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	Former Accountant for Diocese Takes Stand By James F. McCarty The Plain Dealer September 24, 2007 http://blog.cleveland.com/metro/2007/09/former_accountant_for_diocese.html A former accountant for the Catholic Diocese of Cleveland testified Monday in federal court that church officials knew about, and approved, the hundreds of thousands of dollars of secret payments he is now being accused of making as kickbacks to the former top lawyer and chief financial officer at the diocese. Anton Zgoznik, who is accused of paying $784,000 in kickbacks to Joseph Smith, said the diocese routinely used non-traditional forms of compensation for its employees. To keep the transactions confidential, the church often used a pass-through company, such as Zgoznik's Mentor accounting firm, he said. Zgoznik said the beneficiaries of these secret compensation deals included Bishop Anthony Pilla and the Rev. John Wright, Smith's predecessor as the Legal and Financial Secretary at the diocese. When a whistle blower exposed his deal with Smith in 2004, Zgoznik said he immediately contacted Wright, who Zgoznik said had set up the deal. Zgoznik said his fears were realized when Wright refused to back up his story. Wright denied any knowledge or involvement in the payments to Smith when he testified earlier in the trial. "I'd seen it happen before," Zgoznik testified. "They were going to shield their responsibility. They wanted somebody to take the fall for the decision-making at the diocese." Zgoznik, 40, of Kirtland Hills, has been on trial for the past month in U.S. District Court in Cleveland. He is charged with multiple counts of conspiracy, money laundering, mail fraud and obstruction of justice. Smith, 50, of Avon, will stand trial on the same charges at a later date. A spokesman for for Diocese contacted about Zgoznik's testimony said the defendant's allegations are false. "Any suggestion that those involved with the administration of the Diocese knew or approved of the activities charged against the defendant or engaged in similar conduct is false," Bob Tayek said. "As a reminder, the Diocese of Cleveland is not on trial," he added. "It is a victim of the crimes alleged against the defendant." In a report prepared after the deal was exposed, Zgoznik said Wright initially gave a tacit blessing to the Smith payments. "He just did not want to know," Zgoznik testified. "In essence, we interpreted this quiet authorization of the transactions. Father wanted to compensate this key executive." Zgoznik said, at first, he wasn't worried about getting in trouble for paying Smith from his company's accounts because he had witnessed similar transactions before. In his written report, displayed in court, Zgoznik said he had seen diocesan accounting records of $80,000 transferred into Pilla's personal account for unspecified purposes. Zgoznik also said he witnessed a transaction where Pilla provided health equipment from a diocesan warehouse to his brother, for which the diocese received no compensation. "I was shocked, stunned," Zgoznik wrote. But he didn't report the incidents. "In the best interest of the diocese, we needed to move forward." Zgoznik also said he witnessed a questionable land deal by Wright in which the priest inherited property in Sharon Township, Medina County, that he exchanged for a nearby tract of commercial property owned by the diocese. Wright sold the property a short while later for a huge profit, Zgoznik said. Judge Ann Aldrich would not allow defense lawyer Robert Rotatori to question Wright about the land deal at the time the priest testified.
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