By Sam Shane

STOCKTON (CBS13) – The Diocese of Stockton is considering bankruptcy after paying out millions of dollars to settle child sex abuse lawsuits.

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Stockton Bishop Stephen Blaire says they haven’t decided yet, but bankruptcy is an option because the Diocese is running out of money.

But an attorney for sex abuse victims says the church is simply spinning a web of lies.

“I have grieved over the hurt that they have experienced,” said Blaire.

Bishop Blaire says the sex abuse scandal that rocked the Catholic church has now hit his Diocese’s bank account.

He says they only have less than a million dollars left in reserves.

“We have paid out over $15 million in settlements, judgments, and legal affairs. So we have depleted, virtually depleted our reserves,” said Blaire.

Among the biggest sex offenders… defrocked priest Oliver O’Grady, who admitted to sexually abusing 25 children. In 1993, he was convicted for molesting two Turlock brothers.

There’s also Reverend Michael Kelly, a former pastor in Lockeford, who fled to Ireland in the middle of his civil trial, after a former altar boy accused him of rape.

Attorney John Manly represented that altar boy.

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“What happens to children when they’re raped, it’s emotional murder, you’re never the same,” said Manly, Manly & Stewart law firm in Irvine.

Manly is currently representing two more alleged victims.

He says if the Diocese does file Chapter 11, it’s only to escape liability and to hide its money.

“The idea that he only has a $1 million is a lie, it’s deceitful, it’s not true. He controls millions and millions of dollars and that’s not counting the money in the parishes,” said Manly.

For parishioners at St. Mary’s in Stockton, the possibility of bankruptcy is concerning.

“I don’t think it’s fair and it’s destroying the credibility of the Catholic religion,” said Christina Santos, parishioner.

“I think it’s an awful feeling, the church means everything to me,” said Anne Dahl, parishioner.

Just this Monday, the Stockton Diocese settled another sex abuse lawsuit against O’Grady for $1.75 million.

O’Grady is currently in prison in Ireland for possessing child porn.

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As for Reverend Kelly, he’s still on the lam.