The Catholic Diocese of Las Cruces is struggling to pay back $1.9 million in unauthorized loans taken out by a former employee.
Chancellor Louis Roman told ABC-7 an unnamed employee took the loans out between 2004 and 2009 without the Bishop's consent.
All of the money was taken from the Parish Improvement Plan (PIP). The PIP is a savings account made up of donations to the churches in the diocese.
"The Plan consists of parish savings and it operates as a type of 'savings-and-loan,'" Bishop Ricardo Ramirez wrote in Agua Viva, the diocese's newspaper. "The PIP loans are available to the diocese and to parishes following an established process."
Roman said the diocese has annual audits, but they didn't catch the unauthorized loans because they are not detailed enough.
"It appears from the audits that what was happening was that money was being shifted from account to another account to cover things. Actually, when you get right down to it, the bishop and the bishop's finance council were not being given full
disclosure," Roman said.
Roman said the employee did not do anything illegal with the money. The loans were used to pay for employees' health insurance costs and various projects within the diocese.
"None of the money benefitted any individual or individuals. All of the money is accounted for. It's just that now the diocese owes this money back to this account," Roman said.
"'The aforementioned loans, taken on behalf of the diocese, were for legitimate purposes. But the diocesan employee who transacted these loans did not follow proper procedures and informed neither the Diocesan Finance Council nor me. Thus, neither the Diocesan Finance Council nor I received a transparent assessment of our financial status. That employee has since resigned from duties with the diocese,'" Ramirez wrote.
Ramirez added that the "economic recession" has made the situation worse because it has greatly affected the financial markets and negatively influenced the diocese's investments.
"At the same time, while the investments made on behalf of the PIP fund were losing value, the diocese continued to offer parishes interest rates above market rates," Ramirez wrote. "As a result of this, the fund lost $1.4 million in market value."
Steps are being taken to fix the situation.
"First and foremost is the separate incorporation of the PIP fund. We have drawn up preliminary papers for a trust that will be managed by a group of pastors and lay experts," Ramirez wrote. "In this model, the diocese will have no authority to remove money from the fund. This will ensure that a similar situation cannot occur in the future."
ABC-7 asked the Chancellor if he feels it's irresponsible for the diocese not to notice this for five years.
"Perhaps the fact that there was some level of responsibility I think we all share in that responsibility. I think everybody who is involved in any aspect of the finances at the dioceses shares some responsibility for what happened. I don't think you can put it all in one place," Roman replied.
Read Ramirez's full message about the diocese's financial situation by clicking on the link under related content to the left of this article.