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	'Roman Collar Amnesia' Widespread at Church Kickback Trial By James F. McCarty Plain Dealer September 4, 2007 http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/1188895017135800.xml&coll=2 Some employees at Cathedral Square, headquarters of the Catholic Diocese of Cleveland, share a whispered acronym for a memory problem that strikes priests who are called to testify in court cases. "We call it RCA, or Roman Collar Amnesia," employee Janice Hesselton testified during the federal kickback trial of a former diocesan accountant, Anton Zgoznik. Defense attorneys in the case suspect the RCA affliction has spread all the way to the church's hierarchy. Bishop Anthony Pilla, now retired, and the Rev. John Wright, one of his former top assistants, could not recall significant details of financial transactions and business decisions when questioned at the trial last week in U.S. District Court. "I've gotten the impression that people's memories are malleable over there" at the diocese, defense attorney Robert Rotatori said after the sixth day of testimony. Although U.S. District Judge Ann Aldrich limited the extent of their questioning, Rotatori and his defense colleagues said they thought the witnesses' faulty recall would bolster the cases of Zgoznik and his co-defendant, Joseph Smith, the former head lawyer and chief financial officer of the diocese. Smith, 50, formerly of Avon Lake, and Zgoznik, 40, of Kirtland Hills, are charged with several counts of conspiracy, money laundering, mail fraud and obstruction of justice. Zgoznik's trial resumes today. Prosecutors accuse Zgoznik of paying Smith $784,000 in kickbacks, in return for Smith's providing Zgoznik's companies $17.5 million of work - and approving inflated bills - to modernize the diocese's accounting system. While Zgoznik is on trial, much of the testimony has focused on Smith, his rise through the ranks of the diocesan headquarters and his close relationship to Pilla and other church leaders. Smith has spent most of the trial in the back of the courtroom taking detailed notes in preparation for his own trial, scheduled for later this year. Rotatori said he has been surprised by the authority Pilla and Wright granted to Smith during his 21 years of work there. "Everyone deferred to him," Rotatori said. "As far as they all were concerned, Smith was the boss of the diocese. Whatever orders came from him might as well be coming from the mouths of Pilla and Wright." Pilla's voice wavered last week when he spoke about his deep feelings for Smith, a layman whom the bishop embraced in his inner circle of advisers, giving him unprecedented access to the church's dominion. Pilla recalled that Smith had married the niece of one of his favorite priests, the Rev. Edward Camille. He proudly recounted how Smith rose to the top of the diocesan financial office. No nonclergyman had ever reached such a position of power at the Cleveland diocese, witnesses said. When the priest sex-abuse crisis broke in 2002, Pilla named Smith as the diocese's liaison to the Jones Day law firm, which led the defense against lawsuits brought by accusers. The promotion "significantly increased Mr. Smith's status in the diocese," Pilla said. Wright shared a similar fondness and respect for Smith and considered him his right-hand man in the financial office. Smith eventually replaced Wright as head lawyer and chief financial officer. "We were friends," Wright testified. "I relied on him totally for his financial expertise. I felt Joe was a hard worker and he did a good job." When Smith asked Wright for a $250,000 bonus to supplement his six-figure salary, Wright acquiesced - and agreed not to tell Pilla. But on the witness stand, Wright's memory failed him. He couldn't recall the amount on the bonus check, which has never been found. Nor could he remember signing vouchers requesting checks totaling $270,000 for Smith or documents opening a secret account at Fidelity Investments. Wright confessed his deception to Pilla after a whistleblower produced documents that laid bare what prosecutors said was the Smith-Zgoznik kickback scheme. But Pilla said he wasn't upset about the quarter-million-dollar bonus paid to Smith. The bishop said Wright hadn't even told him the amount of the bonus. Pilla said he just wished he had known about it first. In response to a question from the jury, Pilla said he would have approved the bonus with the blessing of the diocese Finance Council. When questioned on other subjects, Pilla and Wright came across as disengaged and uninformed on financial matters: Wright confirmed signing off on a double-dipping deal for Thomas Kelley, chief executive officer of the Catholic Cemeteries Association. Kelley was allowed to retire, collect his pension, and continue working for $88,000 annually. His salary was paid with diocesan checks funneled through Zgoznik's company. Pilla testified he was unaware of the secret deal and thought Kelley had left employment at the diocese. Wright said he was unaware that Casmir Rutt, a former diocesan chief financial officer, continued to be paid his full salary for three years after his retirement. Wright said Pilla approved a $60,000 loan to Wright's secretary, Maria "Mitzy" Milos. The loan was not documented on the church's ledgers, Rotatori said. When she failed to repay the loan, Wright paid off the $50,000 balance with a check from the church's Cemeteries Association. The diocese paid a one-time computer consultant, Don Felkin, head of Resultant Corp., with money funneled through Zgoznik's company, unknown to Wright. Rotatori took note of how the diocese used his client's payroll to make secret payments to favored employees. "Everything they didn't want anyone to see, they ran it through my guy's company," Rotatori said. "He felt very important, like he was one of the big guys at the diocese. He was really just a shmuck with a pen." Judge Aldrich has severely restricted Rotatori's questioning, however, sustaining multiple objections by Assistant U.S. Attorney John Siegel. Most of the issues have been argued quietly beside the judge's bench, which has caused Aldrich to apologize to the jury. "I'm beginning to feel like the judge in the O.J. Simpson trial with all of these sidebars," she said. "I don't normally work like this." To reach James F. McCarty: jmccarty@plaind.com, 216-999-4153.
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