Less than a month after the Boy Scouts filed for bankruptcy in February, the coronavirus pandemic closed schools and halted many in-person Scouting programs, weakening membership that was already on the decline. The Boy Scouts’ revenue this year is down 50 percent compared to last year, and the organization has been forced to lay off 20 percent of its full-time staff, Jessica Boelter, an attorney working on behalf of the organization, said in a bankruptcy court hearing Wednesday. Meanwhile, the bankruptcy process has cost the Boy Scouts more than $41 million so far, she said.
“We simply can’t deny the fact that covid and the bankruptcy together have essentially created a perfect storm,” Boelter said. “Simply stated, we’re going to run out of money if we linger any longer in bankruptcy."
The Boy Scouts of America was already struggling financially before the year began. Youth membership had declined more than 26 percent in the past decade. The organization struggled to find ways to remain relevant among increasingly busy families, and lost a key partnership with the Church of Jesus Christ of Latter-day Saints. Meanwhile, a wave of investigations and media reports have revealed internal Boy Scouts documents that detailed decades of alleged abuse. After several states and the District overhauled their statute-of-limitations laws on child sexual abuse, hundreds of lawsuits began pouring in against the Boy Scouts.
The organization filed for Chapter 11 bankruptcy to keep operating as it reorganizes its finances and creates a trust to pay potential victims. An investigator hired by the Scouts had previously identified 12,254 victims in internal documents from 1946 through 2016. It is now clear the number of victims may be much larger.
In a statement, the Boy Scouts of America said it was “devastated by the number of lives impacted by past abuse in Scouting and moved by the bravery of those who came forward.”
“We intentionally developed an open, accessible process to reach survivors and help them take an essential step toward receiving compensation,” the statement read. “The response we have seen from survivors has been gut wrenching. We are deeply sorry.”
The next step will be for third-party advisers to review the claims while the organization works to create “a plan of reorganization” to fund the compensation trust.
With such a large number of claims, Tancred Schiavoni, an attorney on behalf of insurer Century Indemnity Co., expressed skepticism that the law firms sufficiently vetted the allegations.
“The numbers that came in are absolutely enormous,” Schiavoni said in court Wednesday. “They are beyond anyone’s assessment of where this case would be. … We’re going to need time to look at those claims.”
But Pamela Foohey, an associate law professor at Indiana University who specializes in bankruptcy issues, said the volume of claims suggests that the Boy Scouts — and the lawyers on behalf of victims — were successful at getting the word out about the deadline for claims, through television ads, news articles and other publicity.
The national organization has reported more than $1 billion in assets, which include financial investments and four high-adventure bases such as the Summit Bechtel Reserve in West Virginia and the Philmont Scout Ranch in New Mexico. But a key question continues to be whether the bankruptcy case will implicate the assets of more than 250 local Boy Scout councils, which own camps and properties in prime real estate across the country.
The national organization has sought to shield the local councils from the bankruptcy process, but Boelter said 248 out of 253 local councils have provided asset and insurance information to the court as part of the proceedings.
Ricky Mason, president of the Scouts’ Greater New York Councils and a lawyer representing a coalition of local councils in the bankruptcy process, said any settlement is going to involve local council participation, primarily through local council insurance policies.
“What’s left is probably a lot smaller than some of the plaintiffs’ attorneys had hoped for, and carries with it other potential issues,” Mason said in an interview. Many properties have deed restrictions, meaning they can’t necessarily be sold for development, and many financial investments carry donor restrictions.
While Mason is optimistic the parties will reach a settlement, he spoke in court Wednesday to warn them of what was at stake if they don’t.
“If the settlement negotiations fail, then the BSA case probably fails, and Scouting as a whole probably fails with it,” he said. “Most and possibly all local councils may well cease to survive in their current form.”
Even if the parties do reach a settlement, lawyers on behalf of victims say they plan to file lawsuits after the bankruptcy case concludes, implicating specific local councils as well as sponsoring organizations, such as churches, fire departments, Rotary clubs and other local organizations. “This is a process that could take years,” said Michael Pfau, a lawyer who said he represents about 1,050 men who have filed claims in bankruptcy court.
“Even in the last day or so after the deadline, people are still calling us,” said Chicago-based lawyer Christopher Hurley, who represents 4,000 people with claims against the Scouts. He said some of his cases are in the D.C. area, involving incidents of alleged abuse within the National Capital Area Council.
A representative from the National Capital Area Council declined to comment on the ongoing bankruptcy case.
Among the tens of thousands of people who filed sex-abuse claims, many of them are men who grew up in the D.C. region or live in the area now. One of them is Juan Carlos Rivera, a 53-year-old federal employee and Vienna resident. He said he was 14 years old when a troop leader in Orlando molested him.
“It’s a trauma that will never ever go away. I just deal with it,” Rivera said. “I really believe they need to feel the pain, and really compensate for the pain they put all of us through.”
Michael Nussbaum, a 49-year-old resident of Northern Virginia, remembers the day his Boy Scout Explorers troop leader, a police sergeant in the Miami area, asked him if he wanted to look at magazines. Thinking he meant comic books, the then-14-year-old boy agreed. Instead, the troop leader placed X-rated magazines on a desk in front of him and started groping Nussbaum, he said. The sergeant placed a gun on a table and told Nussbaum that if he ever said anything about what happened, no one would believe him.
Nussbaum ultimately reported the incident. The sergeant, Jon Wyatt, was found guilty of sexually abusing minors. He is serving a life sentence. But the trauma lingered for Nussbaum, and he often found himself having problems with authority figures. “My dreams of being a police officer were completely diminished,” he said.
He said he hopes the Boy Scouts survive bankruptcy, but only after they are reorganized and held accountable. He said the number of victims was astonishing, not only because of how many people came forward, but because of how many others didn’t.
“How many people are ashamed? How many people are scared?” he said. “How many more just don’t want to be added to that number?”