Diocese finance officer gets year Joseph Smith also must pay restitution
Joseph Smith, the former chief financial officer of the Cleveland Catholic Diocese, was sentenced Thursday to one year and one day in prison for six tax crimes.
The prison sentence was much lighter than federal prosecutors had asked for from U.S. District Judge Ann Aldrich.
Smithwas ordered to pay between $200,000 and $400,000 in restitution to the Internal Revenue Service. Aldrich must determine the exact amount, Assistant U.S. Attorney John Siegel said.
Smith was at the center of an explosivetrialfeaturing testimony from Bishop Emeritus Anthony Pilla in which Smith was accused of bilking the diocese out of hundreds of thousands of dollars.Prosecutors accused Smith of approving inflated payments from the diocese to Anton Zgoznik, who did accounting work for the church. Zgoznik then paid money to businesses that Smith ran from his Avon Lake home.
Those payments were kickbacks from Zgoznik to Smith for the church business and inflated payments, prosecutors said.
Smith's lawyers countered that the money was not stolen but simply constituted raises approved by church superiors.
They also argued in pretrial motions that the diocese had scores of hidden bank accounts designed to funnel money to whomever they saw fit and that Pilla knew of and approved of the accounts and payments. The diocese vigorously denied the allegations, and the issues were never raised during the trial.
Smith was acquitted in July of the most serious charges -- that he illegally got payments as part of a kickback scheme to funnel business to Zgoznik. Instead, the jury ruled that he did not pay taxes on $784,000 from the diocese.
Zgoznik, of Kirtland Hills, was tried separately on similar charges and found guilty on all 15 counts, including conspiracy and money laundering. He has yet to be sentenced but is likely to face several years in prison.
Church leaders reiterated Thursday that they did not approve the payments to Smith.
"The diocese respects the court's judgment as to an appropriate sentence," diocesan spokesman Robert Tayek said in a statement. "It remains the diocese's position that no one knew of or approved the payments to Smith by Anton Zgoznik's firm."
The diocese also said it has taken several steps to improve its financial controls, including a reorganization of its legal and finance offices, improved internal controls and more finance personnel, and the use of highly regarded professional firms when appropriate.