A federal jury on Thursday convicted the former top accountant at the Cleveland Catholic Diocese of tax charges and acquitted him of more serious charges related to alleged kickbacks.

The jury in the trial of Joseph H. Smith, 51, had been deliberating for nearly two weeks.

The prosecution portrayed Smith as a manipulator who arranged $785,000 in kickbacks and secret payments because he felt he was underpaid.

He was acquitted of more serious charges of mail fraud related to the alleged kickbacks, but convicted of six tax-related charges, including conspiracy to defraud the IRS. A judge had earlier dismissed money laundering charges.

Sentencing was set for Oct. 3. He faces a maximum of 20 years in prison.

The diocese issued a statement Thursday accepting the verdict and reiterating its position that it didn't know or approve irregular payments to Smith.

Smith's attorney, Philip Kushner, said, "Mr. Smith was happy and gratified to be found not guilty of the most serious charges," Kushner said. He also said the defense team will consider options on the tax convictions, including filing an appeal.

Smith's co-defendant, Anton Zgoznik, a former church accountant and later an outside church contractor, was convicted in October of conspiracy and 14 other charges. He faces sentencing Sept. 26 and also could face up to 20 years in prison.

The government said Smith orchestrated $250,000 in secret pay raises over five years by funneling money to a business related to Zgoznik, who then gave him kickbacks in the form of checks to Smith's golf paraphernalia businesses. Prosecutors said Smith misreported the income on his tax returns.

But the defense said all money was reported correctly either on personal or business returns and that the payments were an attempt by Smith's boss, a priest who directed church financial and legal matters, to keep Smith from quitting for a better-paying job.

Zgoznik and Smith maintained that Bishop Anthony M. Pilla, now retired, knew of the payments. Pilla denied that, testifying at both trials that he was shocked to learn about them from an anonymous whistleblower's letter. Continued...