Of Virtue and Vice, and a Vatican Priest, by Davide Casati, New York Times (October 18, 2014)

On a clear, warm day, a motorcycle zoomed through a quiet, narrow passageway in the old section of Salerno on Italy’s southwestern coast. The rider slowed in front of an elegant house with a baroque stone gate just long enough to shout “Thief! Thief!” before racing off.

The object of derision, Msgr. Nunzio Scarano, was behind the thick walls of his house and did not hear the rider. But the insult would not have surprised him. He has heard quite a few. He’s been called a “consummate delinquent” and a “pleasure-loving prelate.” Even Pope Francis cracked a joke about him, saying that “for sure he did not enter prison because he acted like Blessed Imelda,” before calling events in which the monsignor was involved “a scandal that hurts me.”

Before his arrest in June 2013, the monsignor was a top accountant at the Vatican office that, at that time, managed the Holy See’s real estate and investments. He is currently on trial, accused of money laundering — most notably, of trying to smuggle $26 million from Switzerland to Italy in a private plane, with the help of an Italian secret service agent.

An Italian judge calculated Monsignor Scarano’s wealth at more than $8.2 million, though the Vatican paid the priest just $41,000 a year. Italian authorities seized the 17-room, $1.7 million house in Salerno, where he is now under house arrest, along with many bank accounts; two of them, at the Vatican Bank, were seized by Vatican authorities.

The monsignor’s arrest made front-page news in Italy. “Scandal at the Vatican Bank,” screamed La Repubblica, a Rome-based newspaper. Within a few days, the Vatican Bank’s second and third in command resigned in disgrace. More than a dozen bankers, regulators, prosecutors, lawyers and Vatican insiders were interviewed for this article, and a majority of them consider Monsignor Scarano a small fish in the pond of the Vatican financial system, the accusations against him a mere symptom of much larger problems that Pope Francis is now energetically trying to correct.

A number of official Italian inquiries into money-laundering operations by organized crime or by corrupt politicians and businessmen have led to the doors of the Vatican Bank. The bank itself is not huge: It has just $7.9 billion in assets and 17,419 customers. Only the Holy See and religious entities, charities, members of the clergy and employees are supposed to hold accounts there. What made it appealing to those who prefer to operate in the shadows were its location — there are no border controls between the Vatican and Italy, allowing cash to flow virtually unchecked — and an opaque money transfer system.

That system has undergone a major overhaul. Pressure came from Italy’s central bank when it required Italian banks doing business with the Vatican Bank to ask for transaction details, including the names of people moving money. And there was internal pressure to reform, started under Pope Benedict XVI, in 2009. Expanding on efforts started by his predecessor, Pope Francis announced in the last few months a series of reforms to make the Vatican financial system more transparent and accountable.

John Ringguth, executive secretary of Moneyval, the anti-money-laundering body of the Council of Europe, said: “The Holy See has made substantial progress since 2011. It has introduced in a very short time a significant number of reforms in legislation and practice.”

In what Italian prosecutors welcomed as an unusual move, the Vatican also cooperated with the Italian judiciary on the Scarano case, turning over documents about the monsignor’s financial activities. The Holy See, it seemed, was determined to step out into the light.

The charges against the cleric convey the unpleasant suggestion that priestly vestments provided cover for disreputable transactions. The monsignor sees it differently, and agreed to speak last December to tell his version of the story that had brought him so low.

“I spent my whole life doing good deeds,” said the monsignor, who is 62, as he sat upright on a white couch in his living room. “Sometimes I took advantage of the rich to help the poor — I behaved somewhat like Robin Hood.”

Tall and slender, he was dressed in a light blue pullover sweater, simple trousers and black shoes, his gray hair neatly combed. His vast apartment was furnished with white and gold baroque furniture and filled with decorative china and hundreds of books.

“Sometimes I told some lies, too,” he continued. “But what mattered to me was to help someone.”

Prosecutors say he was, indeed, trying to help someone. But while the monsignor seemed to be suggesting that he has helped only the poor, prosecutors say he used his position to try to help his rich friends — and earn the fruits of their generosity.

His trial in Salerno began on Sept. 29 and is expected to continue for several months. In early January, he was barred from talking to the news media, and I have not been able to speak with him directly since December.

“I’ll never tell anyone the names of the people whom I helped,” the monsignor told me then. “As Jesus said: When you give alms, do not let your left hand know what your right is doing, so that your almsgiving may be secret. And your Father who sees in secret will repay you.”

‘The Calling by God’

Born in Salerno, the monsignor had an eventful youth. “As a teenager, I was a leftist, a rabid anticlerical,” he said with a smirk. What brought him back to the mother church was something he called “a miracle.”

The monsignor tells the story this way: At 17, he learned that he had a rare circulatory system disorder called Buerger’s disease. Doctors warned, he said, “that I would have lived on just for six more months.” The surgery he needed was very expensive, and he did not want to bankrupt his family. He considered suicide.

According to Monsignor Scarano’s recounting, he climbed to the balcony of his parents’ house, ready to leap to his death. His parents restrained him and persuaded him to go to Naples for surgery. “While entering the operating theater, my Aunt Titina put an image of the Virgin Mary under my pillow,” the monsignor recalled. “I felt the Virgin’s mantle covering me. I saw her upon me.”

Six months later, the young Scarano was declared out of peril. He told me that he dropped to his knees to confess after having shunned that sacrament for years.

But the conversion did not immediately lead him out of temptation. He liked nice things and traveling. He dressed well, cultivating the image of a carefree bon vivant, and had “a number of romantic relationships,” he told me. “Let’s say that I lived it up.”

Rita Occidente Lupo, a journalist based in Salerno who has known him since he was a young man, confirmed that he liked to have a good time. “He was the most handsome guy in Salerno,” she added.

At 30, Nunzio Scarano was ready to settle down. Skillful with money, he had become an executive in a commercial bank and was engaged to be married. During a five-day spiritual retreat in a Benedictine abbey, however, he had what he refers to as “the calling by God.” At the end of the retreat, he decided to give up all his worldly possessions to become a priest.

As he tells it, he moved to Rome to study theology. His family opposed his decision. Returning to Salerno for Christmas in 1982, just a few months into the seminary program, his mother refused to let him in the house. “She told me there was no room for me,” he said, using the same phrase as the innkeepers who turned away Mary and Joseph.

And he recalled suffering. He said he slept at the train station, eating a piece of bread that a passenger had tossed away and sneaking onto the train back to Rome. “I spent the whole trip in the toilet to escape the ticket inspector,” he said, “for I had no money to pay for the trip.”

Some friends stepped in to help him — particularly, Monsignor Scarano said, “members of the D’Amico family.” Antonio D’Amico was the co-founder of a shipping company and had known him since he was a child. The priest in training thus was able to meet many of Mr. D’Amico’s wealthy friends: bankers, entrepreneurs and members of the nobility.

After his ordination in 1987, he was sent to tend to the parish of St. Cecilia in Eboli, a town southeast of Salerno. In the five years he spent there, Monsignor Scarano improved the local church’s relationship with parishioners and secured donations to upgrade parish facilities, according to both him and the Rev. Daniele Peron, who served with him and is still pastor of the parish.

“People were constantly offering Scarano a lot of money,” Father Peron said. “Don Nunzio knew how to deal with people.”

Father Peron remembered Monsignor Scarano helping convert a local bully, who was subsequently killed by the local Mafia. The monsignor said he became a target of the mobsters and was shot at three times. He said his archbishop asked him to leave Eboli and to go to the Vatican for his own safety. “I tried to protest the decision,” he told me, “but then I yielded to serve the church.”

More Than Broccoli

During his years as a chief accountant at the Vatican, Monsignor Scarano cultivated his relationships with wealthy benefactors. He became a close friend of counts, marquises and businesspeople, too. He said he christened newborns of the Roman elite, officiated at high-society weddings, hobnobbed at important receptions and accepted these people’s generous gifts for charity.

“I worked tirelessly,” he said, “and I did not take advantage of my position — not even to get a free cup of coffee.”

Monsignor Scarano conceded, though, that his status in the Vatican bureaucracy had its advantages. “When I was the pastor of the parish in Eboli, my parishioners presented me with fresh broccoli,” he told me. “But if you officiate at the wedding of a princess, or of a marquis, they easily give you 10,000 to 50,000 euros. You know, the divine providence has always been very generous with me.”

Many times, providence bore the name of the D’Amico family. Over nine years, according to court records in Salerno, members of the D’Amico family transferred more than $6.9 million into Monsignor Scarano’s accounts at the Vatican Bank: his personal one and the one he called “account for the elderly.” All the transfers were labeled donations.

One acquaintance of the monsignor was Giovanni Carenzio, a financial broker from Pompeii who was married to a Spanish noblewoman. Mr. Carenzio promised investors mind-boggling returns — up to 20 percent in three months, according to La Provincia, a Spanish newspaper. Spanish prosecutors said they thought this investment was a Ponzi scheme, and Mr. Carenzio is currently under investigation. A number of wealthy people, including Paolo D’Amico, gave Mr. Carenzio a lot of money. According to a court filing, Mr. D’Amico said he invested millions simply because the monsignor told them that Mr. Carenzio was a “trustworthy man.”

In May 2012, Mr. Carenzio phoned the monsignor. The broker said Spanish prosecutors were investigating him for possible fraud. He hinted that prosecutors might find out about a suspicious transaction he said he had made in favor of Cesare and Paolo D’Amico, according to court filings in Rome. “There are proofs in the bank accounts,” he told Monsignor Scarano in a wiretapped conversation that is now part of court filings.

Monsignor Scarano felt that he could not leave his friends — and generous donors — in the cold, said his lawyer Silverio Sica. The monsignor asked Mr. Carenzio to avoid mentioning the D’Amicos to Spanish prosecutors, according to a transcript of a phone call filed in Italian courts. He also discussed repatriating to Italy — in cash and tax-free — $26 million that, according to the monsignor, the D’Amicos had invested with Mr. Carenzio and that was kept in Switzerland. According to prosecutors and wiretap transcripts, the monsignor’s plan was to give the money back to his friends, tell them he had steered them away from a potentially dangerous situation and accept their generosity for his unsolicited help.

According to prosecutors and court filings, Monsignor Scarano, in order to carry out this plan, asked for help from another friend, Giovanni Zito, who was a member of the Italian secret service. Mr. Zito agreed to take the risky assignment of bringing back the D’Amicos’ cash on a private plane, in exchange for a refund of his expenses that a judge in Rome later characterized as “realistically marked up.” On July 16, 2012, Mr. Zito went to Switzerland and waited. But Mr. Carenzio made excuses. The D’Amicos never saw their money again.

Still, when the D’Amicos learned that the monsignor had tried to help, they thanked him with a donation, according to wiretapped conversations that are part of court filings. That was in mid-November 2012. By that time, officers of the Guardia di Finanza — Italy’s law enforcement agency for financial crime — had been tapping Monsignor Scarano’s conversations and checking all his transfers for months. They had been tipped off by an anonymous source who had written, in part, “How could this man, in just a few years, buy a whole floor of a prestigious building in Salerno’s city center, worth at least $4 million?”

The Charity Defense

At 6:30 a.m. on June 28, 2013, officials of the Guardia di Finanza pulled up in front of a rectory where Monsignor Scarano was staying in Palidoro, a town west of Rome, and rang the bell. The monsignor, who had been sleeping, opened the door and was told that he was under arrest. A few hours later, in an elegant gray suit, he entered a cell in the most crowded prison in Rome. After several weeks in jail, the monsignor was released and put under house arrest. Prosecutors in Rome have charged him with corruption while, in Salerno, he has been charged with money laundering.

In the interview in December, the monsignor contended that the millions of dollars that had accumulated in his accounts were all for charity. This is also a defense that his lawyer will present.

“I was saving it to build a house for terminally ill patients. Why would I have kept it in a bank account otherwise?” he asked, his voice rising in disdain. “I would have spent it. Astronomically expensive trips to the Bahama Islands, a boat in Amalfi — guess what: I did not do any of these things.”

Prosecutors challenge that explanation, and others who knew him say he has a penchant for embellishment. Father Peron, who worked with him in Eboli, said Monsignor Scarano “never got shot in Eboli — not even once.” Nor did he need convincing to go to the Vatican: “He had always wanted to work there,” Father Peron said, adding that the monsignor “said he wanted to use the money to build a recovery facility for the terminally ill. But if I had to do that, I would use the money people give me for that purpose, not to buy a house in the center in Salerno, or to have real estate companies. Don’t you think?”

‘I Am the One on the Cross’

In the 16 months after the monsignor’s arrest, Pope Francis has made significant changes in the Vatican financial system. He created a secretariat for the economy and hired consulting firms to conduct reviews of the entire financial system. The Vatican Bank’s fortifications against money laundering have been strengthened by closing many accounts and clarifying qualifications for account holders.

The Vatican recently chose a new president for the Vatican Bank — the French fund manager Jean-Baptiste de Franssu, along with a whole new board — including Mary Ann Glendon, a Harvard law professor and a former United States ambassador to the Holy See, and Clemens Boersig, former chairman of the supervisory board of Deutsche Bank.

The Financial Information Authority, the Vatican’s financial watchdog, has also been revamped. The pope recently threw out the whole board of the F.I.A., replacing five Italians with experts from all over the world, including a Switzerland-based philanthropist, the former managing director of the Monetary Authority of Singapore, and a former counterterrorism adviser to President George W. Bush.

But change from the board to the F.I.A.’s operations may take more time. The authority still has only four employees, none of whom are anti-money-laundering experts. Mr. Ringguth said the authority “needs to engage additional staff with the appropriate training and experience so it can carry out its new tasks effectively.”

A former top representative at the F.I.A, who asked not to be identified because he was not authorized to speak publicly about this subject, said: “Now the Vatican has a solid regulatory anti-money-laundering framework — yet we don’t know if this would be enough to single out the next Scarano. Nor do we know how many Scaranos — actually far worse than Scarano himself — were there.”

The monsignor sees himself as a scapegoat. “Right now, I am the one on the cross,” he told me. When he feels that he is drowning, he said, he finds solace in the Gospel — and especially in two passages about money, wrongdoing and salvation. The first is the calling of Matthew — a former tax collector — by Jesus. The second is the parable of the prodigal son. In it, a boastful young man wastes half of his father’s fortune, then repents and goes back to his family house, where his father is ready to embrace him again.

The monsignor faces up to 20 years in prison, according to his lawyer. The monsignor himself played down the seriousness of the charges. The plan to repatriate $26 million from Switzerland, he told me back in December, “was just helping someone who needed a favor.”

He then stopped and leaned back on the sofa for a moment. He resumed speaking in a low tone:

“I am no saint, no. I am a sinner, like everyone else. I trusted the wrong people. I have been stupid. I made a mistake. That’s it.”