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	Church Official Testifies about Off-Books Loan to Secretary Associated Press, carried in Beacon Journal August 28, 2007 http://www.ohio.com/news/ap?articleID=62866&c=y Cleveland — The former top financial and legal officer of the Cleveland Catholic Diocese testified Tuesday that he arranged a $60,000, off-books loan to his secretary in a transaction approved by the bishop. Rev. John Wright said he put together the loan to his secretary in the mid-1990's and Bishop Anthony M. Pilla, now retired, signed off on the idea. "We didn't tell him the specifics, but he told us to work it out," Wright testified during the trial of Anton Zgoznik, the diocese's ex-accountant. Zgoznik, 40, of suburban Kirtland Hills, is on trial in U.S. District Court on 15 counts, including mail fraud and conspiracy to commit mail fraud. The prosecution has alleged that Zgoznik funneled $785,000 in kickbacks to Wright's successor, Joseph Smith, through $17 million in outside contracts with the church. Smith faces trial later. The defense claims that the funds reflected extra executive compensation arranged by the defendant in a pattern of secret financial dealings by the church. Under cross-examination, Wright testified that the loan to his secretary had an 8 percent interest rate and the secretary, now working for Wright at the Catholic cemeteries office, made biweekly payments without fail. When Wright and his secretary moved from the finance and legal office to the church agency that runs 17 cemeteries, the loan was transferred at Smith's request to the books of the Catholic Cemeteries Association, Wright testified. Asked by defense attorney Robert Rotatori whether the loan was recorded in diocesan financial records after media reports about financial irregularities, Wright responded, "I don't know that." Asked by the prosecutor whether his secretary had received any additional pay, Wright said, "Not that I'm aware of." Another prosecution witness, diocesan controller Gerald Arnold, deflected defense questions about whether there was a pattern of secret accounts not reflected on church or parish financial records. "We've always stressed that all accounts should be recorded," Arnold said. Asked whether it was common for parishes to have secret accounts, he responded, "I don't know that. I can't say that." Arnold testified that Bishop Richard Lennon, who succeeded Pilla last year, had issued a directive that all accounts be reflected in financial records. Arnold said the order only reiterated regular practice in the eight-county diocese of 800,000 Catholics.
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