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	Diocesan Ex-Official: Payments a Secret But He Denies Ok'ing $784,000 for Aide By James F. McCarty Plain Dealer August 28, 2007 http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/118829098817580.xml&coll=2 The former top lawyer and chief financial officer at the Cleveland Catholic Diocese testified Monday that he approved $250,000 in secret payments to his successor. But the Rev. John Wright denied authorizing a diocesan accountant, Anton Zgoznik, to pay another $784,000 to Wright's replacement. Government prosecutors considered the $784,000 to be kickbacks and called Wright to testify at Zgoznik's trial in U.S. District Court in Cleveland. Zgoznik is charged with multiple counts of conspiracy, money laundering, mail fraud and obstruction of justice. Wright's replacement, Joseph Smith, will stand trial later. He faces the same charges. Wright said he approved a $250,000 payment to Smith in 1996, to be made over five years, to supplement his assistant's salary and persuade him not to leave the diocese. Smith had the benefit of an advocate, Zgoznik, with close ties to Wright. The priest had presided over Zgoznik's wedding and baptized his son. Zgoznik convinced Wright that Smith could easily double his $140,000 salary in the private sector and that he was worth keeping. Wright vowed to keep Smith's bonus a secret from everyone - even Bishop Anthony Pilla. "I was told no one would ever know about it," Wright testified. "I didn't want other people coming to me saying I gave Joe a raise, I want a raise, too." But when a whistleblower exposed the Smith-Zgoznik kickback scheme in 2004, Wright faced the unpleasant prospect of confessing his deeds to Pilla, now retired. Wright said he was not punished. Smith, 50, the top paid employee at the diocese, resigned within days of the whistleblower letter. Assistant U.S. Attorney John Siegel presented diocesan financial documents and checks for $185,000 and $85,000 written to Smith - all bearing Wright's signature. Wright denied signing them and said they might have been forged. Nor did Wright admit writing a memo establishing a tax-free diocesan account at Fidelity Investments to be used "to handle sensitive items impacting the diocese." Wright said he was shocked and hurt to learn how Smith had betrayed his trust, pocketing $20,000 more than their agreed-upon deal. Defense lawyer Robert Rotatori asked Wright if he expected Smith to take a pay cut after five years, when the secret fund had run out. "That issue was not brought up, and I didn't think about it," Wright said. Wright expressed no regrets for approving another deal to secretly pay the church cemeteries' chief operating officer. Tom Kelley retired and collected his pension but continued to work as a contract consultant for $88,368 a year. Zgoznik, 40, of Kirtland Hills, maintains that the $784,000 his accounting companies paid to Smith was part of a standard, off-the-books diocesan deal similar to Kelley's and approved by Wright. Wright denied knowing about Smith's deal or endorsing it. The diocese paid Zgoznik $17.5 million over seven years to modernize the church's accounting systems. To reach this Plain Dealer reporter: jmccarty@plaind.com, 216-999-4153
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