Ex-Church Accountant Goes on Trial in Alleged Kickback Scam

CLEVELAND (AP) - A former top accountant for the Cleveland Catholic Diocese cheated the church and defrauded the government by handling about $785,000 in kickbacks that went to the top-ranking lay executive of the diocese, the government said at Monday's trial opening.

Anton Zgoznik, 40, of suburban Kirkland Hills, was instrumental in arranging the secret payments from church funds to Joseph Smith, former diocese chief financial officer, federal prosecutor John M. Siegel told a U.S. District Court jury. Smith faces a trial later.

Zgoznik's attorney, Robert J. Rotatori, said the payments amounted to secret executive compensation approved in an exhaustive church budget process that included Bishop Anthony M. Pilla, who is now retired.

Zgoznik, the son of devout Slovenian Catholic immigrants, was raised to be respective of priests without question, Rotatori said, and approved the secret payments to Smith at the direction of the top diocesan leadership.

"That was the way of the diocese and priests - secrecy," Rotatori said.

Siegel said Zgoznik concocted the idea of secret executive pay approved by church leaders as a legal defense against a mounting church audit which eventually led to an FBI investigation.

Zgoznik, who rocked in his chair and sipped coffee during the opening statements, is facing 15 counts, including mail fraud and conspiracy to commit mail fraud.