Monday, February 19, 2007

Retired Catholic Bishop Accused of Having Secret Bank Accounts

Newsnet5 reported February 18 that:

CLEVELAND -- The former financial chief of Ohio's largest Roman Catholic diocese, who is facing federal charges accusing him of taking church funds, contends in court documents that the retired bishop kept his own secret fund.

In court papers, Joseph H. Smith, the former chief financial officer of the Diocese of Cleveland, accused former Bishop Anthony Pilla of writing checks and buying furniture from off-the-books church accounts. The diocese on Saturday denied Smith's allegation.

Smith, 50, pleaded not guilty in August in U.S. District Court to 23 counts, including making false personal income tax returns, money laundering, mail fraud and conspiracy. Anton Zgoznik, Smith's friend who once worked under him at the Cleveland diocese, pleaded not guilty to 15 counts, including conspiracy, money laundering and mail fraud.

Zgoznik, 40, joined Smith's motion, filed Friday, which asks the court to order the diocese or prosecutors to produce financial records that defense lawyers say would exonerate the two. Their trial is scheduled for April.

"We are sorry that Mr. Smith has resorted to making false accusations against those associated with the diocese," diocese spokesman Bob Tayek said in a statement on Saturday.

"Any suggestion that those involved with the administration of the diocese knew or approved of the activities charged against Mr. Smith, or engaged in similar acts, is false."

The federal indictment alleges Smith, chief financial officer for 10 years and the highest-ranking lay employee of the diocese, diverted money collected from members of its 233 parishes across eight northeast Ohio counties.

Prosecutors say that from 1997 through 2004, Smith approved inflated payments of more than $17.5 million, some of them for legitimate work, from the diocese to companies owned by Zgoznik, and that Zgoznik then paid $784,000 in bogus consulting fees to companies owned by Smith. Prosecutors accuse Smith of using the money to buy a Florida condominium and pay for his children's tuition, landscaping and a resort membership.

The two men say they were following orders from superiors, including Pilla. Friday's motion says the diocese had hundreds of bank accounts not listed in official financial records that were used to compensate employees.

"We want to demonstrate the diocese was working with off-book accounts and disbursing money," said Robert Rotatori, Zgoznik's lawyer. "This is not something they're unfamiliar with."

The motion details an account that Smith said contained more than $500,000, called the "Anthony M. Pilla Charitable Account."

Smith detailed transactions totaling $177,000 that he said the bishop ordered, which were either payments to the diocese converted into money orders payable to Pilla, payments to a furniture store or checks made out to cash.

"Joe Smith worked at the highest levels of the diocese for over 20 years," said his attorney, Philip Kushner. "He's intimately familiar with diocesan operations and specific transactions."

Pilla, who retired last year citing health concerns, declined through a spokesman Saturday to comment.

The complete story may be found here:


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