N.Y. Church Sues Insurer Over $1.2 Million Thefts Blamed on Priest

A Roman Catholic church in Manhattan has sued the Travelers Casualty and Surety Co. charging breach of contract, claiming the insurance carrier has improperly refused to pay $1.22 million stolen by a priest.

The Church of St. John the Martyr, on East 71st Street, says in court papers the losses were due to thefts by Monsignor John Woolsey. After the losses were discovered, Woolsey was forced to resign as pastor and a Manhattan grand jury indicted him.

Prosecutors charged that Woolsey funneled at least $820,800 from the church into his personal bank accounts, including $47,000 given to the church by parishioners.

Prosecutors said he used the stolen money for country club expenses, designer watches, fancy clothes and trips to Vermont, Florida and Spain. They said he used a church checking account to pay nearly $16,000 in personal credit card charges.

The investigation of Woolsey began in 2004 after a civil lawsuit was filed charging that he used undue influence to get an 88-year-old parishioner to sign over at least $490,000 in cash and stock to him before she died.

The church lawsuit says it bought a Travelers Crime Plus policy that was in effect from Dec. 15, 2002, to March 1, 2005, and protected the church against employee theft.

The policy insured the church against losses of money, securities and other property that resulted from employee dishonesty in amounts up to $5 million, with a $100,000 deductible, the lawsuit filed Monday in Manhattan’s state Supreme Court says.

The church says it discovered in March 2004 a loss of $1.32 million “as a result of the dishonesty, theft, conversion and/or fraud on behalf of then-employee and pastor of St. John the Martyr, Monsignor John Woolsey.”

The church says the loss was covered by the Crime Plus policy and on June 8, 2004, it filed a claim for that amount minus the deductible. It says Travelers ‘”has breached its contract of insurance for its refusal to pay the claim.”

Archdiocese of New York spokesman Joe Zwilling said the church and Travelers have been in negotiations for months over payment of the claim but the statute of limitations on a lawsuit would have lapsed in a few weeks.

“The parish wanted to do this (file the lawsuit) to preserve to right of parishioners to recover the money they donated,” Zwilling said, adding it’s possible a settlement will be reached soon.

A spokeswoman for Travelers was unavailable to comment Tuesday, said a man who answered the telephone at the company’s Hartford, Conn., headquarters.

Woolsey pleaded not guilty to charges of grand larceny, tax evasion and falsifying business records. A statement released by his lawyer said he denied taking funds from the parish and had strong support from numerous parishioners.

Woolsey “may not have been a good bookkeeper, but he was a beloved, effective and honest pastor,” the statement said.