NC priest resigns after spiritual direction abuse allegations

“I want to say once again ... how very sorry I am for my past actions.”

A North Carolina priest has resigned his parish, after news reporting detailed allegations of sexual and spiritual manipulation in the context of spiritual direction.

The priest, who has been banned from a Catholic university in Virginia over the allegations against him, was made last month administrator of St. Paul Parish in New Bern, North Carolina, and resigned from the office Friday evening.

St. Paul Catholic Church, New Bern, North Carolina. Courtesy photo.

“After a recent news publication, I will be voluntarily stepping away from ministry at St. Paul and St. Peter the Fisherman and moving away from New Bern,” wrote Fr. Steven Costello in a July 25 email to parishioners, obtained on Saturday by The Pillar.

“I want to say once again as I did when I returned here in October how very sorry I am for my past actions.” I will say that it was certainly the worst mistake of my life,” the priest added.

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Costello’s resignation came one day after The Pillar reported that a former spiritual directee had alleged against him a three-year period of abuse and manipulation, during which he reportedly said that God had given them a unique relationship, which he allegedly characterized as “spousal friendship.”

In the context of that relationship — during which he allegedly manipulated the woman’s emotional vulnerabilities disclosed in spiritual direction — the priest often told the woman he loved her, initiated hand-holding and cuddling sessions, touched her breasts, discussed his sexual desire for her, and disclosed to her that he had ejaculated while texting her, or during a FaceTime Call.

The priest allegedly analogized the couple’s relationship to the mystical spirituality of St. Theresa of Avila, while urging the woman to be “discreet,” because others, including her husband, would not “understand” the nature of their relationship.

According to the woman, the priest also disclosed to her that he had engaged in three similar relationships with women in the past.

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In 2024, after three years of the relationship, the woman’s husband became aware of its character and attributes. The couple consulted with psychologists, one of whom called the relationship a “textbook” pattern of coercion and manipulation.

The couple reported the relationship to the Diocese of Raleigh, where Costello — incardinated in the Legionaries of Christ religious community — was assigned to parish ministry, and was seeking diocesan incardination.

The couple included the recording of a phone call with the woman’s husband, in which the priest admitted to much of the alleged conduct.

In that recording, heard by The Pillar, Costello conceded that he had “touched” the woman’s chest “more than once,” embraced her closely, and said that “my hand might have gone to her backside.” He conceded that he had talked about “entering” her and discussed a desire for sexual intimacy, sent sexual texts using language from Song of Songs, discussed her breasts and genitalia, and ejaculated while texting her.

While the priest insisted there was a “context” to those admissions that was not being understood, he also conceded that their relationship was “wrong,” and that it was a part of “certain patterns of my whole life, certain themes.”

He insisted that his relationship with the woman was not for the purpose of sexual gratification, and that he “wasn’t preying upon her.”

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Two months after the woman reported the relationship, Costello was placed on a six month leave, with the Raleigh diocese saying in a March 2024 email to priests that Costello’s actions were “consensual” and between adults..

When he returned to ministry, the woman and her psychologist objected, with the psychologist telling Bishop Luis Zarama that “[Costello] very likely continues to pose a serious spiritual and sexual threat to parishioners and the diocese.”

While he was on leave, the priest was banned from Divine Mercy University, a Virginia graduate school of psychology sponsored by the Legionaries of Christ, where he first became the woman’s spiritual director in 2019.

“Given the unique role and authority that comes with the priesthood, inappropriate sexual behavior with another person has an aggravated degree of gravity for a priest,” wrote Fr. Charles Sikorsky, LC, Divine Mercy University’s president, in an internal email obtained by The Pillar.

“In this case, the severity was further compounded by the power differential stemming from having been a spiritual director and professor of the student.”

But in Raleigh, Costello was returned to ministry, for nine months as a parochial vicar, and then — beginning last month — as administrator of St. Paul Parish in New Bern.

In his resignation letter — first posted online Friday night by victims’ advocate Dan Sealana, who had written several blog posts about the priest’s ban from DMU — Costello said he was sorry for the pain he had caused.

It is not clear that the priest has actually expressed contrition to the woman, or to other potential victims. The woman previously told The Pillar that the last time she or her husband spoke to Costello was in January 2024, when the woman’s husband confronted the priest on the telephone. That conversation, reviewed by The Pillar, did not contain an apology.

The woman had previously told The Pillar that she wrote to Costello in May 2025, to “invite [Costello] into a process that serves healing,” — namely, evaluation of their prior relationship by a third party —seemingly a clinical psychologist — to assess the stark difference in their accounts.

In her May letter, the woman lamented the “two vastly different accounts [of the relationship]: one, now public, claims the relationship was consensual between a woman and a priest. The other—held quietly by my care team—is that I was subjected to deeply rooted and sustained spiritual abuse, under the guise of care and authority. The gap between these two narratives is profound, and the stakes are too high to allow only one to be heard.”

“Truth is the foundation of healing, and healing cannot happen in darkness or silence,” the woman wrote.

Costello, she said, did not respond to the letter.

But in his resignation letter Friday, Costello told his parishioners that he was “deeply sorry for the pain I caused the individuals involved and for any way learning about my actions has hurt you. I ask for their forgiveness and yours.”

It is not clear whether Costello will remain in the Diocese of Raleigh. He was previously accepted conditionally in the diocese, to be evaluated for the prospect of incardination, with an ad experimentum indult of departure approved by the Dicastery for Institutes of Consecrated Life. If he is not accepted for incardination in the Raleigh diocese, he will revert to his obligations as a member of the Legionaries of Christ.

Neither Costello nor the Diocese of Raleigh have responded to repeated requests for comment from The Pillar.