CLEVELAND — A former accountant for the Cleveland Catholic Diocese sobbed Tuesday as he told a federal court jury that the $784,000 in secret payments made to his old boss were approved by church leaders.
“I didn’t know ... ,” Anton Zgoznik, 40, of Kirtland Hills, said before breaking into tears and gasps in U.S. District Court.
The payments amounted to extra executive compensation arranged by the defendant and authorized by top church officials as part of a pattern of secret financial dealings, Zgoznik’s defense has contended.
The prosecution has portrayed the payments as unauthorized kickbacks Zgoznik made in return for accounting contract work that was awarded to his private business. The eight-county diocese of about 780,000 Catholics has said it was a victim in the alleged scheme.
Zgoznik, answering pointed questions submitted by the jury, testified during his second day on the stand that he was a “passthrough” middleman who handled payments between diocesan leaders and a valued lay employee who could command a higher salary elsewhere.
“The salary structure didn’t fit people like Joe Smith,” Zgoznik testified. “So they did it (paid him more) confidentially through me.”
The jury could begin deliberating the case by the end of the week.
Smith, former chief legal and financial officer for the diocese, faces trial later on similar charges. The trials were held separately because of potentially conflicting legal interests. Smith has attended much of the five-week trial, taking notes.
Zgoznik, repeatedly trying to expand on his answers to juror questions, said the case against him amounted to confusion over the difference between a vendor doing contracting business and a fiscal agent making payments to a third party on someone else’s behalf.
“Unfortunately, we were doing both,” Zgoznik testified. “That’s what’s causing confusion.”
One juror wanted to know if Zgoznik, son of devout Catholic immigrants from Slovenia, still had contact with church leaders who had hired and befriended him and then directed accounting business to his outside consulting firm.
“Everybody abandoned me,” Zgoznik said. At one point he sobbed loudly, patting his chest to compose himself and urged by his attorney to calm down.
In response to a juror’s question, Zgoznik said it was “absolutely” legal to make a passthrough payment.
Zgoznik said he didn’t quit his church job and then set up a business with advance church backing, but said his reputation might have helped. “Something must have told them I would be a loyal diocesan soldier,” he said. “I was a loyal diocesan soldier.”
Zgoznik is charged with conspiracy, money laundering, mail fraud and obstruction of justice.