Episcopal Press and News

Diocese of Milwaukee Faces Racketeering Charge

Episcopal News Service. April 18, 1997 [97-1744D]

(ENS) The Episcopal Diocese of Milwaukee has been charged with racketeering in an $11.7 million class-action lawsuit brought by bondholders of a senior citizens' housing project developed by a diocesan housing corporation. The suit, filed on behalf of 1,700 persons who invested more than $10 million, claims that diocesan leaders failed to disclose failings of the Lake Oaks project and lied to consultants, underwriters and investors. When the diocese defaulted on the property, a 1995 foreclosure sale compensated investors only 32 cents on the dollar. According to an article in the Milwaukee Journal-Sentinel, only 25 of the project's 85 units were ever occupied. "The charges are absurd," said Carl Eschweiler, diocesan executive secretary, in an interview with the Journal Sentinel. "The racketeering charges were designed for organized crime, not organized religion." Bishop Roger White of Milwaukee asserted that "the church would not and did not misrepresent anything. It would never condone such behavior. Quite the opposite: The diocese spent large amounts of its fiscal and human resources to prevent the project from failing by acquiring the best professional advice available. "