abuse victims.

Still, the organization’s responsibility to every teenager abused in a scout-affiliated program doesn’t dissipate with a Victims Compensation Trust or overhauled internal policies put in place.

“Yes, the Boy Scouts are partially responsible for what happened to my clients,” Thomas said. “They know this and this is why they filed bankruptcy to halt the claims of other victims with potential claims.”

Thomas also voiced worries that the Victims Compensation Trust will be “woefully inadequate to address all the claims by victims in the Boy Scouts systems.”

The Boy Scouts have declined interviews with media outlets, and refused to answer a detailed list of questions sent by Fox News. They issued a statement following their bankruptcy filing, which  promised that “programs will continue throughout this process and for many years to come.”

The letter to survivors begins with a recognition that “any incident of abuse is one too many.”

“We believe you, we believe in compensating you, and we have programs in place to pay for counseling for you and your family by a provider of your choice,” the statement continues.

Mones said the bankruptcy filing will pressure victims who haven’t yet come forward. Now, they’ll be forced to lobby their claims of abuse in a confidential manner in a Delaware court.

“Victims who haven’t come forward to sue will have to come forward,” Mones said. “They’ll have a limited amount of time to come forward in order to make a claim as a creditor in the bankruptcy … Having men come forward who are abused is really, really critical. People need to contact attorneys and make sure they preserve their rights.”

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