Former Bishop Pilla Says Report of Kickbacks a Shock, by Mike Tobin, Plain Dealer, August 29, 2007

Former Bishop Pilla Says Report of Kickbacks a Shock

By Mike Tobin
Plain Dealer
August 29, 2007

http://blog.cleveland.com/metro/2007/08/former_bishop_pilla_says_repor.html

Former Bishop Anthony Pilla said he was shocked when confronted with evidence that Cleveland Catholic Diocese employees stole hundreds of thousands of dollars through what prosecutors call an elaborate kickback scheme.

Pilla, the longtime leader of the diocese who retired in last year, took the stand in the trial of Anton Zgoznik, who is accused of multiple counts of conspiracy, money laundering, mail fraud and obstruction of justice.

Zgoznik's supervisor, Joseph Smith, will stand trial later. He faces the same charges.

Smith was the highest-ranking layperson to work at the diocese, serving as chief financial officer. Prosecutors accuse Smith of approving inflated billings from Zgoznik, who in turn paid money to companies owned by Smith, prosecutors said.

The retired bishop's testimony Wednesday focused on Smith. "I considered ours a very close relationship," Pilla said.

Prosecutors appeared to lay a deep, broad foundation for all work Smith did for Pilla, including a Pilla-sponsored golf tournament that raised money for inner-city schools.

Smith helped Pilla when he served on the National Council of Bishops. "I'm not a business person," Pilla said. "Joe was of great assistance to me there."

In 2004, a whistle-blower sent an anonymous letter to the diocese outlining the payments to Smith and Zgoznik. Assistant U.S. Attorney John Siegel asked Pilla his reaction.

"Shocked," Pilla said. "Shocked. I had complete trust in Mr. Smith. He was a valued co-worker in whom I had great trust." On advice of diocesan lawyers, he said, he placed Smith on a leave of absence and called the FBI.