A jury returned guilty verdicts against Joseph H. Smith, the former treasurer, CFO and legal secretary of the Catholic Diocese of Cleveland, on charges of conspiracy and filing false tax returns.

Smith, an attorney and CPA, was convicted on six tax charges after a six-week trial in a Cleveland federal court. The jury acquitted Smith of mail fraud and conspiracy to commit mail fraud.

Smith's co-defendant, Anton Zgoznik, was convicted in October 2007 of similar charges. Zgoznik, a former diocese employee, owned and operated several corporations that provided accounting, tax, financial and computer technology services for the diocese.

According to the indictment, between 1997 and 2003, Zgoznik paid more than $784,000 in kickbacks to Smith in exchange for Smith's efforts to steer work to the entities that Zgoznik controlled. As a result, the diocese paid the entities controlled by Zgoznik more than $17.5 million between 1997 and 2003. Some of the bills were inflated or were for services that were not needed.

Prosecutors said that Smith and Zgoznik defrauded the IRS by disguising the kickback payments as compensation for consulting and legal services that Smith purportedly provided for the Zgoznik entities. The two defendants allegedly disguised the kickbacks in part by having Zgoznik's companies pay the kickbacks by checks payable to a golf paraphernalia business operated by Smith and to another business name used by Smith as purported payments for legal, consulting and other services not actually rendered by Smith.

As a result, Smith and Zgoznik were able to deceive the IRS during an audit of Smith's 1999 tax return and three years of returns for the Zgoznik entities, according to prosecutors. Smith also failed to report some of the kickbacks on his tax returns and misreported other kickbacks as business income on his Schedule C.

The court dismissed eight money-laundering charges against Smith, but he still faces a maximum sentence of 20 years in prison. Sentencing is set for Oct. 3.

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