Retired Bishop of Cleveland Anthony Pilla

Cleveland, Ohio, Aug 30, 2007 / 09:00 am (CNA).- Retired Bishop Anthony Pilla of Cleveland said he was shocked when evidence indicated that his former employees had stolen hundreds of thousands of dollars through what prosecutors call an elaborate kickback scheme, reported The Cleveland Plain Dealer.

Bishop Pilla retired from his post last year but took the stand yesterday 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 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.

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 the bishop his reaction.

"Shocked," Bishop Pilla was quoted as saying. "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, the bishop placed Smith on a leave of absence and called the FBI when he learned of evidence of fraud.

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