Updated 5:30 p.m. 8/25/2011

CHICAGO (CBS) — A new lawsuit claims that the Chicago Archdiocese knew as long ago as 1992 that an incarcerated former priest was molesting young boys, but swept it under the rug until his arrest in 2006.

READ MORE: Local Businesses Hope For Similar Outcome Of Shoppers For Small Business Saturday

The lawsuit was filed by a Chicago teen who alleges he was sexually abused by the Rev. Daniel McCormack at St. Agatha Parish, 3147 W. Douglas Blvd., from 2004 until McCormack’s arrest in 2006.

LISTEN: WBBM Newsradio’s Michele Fiore reports

READ The Lawsuit

Advocates for priest abuse survivors complained at the time that the allegations that led to criminal charges against McCormack dated back to August 2005, but the lack of action kept McCormack in a position where he could continue to have contact with children, up until the charges were levied five months later.

But the suit alleges that the Archdiocese knew as early as 1992 that McCormack was a pedophile priest who was molesting children.

The lawsuit names the Archdiocese and Francis Cardinal George as defendants, although some of the allegations about oversight by the Archdiocese go back to when the late Joseph Cardinal Bernardin was still at the helm.

Responding to the lawsuit, a spokesperson for the Archdiocese on Thursday said church officials would have preferred to work with the plaintiff on a settlement to avoid “the ordeal of litigation.”

“The Archdiocese has a long-standing practice of reaching out to all victims of misconduct by clergy to resolve their claims in a just, compassionate and respectful way,” the spokesperson said.

In 1992, when McCormack was a seminarian at St. Mary of the Lake in Mundelein, Archdiocese officials were notified that McCormack was a sexual deviant who had committed acts of misconduct and molestation. But no action was taken, the lawsuit alleged.

Instead, McCormack was ordained as a priest, and was appointed to teach children at the Holy Family Parish in 1998. In October 1999, the nun who was serving as principal of the now-shuttered Holy Family School received an allegation that McCormack had asked a fourth-grade boy to pull down his pants in the sacristy of the historic Holy Family Church, 1080 W. Roosevelt Rd.

The principal’s allegations of McCormack’s earlier misconduct received coverage shortly after his arrest in 2006.

READ MORE: Chicago Weather: Breezy With A Little More Sunshine

But the Chicago Sun-Times reported at the time that on one occasion when the principal reported the abuse to the Archdiocese, she was told, “If the parents aren’t pushing it, let it go,” a claim that was repeated in the new lawsuit.

The lawsuit alleges that McCormack admitted to asking the boy to drop his pants, and that he had used “poor judgment.”

But despite numerous complaints to Archdiocese officials by the principal, no action was taken, the lawsuit alleged.

The lawsuit claims that even after announcing with “great fanfare” a zero-tolerance policy about removing priests involved in even one act of child sex abuse from ministry in 2002, McCormack was still abusing children, and the Archdiocese was still doing nothing.

McCormack was promoted to become pastor of St. Agatha’s in 2000, and another report of possible misconduct came in 2003, the lawsuit alleged.

The boy named as plaintiff in the lawsuit alleged that he was molested by McCormack from 2004 to January 2006, when McCormack was arrested.

The lawsuit accuses the Archdiocese and Cardinal George of negligence and fraud, and seeks unspecified damages.

Three months after the criminal sexual abuse allegations surfaced against McCormack in 2005, a church review board that had been looking into the accusations recommended that McCormack be removed from his post. But that did not happen until the criminal charges against him were brought three months later.

At the time, Cardinal George conceded that he should have launched an investigation against McCormack sooner. In early February 2006, he issued a letter of apology that said “our response… was sorely inadequate.”

The Survivors Network of Those Abused by Priests later called for Cardinal George to resign over the scandal. But the Archdiocese said the group had no authority to make any such demand, and that the cardinal would not be resigning.

The controversy continued after McCormack pleaded guilty in 2007. At that point, critics said his plea deal spared the archdiocese embarrassing testimony about mismanagement and foot-dragging in the case, and accused the church of being secretive.

McCormack spent 2 1/2 years in prison. He was technically paroled, but he is still being held in a state mental health facility, while he waits trial on whether he should be put away indefinitely as a sexually violent predator.

MORE NEWS: Chicago Police Alert Residents Of Recent Robberies In McKinley Park

In August 2008, the Archdiocese settled with victims of abuse of McCormack and other priests. The settlements totaled $12.675 million.