Diocese trial goes to the jury

The ex-accountant for the Cleveland diocese faces money-laundering charges, among others.

CLEVELAND (AP) — A trial that focused on alleged secret accounts and a six-figure payout to a favored Cleveland Catholic Diocese employee wrapped up Friday with the two sides contending the payment was either authorized by church leaders or a kickback made by a rogue accountant.

Assistant U.S. Attorney John Siegel repeatedly mentioned Bishop Anthony M. Pilla in his closing argument to the jury and said “there was no way” the now-retired head of the diocese was aware of the $784,000 in payments made to a former top financial officer of the diocese.

But lawyers for defendant Anton Zgoznik, of Kirtland Hills, said Zgoznik approved the payments through his businesses at the directive of two of Bishop Pilla’s top lieutenants, a priest and a layman who replaced the priest as diocesan chief financial and legal officer.

The U.S. District Court jury left the courtroom after 21⁄2 hours of closing arguments to begin deliberating Friday afternoon.

Zgoznik, 40, is charged with conspiracy, money laundering, mail fraud and obstruction of justice. He clutched a coffee cup during the closing arguments, occasionally narrowing his eyes on a prosecution point or smiling lightly when his attorneys summarized his defense for jurors.

Who got the payments

The payments went to Joseph Smith, 50, former chief legal and financial officer for the diocese. Smith, who attended most of the trial taking notes, faces trial later on similar charges.

“There was no way Bishop Pilla would know, the diocese would know” about the payments, Siegel told the jury.

Siegel said accounting bills submitted to the diocese by Zgoznik were meant to obscure their true meaning from church leaders.

“It is clear they didn’t know what was going on and the invoices were designed to make sure they didn’t know,” Siegel said.

The church may have needed outside accounting help because of outdated bookkeeping practices and computers, but that outsourced work was used as a platform for kickbacks, Siegel said.

But the question of high-level authorization for the payments “flows through every charge” in the case, said defense attorney Robert Rotatori.

“They were passed through, directed by the diocese,” said Rotatori, who Zgoznik tried to fire midtrial.

‘Following instructions’

According to Rotatori, Zgoznik was a lightly experienced accountant when he went to work for the church and wasn’t in a position to question payments authorized by Smith and his predecessor as chief financial-legal officer, Rev. John Wright.

“He was the new kid on the block and was following instructions,” Rotatori said.

Zgoznik eventually left his church job and set up an accounting practice that landed extensive diocesan audit work. “There were no false deductions here, no conspiracies,” Rotatori said.

The eight-county diocese of about 780,000 Catholics has said it was a victim in the alleged scheme.

A trial highlight was the testimony of the 74-year-old Bishop Pilla, who said he felt betrayed when he learned about the alleged scheme. The judge limited the defense questioning of the bishop about alleged secret accounts.