A judge began criminal contempt-of-court proceedings against Brown on Tuesday, just three days after he agreed to pay nearly $7 million to settle the lawsuits that led to contempt allegations surrounding Brown's decision to send the church official to Canada.

Before the hearing, plaintiffs' lawyers said they expected the judge to dismiss the contempt filing because the case had been settled. But Diocese of Orange attorney Peter Callahan insisted the proceedings go forward to clear the bishop's name, and Judge Gail Andler took him up on the offer.

Brown waived his arraignment, which lawyers said was the equivalent of a not guilty plea.

"This is one more example of the diocese stepping in their own mess," said John Manly, a lawyer for the plaintiffs in the case. "Now we can have our cake and eat it too."

Plaintiffs' attorneys had accused Brown of sending Msgr. John Urell to Ontario, Canada, for medical treatment before he could complete a deposition in one of four cases settled Friday. The monsignor was responsible for handling sexual abuse allegations against the diocese.

Brown testified in a pretrial deposition that he made the decision to send Urell to the Southdown Institute, although he knew Urell "had given a deposition and was going to be called back for further deposition."

He said Tuesday the facility is one of few that specializes in psychological care for clergy and because it could take him immediately.

Andler allowed attorneys to deliver their opening statements in the contempt case before postponing the rest of the hearing until Dec. 3. She said a subpoena for Urell's testimony would remain in effect until that date.

Callahan will argue at the hearing to dismiss the contempt matter.

Venus Soltan, a plaintiffs attorney, said Brown sent Urell away to suppress critical evidence about the diocese's handling of sexual abuse. Urell went away a week after he broke down during his deposition by plaintiffs' attorneys.

"When Msgr. Urell was there for half a day, he couldn't take it because he was too upset about having to testify about hiding all these allegations," she said in court. "This is plain and simply hiding the facts."

Callahan, however, said there was no evidence that a court order was in effect when Brown sent Urell away and asserted that a plaintiffs' attorney had verged on perjury in the court filings that precipitated the contempt hearing.

Urell knew nothing about the current case, which involved allegations that a lay assistant basketball coach molested a 16-year-old girl at Mater Dei High School, Callahan said.

"I was disappointed that the judge didn't rule. We were hoping that the bishop would have the opportunity to exonerate himself by telling the truth but he didn't get the opportunity," he said.

At a news conference outside court, two of the young women who were plaintiffs in the cases angrily asked Brown and his attorneys questions about how church officials handled their cases.

Brown did not respond to the questions directly, but apologized.

"To both of you, and to the other victims, all I can do is repeat once again, my sincerest and deepest and most compassionate apology on the part of the church for what happened to you, which was terrible and sinful and criminal and reprehensible," Brown said. "I'm just so very sorry it happened."

Three years ago, Brown agreed to pay $100 million to settle lawsuits from about 90 sexual abuse victims.

That means that as of Jan. 1, Oregon will join eight other states that have approved spousal rights in some form for same-sex couples: Connecticut, Vermont, New Hampshire, New Jersey, Maine, California, Washington and Hawaii. Massachusetts is the only state that allows gay couples to marry.

Later this week, word is expected on whether opponents gathered enough signatures to block a gay-rights law that would ban discrimination based on sexual orientation — though that effort, as well, appears to be lacking sufficient signatures.

Social-conservative and church groups mounted the signature-gathering drive after the two gay-rights laws were approved by the Democratic-controlled Oregon Legislature with strong backing from Gov. Ted Kulongoski, also a Democrat.

The state's largest gay-rights group called Monday's announcement a "proud day for Oregon."

"In refusing to sign these petitions, Oregonians showed that they aren't interested in rolling back our anti-discrimination laws," said John Hummel, executive director of Basic Rights Oregon.

Sponsors of the referral effort had conceded in recent days that they probably hadn't gotten enough signatures. But they vowed to take another avenue to try to derail the laws — an initiative effort to repeal the laws outright. They would have until next July to collect 82,000 valid signatures to repeal each of the two laws.

"The market is virtually eliminating any Fed move on Oct. 31, due to the Fed minutes," said Tom di Galoma, fixed income analyst at Jefferies & Co. "This has the bears in control." The view that the Fed is on hold sparked heavy overseas selling of Treasurys and Japanese government bonds that continued into the U.S. session.

The stock market had its own interpretation of the Fed minutes, zeroing in on the fact that Fed policy makers were very worried about the rapid deterioration of the credit markets last summer. The Fed cut rates by a half percentage point at its Sept. 18 meeting and equities investors appear to think the bank could order another rate cut at its October meeting. Stocks were a bit lower Wednesday, after rallying sharply Tuesday on the minutes.

In a statement Wednesday, Jacobs cited "multiple health problems" as a factor in Levy's resignation, but did not provide further details.

Levy has been under federal investigation for embellishing his Army service in Vietnam.

"The circumstances surrounding his resignation include multiple health problems, but were precipitated by a pending Federal Department of Veterans Affairs investigation," Jacobs said.

Last fall, the Press of Atlantic City reported that the Vietnam veteran's claims that he was a member of the Green Berets were untrue. He apologized, but federal authorities have been looking into whether the 64-year-old Levy made that claim to increase his veteran's benefit payments.

Jacobs said in the statement that the mayor was in discussions with the U.S. Attorney's Office about resolving the investigation in a "fair and expeditious" way. Levy allegedly took in about $25,000 in extra benefits payments as a result of the falsification.

No part of the investigation includes allegations of Levy's abuse of his position as mayor, his lawyer said.

Levy served in the United States Army for 20 years, form 1964-1984 and served two tours of duty in Vietnam, from which he received multiple medals, awards and citations, according to Jacobs.

"The pending investigation has called into question two of those awards, neither of which appear to be supported by an appropriate military order," said Jacobs.

Members of the city council had asked a judge to declare the mayor's office vacant and clear the way for the council president to take over as interim mayor.

Levy — who was missing for almost two weeks — was at home after leaving a Somerset County clinic known for treatment of substance abuse and mental health issues, according his lawyer.

Tuesday's revelation about Levy's whereabouts came after a brief conference with a state judge, who scheduled a Friday hearing to discuss a request by a city councilman to declare that the mayor had abandoned his office.

Sallie Mae's lawsuit seeks a declaration that the buyer group has reneged on the merger agreement, that no "material adverse change" has occurred, and that Sallie Mae may terminate the takeover and collect the $900 million.

A material adverse change (MAC) is a condition that could cause a substantial reduction in earnings power and it can give buyers or lenders a "walk right" from their obligations.

The lawsuit is being seen by many as a hard-ball attempt by Sallie Mae to force the buyer group to stick to the original deal, in which the group offered $60 a share, or come up with something closer to it than its revised proposal of $50 a share, or $20.6 billion offer, plus extra payments depending on how the company performed.

"We are prepared to close under the contract the parties signed in April," said Sallie Mae chairman Albert Lord in a statement late on Monday. "Sallie Mae has honored its obligations under the merger agreement. We ask only that the buyer group do the same."