Local diocese cost-cutting updates given

STEUBENVILLE – The Diocese of Steubenville said legal action could be filed within weeks against a former financial official arising out of an ongoing investigation into misappropriation of funds.

The diocese said in May legal action would be taken against former comptroller David Franklin.

Bishop Jeffrey Monforton released an update Friday. He said, “Diocesan attorneys are completing their investigation relating to a civil action against a former diocesan employee for recovery of financial damages related to the payroll tax issue, and expect to be filing such an action within a few weeks.”

A forensic audit of the diocese found funds were misappropriated between 2004 and 2016, including payroll taxes that were withheld from employee checks but not paid to the proper federal, state and local taxing authorities.

The diocese paid $3.5 million by liquidating unrestricted diocesan investments, the bishop said. The diocese has not said what those assets were.

However, the liquidated assets do not include money set aside for the Holy Name Cathedral remodeling project, said diocesan spokesman Dino Orsatti. He emphasized “Nothing was touched when it comes to the cathedral. It is not affected at all.”

Monforton went on to say, “While every position here at the chancery is being evaluated and we are looking for additional ways to save the diocese money, all major projects remain suspended at this time.”

The cathedral was closed in 2014 and more than $1 million has been spent on infrastructure, including creation of a cul-de-sac in front of the building. Interior renovations were to have started during the winter, and the diocese had been hoping to apply for grants from Catholic Home Missions to aid the financial campaign to complete Holy Name.

The diocese has been raising money for the cathedral for more than a decade, following the realignment of parishes in the city. Prior to the forensic audit, the diocese was preparing to embark on another campaign to complete the project.

Orsatti said the cathedral project has been indefinitely suspended not because of finances specifically set aside for the project, but because the diocese is implementing austerity measures and trying to figure out its overall financial situation.

“It can’t be touched,” he said of the cathedral funds. “Nothing can be touched that was supposed to be for certain projects.”

Orsatti explained that while the diocese is trying to find ways to cut costs, it would not make sense to spend on major projcts at the same time, thus the cathedral remains on hold.

“As the bishop has said, we were being shown we were in the black when we actually were in the red. We have to get our act together financially,” Orsatti said. “While we’re implementing belt-tightening measures, it’s not a time to work on any major financial projects. That’s why the cathedral is on hold. When we’re still finding ways to save money, we can’t think about major projects at this point. All of our focus is about getting us back on track and making sure we’re making every smart move when it comes to finances.”

Orsatti said while there were no signs of embezzlement or misappropriation for personal gain so far in the investigation, the diocese’s finances are not clear overall.

“At this point, it is just poor management of finances, that’s what we have been finding so far,” he said.

Monforton announced in his update statement Friday the diocese is implementing cost-cutting efforts in the wake of the investigation including switching health insurance brokers, restructuring vendor agreements and employee payroll, evaluating outsourcing, using technology to reduce travel and operating expenses and adding more volunteers and interns to sustain the level of services.

The diocese has retained the Schneider Downs accounting firm from Pittsburgh and the Bodman Law firm of Troy, Mich., to conduct the investigation.

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