Second trial in alleged theft from church set

CLEVELAND (AP) -- The boss of a former Roman Catholic Diocese of Cleveland accountant who was convicted of funneling $784,000 in kickbacks goes on trial Monday on multiple charges that include making false personal income tax returns, money laundering, mail fraud and conspiracy.

Jury selection was set to begin in U.S. District Court in the trial of Joseph Smith, the diocese's former chief financial officer.

The accountant, Anton Zgoznik, was convicted in October of conspiracy and 14 other charges. He was accused of arranging the payments to his former boss from 1997 through 2004 in what prosecutors portrayed as unauthorized kickbacks in return for having diocesan accounting work contracted to Zgoznik's private business.

Smith, 51, of Avon Lake, was the Cleveland diocese's highest-ranking lay person until 2004, when irregularities in the church's finances became known. Smith was close to former Bishop Anthony Pilla, who testified in Zgoznik's trial and likely will be called in Smith's as well.

Zgoznik and Smith have maintained that Pilla knew of the payment scheme. Diocesan officials disagree.

"The Diocese of Cleveland is not on trial," diocese officials said in a statement last week. "Any suggestion that church officials knew or approved of Smith's 3/8 activities ... or engaged in similar conduct, is false."

Smith was put on paid leave in February 2004, after the allegations surfaced. He then took a job as chief financial officer in the Columbus Catholic Diocese. He eventually resigned from that job, months after he was indicted in federal court in August 2006.

Smith's attorney, Philip Kushner, has questioned the Cleveland diocese's credibility. In court papers, Kushner and Smith said the diocese had hundreds of secret accounts used to move money around and take care of people financially as church leaders saw fit.

The diocese has denied those claims, and Pilla testified that any financial moves he made, personally or on behalf of the diocese, were done based on Smith's advice.

Zgoznik faces up to 20 years in prison and will be sentenced on June 18.

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Information from: The Plain Dealer, http://www.cleveland.com