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(Reuters) - Computer technician Ken Kes was supposed to be repairing a laptop for a local priest as part of his work for a Catholic Diocese in Kansas City. But as Kes opened a series of picture files stored on the computer, he slowly realized that the odd images of young children were not merely strange; they seemed pornographic.

"I looked at the first one. It was a young girl climbing up the back of a pickup truck and I thought, huh, that's kind of a neat shot," the 59-year-old Kes recalled. "The next one that I clicked on was a girl... climbing out of swimming pool and all it showed was her rear end. Then there was a little girl on the grass with her legs spread. All you could see was the area from her belly button to her knees."

By the time Kes got to a graphic photo of a little girl on a bed, exposed below the waist, his hands were shaking and he was in full panic.

"I stopped looking right there and got on the phone," he said.

That discovery last December yielded hundreds of such photos on the laptop of Father Shawn Ratigan, ultimately landing the 46-year-old priest in jail on multiple child pornography charges. He is awaiting trial next summer after pleading not guilty and remains jailed.

And, in what Catholic experts say is a first-ever event, authorities have filed criminal charges against Bishop Robert Finn, the leader of the 133,000-member Catholic Diocese of Kansas City-St. Joseph, because despite knowing about the pictures, Finn did not alert authorities.

Bishop Finn is the highest-ranking Catholic official to face criminal charges in the United States in connection with a child sexual abuse case. He is slated for a preliminary court hearing December 15 on a misdemeanour charge of failing to report a child might be subject to abuse.

Finn and the diocese he leads say they are not guilty, arguing that they did not know the pictures constituted child pornography.

Neither Ratigan nor Bishop Finn would agree to interview requests and their lawyers declined to respond to the allegations against them.

But police reports, interviews with individuals involved in the events, an investigative report commissioned by the diocese and overseen by former U.S. Attorney Todd Graves, as well as lawsuits filed against Ratigan, the diocese and Bishop Finn, paint a stark picture of how Catholic leaders overlooked numerous warnings about Father Ratigan's behaviour - and ultimately wound up in legal jeopardy themselves.

WATERSHED MOMENT

Kansas City is but one of many communities to struggle with abuse allegations against a Catholic priest and complaints of cover-ups by church officials.

But the Ratigan case marks a first: this time, civil authorities are compelling Catholic leaders, through criminal charges, to face accountability for what happened in a way that goes far beyond statements of regret or financial settlements with victims seen in other church sex abuse cases.

Few expect Bishop Finn will actually serve significant, if any, prison time if convicted. He faces a maximum of one year in prison and a $1,000 (640.90 pounds) fine on the misdemeanour charge, and some sort of plea arrangement is expected by both critics and supporters.

The case has parallels to recent events at Penn State University, where two university officials have been charged with not reporting allegations of child abuse by a former assistant football coach. In that case, the storied college football program headed for decades by coach Joe Paterno has been likened to the church in its culture of secrecy and impunity.

Kansas City lawyer Rebecca Randles is representing four families who have brought civil suits against Bishop Finn and the diocese. She hopes that forcing church officials to accept responsibility for not reporting abuse to civil authorities will serve notice not only on the church but on all insular institutions that seek to protect their own and keep law enforcement at bay.

"The indictment of Bishop Finn is a watershed moment. We are getting a glimpse into what has been business as usual. And shedding light on business as usual is the first way to end business as usual," Randles said.

The events unfolded much like a melodrama: there were warnings about Father Ratigan's behaviour before the discovery of the photos. Then came anguished debate by those who saw the photos over how to react, whether or not to call police. Upon being discovered, the priest tried to kill himself, only narrowly surviving. The priest's laptop was destroyed before police could see it.

And in a turn that haunts parents, after recovering from his suicide attempt and being banished from his parish, Ratigan allegedly continued to victimize children when unsuspecting families welcomed the priest into their homes.

The prologue to the saga was grim enough. In 2008 the Kansas City Diocese agreed to settle a lawsuit brought by 47 plaintiffs who claimed that as children decades ago they were repeatedly sexually abused by a group of Kansas City priests. Those events did not involve Ratigan, occurring well before he was ordained, but it put the diocese on high alert for any improper behaviour.

Bishop Finn helped oversee the 2008 settlement, listening to accounts from victims who detailed priest-organized parties that featured drug and alcohol use, pornography and repeated child rape. The diocese, which spans 27 counties of northern and western Missouri, paid the group $10 million and pledged to put in place rigorous policies that would protect children from predatory priests.

For the last few years, training on how to identify a child predator has been mandatory for all employees of the diocese, including more than 1,000 teachers at the 28 elementary and eight Catholic high schools within the diocese. The diocese posts hotline numbers on its website, has a special review panel for child abuse cases and asks anyone suspecting harm to a child to speak out.

At the time of the 2008 settlement, Finn vowed reform was a top priority. He declared he would be vigilant in making sure nothing like that ever happened again.

And then it did.