by Jason Berry
To a very large percent, the parishes were clustered with those who they had mentioned in their own report. My hope is that this will be an opportunity for all of our parishes and all the people in the parishes to enhance their own Catholic life … The clustering process with the good will of the people and their energy will in fact do what Bishop Pilla had envisioned to be an opportunity for the church to revigorize itself going forward.
Returning to “the church’s interaction in the larger community,” Lennon assessed Catholic education:
The schools, especially as we see them, but not exclusively in the inner cities, the church is committed to not only educating, but helping people to give them an opportunity … I have visited now twelve of our Catholic high schools, many of which have large numbers of nonCatholic students, and I feel confident that the contribution we’re making is indeed a helpful contribution and a significant one. It does challenge us, however, as a church to be able to continue to offer this because of resources and personnel, and yet I personally would want us to be able to always offer what we’re offering today.
Turning to Catholic Charities, with its large budget, he was on surer footing, reviewing various programs, and thanking members of the development office in the audience “for all that they have done … so that we, as a diocese, can make a contribution to the larger community.”
Bishop Lennon cited scripture to convey his idea of faith.
As we go forward as a diocese, we do so in a dual relationship, as I see it. One relationship as a bishop, I call the Catholic community to a deeper relationship with God. First and foremost, we are a religion. We are a faith community. So, as a bishop, my concern is a relationship with God that, in turn, enlivens the lives of individuals so that they in turn may have a committed relationship with all of their brothers and sisters in these eight counties. When Our Lord was asked what is the greatest commandment, he answers very succinctly, to love God and love your neighbor. And that is still our charge today. That is my charge as a leader of the Catholic community—to work with those in the church to deepen those relationships so that we’re ever more faithful with the mission that the church has been given, that God’s kingdom will be on earth as it is in heaven.
In the question period, someone asked if the clustering would see a shift from the city “out in the suburbs and rural parishes.” He said, “I don’t see where that needs at all to be, you know, exclusionary of the—you know, the Church and the City. One of the first things I did when I came here, I read all those documents … I did not see where clustering a group of parishes in a section of the city precludes relationships with the parishes in the suburbs … I think the two can go along, you know, side by side.” To a similar question, he responded, “In this year’s financial statements to the diocese, again sent to everyone, shows that forty-two percent [of parishes] are operating in the red. So I think that clustering at least since mid-summer if not before, I have consistently spoken that the main reasons are threefold. Demographic shift, number one. Number two, is the whole question of financial viability, and number three is the decreasing number of priests.”
Out of the mangled sentence structure, Lennon at least acknowledged what he did not say to FutureChurch leaders: the priest shortage was a factor.
VICTIMS FOR THE PROSECUTION
Judge Ann Aldrich, who would preside over the Smith-Zgoznik trial, had been appointed to the federal bench in 1980 by President Carter. With a law degree from New York University, staff experience at the Federal Communications Commission, and twenty-seven years on the federal bench, Judge Aldrich was nearly eighty. Despite her reputation as a liberal with a sympathy for civil liberties, she denied the request by Zgoznik’s counsel to learn whether the prosecution had given immunity to any witnesses.
In another motion seeking evidence, Smith’s attorney, Philip Kushner, took a knife to the diocese’s Achilles’ heel: “The indictment takes no position regarding whether Father Wright was authorized to pay Mr. Smith additional compensation, or to not disclose it on the [diocese’s] financial records, or to conceal it from others within the Diocese.” Kushner made no issue of Smith’s $270,000 off-the-books compensation. Smith, however, was accused of taking $784,624 in other fees. “Father Wright was not duped,” declaimed Kushner.
[Wright] is a financially sophisticated attorney. He arranged for other Diocesan employees to receive compensation through the Zgoznik Entities, so that it would not be disclosed on the [diocese’s] books and records.8
In 1996, while financial and legal secretary, Wright also became CEO of the Catholic Cemeteries Association, which had 170 employees and seventeen sites. Wright left the chancery in 2000 to handle Cemeteries full-time. “Cemeteries was a cash cow,” Charlie Feliciano told me with a shrug. People buy in, die, loved ones follow. Kushner’s motions suggested he owned a map of where evidentiary bodies lay buried. Moreover, the digest of an FBI interview with Zrino Jukic stated that
the reason this money was given to Smith was because he was invited to be on the Board of Directors for Blue Cross Blue Shield and other companies; however, Bishop Pilla would not permit him to sit on these boards. Because of this, Smith was going to leave the Diocese while he still had the opportunity to pursue other more lucrative business ventures. Jukic went on to say that Marilyn Ruane, secretary of the Diocese Cemeteries Association, was on the payroll of Resultant Corporation but didn’t work there. Ruane was Father Wright’s girlfriend.9
“John was in love with Marilyn,” says Smith matter-of-factly. “I did Marilyn’s tax returns. John met Marilyn at St. Bernadette’s. I always thought he’d leave the priesthood and marry after his dad died, but he stayed a priest.”
“The defense of this case centers on whether Mr. Zgoznik believed he was authorized to make the payments to Mr. Smith and what the Diocese knew about those payments,” asserted Zgoznik’s attorney, Robert Rotatori, in another evidentiary request. Certain payments “were, in large part, for Father Wright” because Wright’s “friend … needed work.”10 Marilyn Ruane began work at Cemeteries in 1997 on a salary of $31,500, which ramped up to $81,000 by 2004, prompting the scornful tone of the journalist Bill Frogameni, writing for the Cleveland Scene: “If the raises seem a bit outsized for a religious entity funded by the dollar donations of little old ladies, Ruane isn’t talking. ‘I really don’t want to comment about that,’ she said sweetly when contacted by Scene, ‘but thanks so much for calling.’ ”11
Whatever the precise nature of Wright’s relationship with Ruane, he helped her find work, routing funds through a subcontractor for compensation, according to Kushner. Kushner charged that the diocese “routinely gave additional compensation to employees” outside the conventional payroll methods, “including many of the witnesses in this case, such as Father Wright.… [and] Bishop Pilla.” John Wright and Joe Smith had played golf together, sometimes with Anton Zgoznik. Now, it was every man for himself. Smith was pulling out what he knew about the clergy old-boy network and its ethical liabilities to mount a defense. Kushner wanted the diocese’s copy of IRS findings from a late-1990s audit because, he alleged, “the IRS determined that the Catholic Universe Bulletin had consistently failed to report additional income paid to individuals”—more off the books! As the evidence scrimmage pitched back and forth, Kushner accused the diocese of destroying records, a charge unproven. His discovery requests did not yield all of the materials he suggested would exculpate his client;12 but he planted the unmistakable impression that Pilla had a rewarding relationship with his ex-quarterback on money, Joe Smith:
The Anthony M. Pilla Charitable Account [has] assets in excess of $500,000 … It has never appeared on the [diocese’s] books and records. Bishop Pilla withdrew money from the account for his own use in a manner designed to conceal the transactions and his use of the funds.13
Jones Day attorney Stephen Sozio accused Kushner of a fishing expedition. Kushner had indeed tossed juicy bait to the press: “After the indictment in this case, Bishop
Pilla resigned and filed amended tax returns which account for some of the activity in this account.” Pilla had written a check payable to cash for $180,000 from the account and deposited it with the diocese, asserted Kushner. The diocese attacked Kushner’s “scurrilous accusations.” But for all of the church’s pushback, the persona of Pilla–as–gentle pastor faced a competing image: the bishop who lived like a lord. For as the Plain Dealer tracked the money, some $78,000 that attorney Kushner said “was secretly funneled” to the bishop, reported Mike Tobin, went to
furnishing and remodeling a spacious Geauga County home that was to be used as a getaway spot. Pilla kept many of the household items—including a large-scale television—after the diocese sold the Munson Township house and 30-acre lot in 2003. Movers took the furnishings to a home Pilla owns in Cleveland Heights …
Diocesan spokesman Bob Tayek said private donations paid for improvements at the Munson property. After the sale, items in the home were split among diocesan headquarters, St. John Cathedral and the Cleveland Heights residence that Pilla inherited after his mother died.
“The diocese is responsible for a retirement residence for him,” Tayek said.
The Munson home was donated to the diocese in 1995 by Larry Dolan, now the owner of the Cleveland Indians, who suggested it be used as a retreat house for the Cleveland bishop. The house was intended for whoever was serving as bishop of the Cleveland diocese, not just Pilla, Tayek said.14
The diocese had sold the house in 2003 for $696,000 to a company managed by Peter Carfagna, a board member of the Catholic Diocese of Cleveland Foundation and a high-level professional sports attorney. Of the $383,000 in renovation to the large home, Tayek said that it had all come from private donations. Jim McCarty of the Plain Dealer had done research on the house for an earlier report.15 The reporter had spoken with one of the six Dolan siblings who had grown up there. “I kind of ambushed Matt Dolan, a lawyer and former assistant county prosecutor,” McCarty told me, “and asked him about the decision to give the estate to the diocese. Dolan said the intention was to convert the home into a diocesan retreat house or an old priests’ retirement home, although those provisions weren’t written into any sort of agreement.”
Joe Smith told me, “Pilla felt he had earned the house through his time as bishop. His mom would stay out there with him. The Dolans were pissed at us and they should have been: the purpose was for priests to get away from the parish, and relax—a house in the woods with six bedrooms upstairs, a pond and a creek and tennis courts. Pilla wanted the property in his name. I went to see Pat McCartan, Jack Newman [another Jones Day top partner], and Peter Carfagna to figure a way to do this without all of us winding up in the can. It was the damnedest thing. Pilla had complete access to the place; he was afraid that when the next bishop came he would throw him out. He wanted the house in his name. Then it came out in the press, so we’re selling it. I think Peter Carfagna decided to help Pilla out of the jam. Pilla tells me, ‘You go out and clean it up.’ So I’m spending days in this fricking house, making sure it’s cleaned, bills paid, overseeing Jimmy jobs on repair … He wanted someone he could trust. He was so concerned about his image.”
The evidentiary motions fed deeper coverage in the Plain Dealer. “The Anthony M. Pilla Charitable Account wasn’t a secret fund but rather the former bishop’s personal savings account,” reported Mike Tobin, referring to a fund at $500,000 plus. Stephen Sozio of Jones Day, for the diocese, accused Joe Smith of trying “to impugn Bishop Pilla by arguing that the transactions … on which he actually advised the bishop were somehow untoward. They were not.”
But why was Pilla’s account secret? Why so many secret accounts? And how does a bishop amass half a million dollars plus in private savings?
“Smith was comfortable receiving additional compensation in this fashion because Bishop Pilla had a similar investment account,” wrote Kushner, implying a bishop in harmony with secret payments to upper-echelon personnel.
On June 14, 2007, Judge Aldrich ordered the diocese to provide many of the financial records the defense requested, though not the IRS findings. The files included payments of $27,200 to the family of a deacon who had lost his job at a high school for making sexual advances to girls. The disclosure of payments included a loan approved by Father Wright for $60,000 in church funds to another female secretary. Kushner was taking off the gloves as Jones Day lawyers positioned Pilla and Wright as victims.
Judge Aldrich framed the core issue of the approaching trial:
The defendants’ position is that while the evidence sought would cast doubt on the credibility of Bishop Pilla, Father Wright and the Diocese, it also and primarily serves to rebut the factual assertions Bishop Pilla and Father Wright make—that the Kickback Scheme could not have been authorized, was not authorized, and was not similar to common, questionable practices used by the Diocese.16
“Bishop Pilla, Father Wright, Joe Smith, they were all stealing,” Charlie Feliciano told the New York Times. “It was a corporate culture that was corrupt at almost all the top levels.”17 Disappointed that Pilla and Wright escaped indictment, Feliciano took comfort that his thwarted civil case of defrauding a religious charity would be distilled into a federal criminal proceeding.
A thorny legal issue arose: a tape recording as prosecution evidence.
In January 2004, with the diocese in damage control over the secret files, Anton Zgoznik was at a conference in Las Vegas. Stunned to hear Joe Smith had been sacked, Zgoznik made his first call to the priest who had blessed his marriage and later his infant son: John Wright, who confided that he had gotten an attorney. Hang in there, he recalled the priest saying. Remember that Joe worked for you. Anton Zgoznik felt alone on an island.18 When he reached out to Zrino Jukic, both men smelled trouble. On January 12, two days after the story broke, Zrino lodged a digital tape recorder into his right sock. Anton, as he said later, “was the type of person that could have tried to blame me.”19
They met in a parking lot, which is rarely a good sign.
“The fucking assholes,” Anton snarls to Zrino. “See, this is what happens when nobody communicates. Okay, Joe’s trying to claim it’s a consulting fee from us.” Anton confides that lawyer Steve Sozio, for the diocese, has asked him why he paid Joe Smith all that money. “Obviously, you and I would never give a kickback,” Anton says. To which Zrino says, “No.”
“It was executive compensation,” continues Anton Zgoznik. “Cause that’s exactly what we have to say.”
“Right.”
“Father Wright is behind this. You know that as well as I do.”
“He is?” blurts Zrino Jukic.
“They hooked us into their system,” says Zgoznik, of the diocese.
“Right.”
Zgoznik gets down to the point. “But you gotta help me out with Joe and Father and say that they authorized this.”
“They did,” replies Zrino Jukic.
Anton tells Zrino to confect a document to show that.20
Zrino Jukic drove home in the toxic residue of a Christmas dirty trick and put the tape in his dresser drawer where it slept for several months until he met with the federal prosecutor, John Siegel. As Anton Zgoznik’s business crashed, Jukic hoped his tape would keep him from being indicted.
Judge Aldrich ruled that the recording was hearsay damaging to Smith, who was not present. Thus, separate trials for Zgoznik and Smith.
Anton Zgoznik’s trial began the last week of August 2007.
Joe Smith sat in the audience, taking copious notes each day.
Zrino Jukic, as the prosecution lead witness, testified that while in Zgoznik’s employ, Anton “told me that Joe was asking for a percentage of the business that the company was getting from the Diocese … ten percent.” Jukic claimed to have no “control over the situation. So I can’t say I challenged him.” Pressed by prosecutor Siegel as to whether it “would be legal for you” to help facilitate such payments, he said, “No.”
Siegel r
ejoined: “Did you agree to go ahead and do it anyway?”
“I did.”
As he gave more answers, Zrino Jukic showed himself still hurting from the jilt.
I started to realize that I was not an owner in the company … I was being reviewed and treated like an employee just like everyone else. My salary was determined by Anton. I didn’t come in and say, “These are my clients and [I] brought in so much as revenues; as a partner, that’s mine.” No, that was not the story.
Jukic several times mentioned “kickbacks” to Joe Smith, finally eliciting an objection from defense attorney Robert Rotatori over a term yet unproven. Rotatori jabbed at Jukic for his failure to file personal income taxes “in 1997, 1998, 1999 and 2000”—he had finally filed them, several years later. A detached observer might see why Zgoznik subjected him to a job review, and wonder how a guy who failed to file his tax returns qualified as a financial adviser. Rotatori in trying to attack his credibility sought to portray Zrino Jukic as a snitch.
ROTATORI: What’s your expectation as you sit here today about your being prosecuted with regard to your personal tax returns that you described in your testimony?
JUKIC: I have no expectations.
You don’t believe you will be prosecuted?
I don’t control that. I have been asked to cooperate as a witness, and that’s what I’ve done … Nothing was promised to me.
In contrast to the corpulent Jukic who double-crossed his friend, the slender Father Wright in his Roman collar was a bland personality. He wore glasses; his silver-gray hair was carefully parted. He had entered seminary after law school and a broken romance. By virtue of his background and education, Pilla had made him secretary for legal and financial affairs. The job ran nineteen years. Cemeteries was less demanding than the chancery post: more time to be a pastor, more time to be with friends. From lawyers’ huddles came the agreement not to grill Wright about “the girlfriend,” since he was not on trial.