A U.S. Bankruptcy judge this week criticized a proposed USA Gymnastics financial settlement with the survivors of Larry Nassar that would release the U.S. Olympic and Paralympic Committee from all current and future claims related to Nassar’s sexual abuse of young athletes.
Robyn L. Moberly, the chief judge for U.S. Bankruptcy Court Southern District, in a hearing Monday repeatedly expressed her displeasure with the proposed settlement that would release the USOPC from liability without paying anything to survivors, according to a hearing transcript obtained by the Southern California News Group.
USA Gymnastics, facing hundreds of lawsuit related to the sexual abuse of Nassar, the former U.S. Olympic and women’s national team physician, Don Peters, a former U.S. Olympic team coach, and Marvin Sharp, a former U.S. national team coach, and others, filed for protection under Chapter 11 in U.S. Bankruptcy in December 2018.The USOPC is named in many of those suits.
USA Gymnastics has proposed $217-million settlement is part of a reorganization plan filed with the court earlier this year. A 77-page disclosure statement related to the settlement proposal states that if the 517 Nassar survivors would agree to release “any and all claims arising from or related to Abuse Claims or Future Claims.”
“USOPC is a beneficiary of the Settlement Election’s release and its injunctions,” according to the filing.
“The only way the USOPC will agree to” the settlement “is if it is protected by the release and injunctions described” in the agreement.
But Moberly has not hid her feelings toward the proposal.
“I’m not a fan of USOPC’s participation in this,” she said Monday.
“I don’t like — I mean, as any citizen who observes this process, the channeling injunction or releases for USOPC, which is certainly the wealthier of the organizations, were not going through what USAG has gone through without anything more than — as I’ve expressed before, without any — without a nickle put in out of their own private pockets other than their premiums that they paid,” Moberly said in the hearing. “You know, that doesn’t sit that well, and I’ve expressed that before.”
In addition to the USOPC, the settlement proposal also calls for the release of former USA Gymnastics CEO Steve Penny, Peters, former U.S. national team directors Bela and Martha Karolyi, five Karolyi-related businesses, 2012 Olympic coach John Geddert, former USA Gymnastics senior vice president Rhonda Faehn, former USA Gymnastics board chairman Paul Parilla, former USA Gymnastics president Bob Colarossi, former USA Gymnastics national teams manager Amy White, former USA Gymnastics sports medicine official Debra Van Horn and the All Olympia Gymnastics Center in Southern California.
Moberly’s comments came during a hearing on a request by attorneys for the survivors to hire a financial advisor to examine the USOPC’s records.
“Right now, the way the plan and the disclosure statement are written, the survivors are going to make this decision in the dark without full disclosure of the upside if they’re successful in the litigation,” Debbie Caruso, an attorney for the survivors told the court. “A critical component of this analysis for the survivors is the collectability of multiple mass judgments that could be entered against the USOPC if some of the litigation is successful.
“And, no, this is not USOPC’s bankruptcy, but they’re a big part of it. They’re going to get a big, huge benefit and a big prize at the end of this, and they’re going to walk away from litigation all over this country, a lot of litigation. And you don’t do that for free. You have to disclose.”
Moberly denied the request, stating that the USOPC’s financial records are already available online. Catherine L. Steege, an attorney for USA Gymnastics, told Moberly that the USOPC had $443 million in assets without donor restraints.
The USOPC listed $322.8 million in revenue for the 2018 fiscal year, according to an Internal Revenue Service filing and financial documents. The organization spent $13.6 million in legal fees and $147,430 on lobbying in 2018. The USOPC also paid out $7.6 million in compensation to officers and key employees. The organization had 14 employees receiving at least $320,000 in annual compensation, nine receiving more than $400,000 in compensation.
Attorneys for 512 of the 517 survivors who said they were sexually abused by former U.S. Olympic and women’s national team physician Larry Nassar and other USOPC and USA Gymnastics national team coaches and officials told SCNG this week that none of their clients would vote to accept the proposed settlement.
“No one is going to accept this and everybody agrees on that,” said Jon Little, an Indiana attorney for survivors.
The attorneys cited the USOPC release and USA Gymnastics’ failure to release documents that detail the culture of abuse within the sport that enabled Nassar and Peters and others’ predatory behavior and the lengths USA Gymnastics and USOPC officials went to conceal that behavior from the public and future victims.
“If, in fact, the majority of claimants, their lawyers believe that the only acceptable route is a route that litigates to the insolvency of USOPC, and I hope that’s not the case, but that is — does seem to be what — you know, what is being suggested here today, that we have to figure out what would make USOPC insolvent, and that’s the breakpoint for what you would take, if that’s true, I think we can all agree to recognize that a settlement is unlikely,” Steege said.
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