THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, April 4, 1995 TAG: 9504040325
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORTS
DATELINE: ALEXANDRIA LENGTH: Medium: 85 lines
Former United Way of America president William Aramony was convicted Monday of stealing nearly $600,000 from the nation's biggest charity and lavishing it on young women, some in their teens.
A federal jury deliberated over seven days before finding Aramony guilty of 25 counts of fraud, conspiracy and money laundering. Aramony showed no emotion as the court clerk read the guilty verdicts.
Aramony was charged, along with Thomas J. Merlo and Stephen J. Paulachak, with siphoning off money that had been donated to the charity by businesses and individuals. Merlo was convicted of 17 counts; Paulachak, of eight.
Aramony was divorced, with two sons and a daughter who attended much of the three-week trial. He was married when he began an affair with a 17-year-old who was at the heart of the federal case.
After the scandal broke in 1991, local chapters withheld voluntary dues, demanding an investigation into the allegations. Donations fell off sharply from $3.1 billion in 1990, but bounced back to $3.05 billion in 1993 and were expected to equal or exceed $3.1 billion in 1994.
``This verdict sends the message that society won't tolerate individuals who are charged with protecting the precious assets of charity diverting those assets for their own personal use,'' Assistant U.S. Attorney Randy Bellows said.
The charity has installed new financial controls and a code of ethics since Aramony's departure, United Way of America president Elaine Chao said in a statement Monday.
``We are gratified by the federal jury's decision,'' she said.
The verdict drew praise from local United Way officials as well.
``We are pleased that justice has been served,'' Denver F. Hicks, 1995 chairman of the board of United Way of South Hampton Roads said in a statement Monday. ``. . . The actions of these few individuals seriously diminished United Way of America's image, and even more seriously impacted fund raising by local United Ways like United Way of South Hampton Roads.
``With this vindication, we can put to rest this unfortunate part of history and move forward, knowing that there are safeguards in place to prevent this from happening again.''
Aramony and Merlo, 64, could get about five years in prison. Paulachak, 49, could get about two years.
All three plan to appeal and are free on bond pending the June 14 sentencing hearing.
More than three dozen witnesses testified during the trial, many of whom painted Aramony, 67, as a mean-spirited boss who tried to intimidate or buy off those who could expose him.
In news reports and, later, in court testimony, a succession of female employees said Aramony repeatedly propositioned them for sex and wooed them - at United Way expense - with jaunts to London, Paris, Egypt, Las Vegas and other vacation spots.
Barbara Florence, an assistant in Aramony's office, said she rejected his sexual advances during a 1985 business trip and was offered another job to remain silent about the overture.
Another woman, Lori Villasor, said she had a four-year sexual relationship with Aramony that began when she was 17. Villasor, who testified under immunity from prosecution, added that she received a $27,500 salary for two years to do virtually no real work and received nearly $80,000 during the time she was involved with him.
In testimony, Edward A. Brennan, the chief executive of Sears, Roebuck and Co., and the 1990 United Way chairman, said he confronted Aramony about rumors of womanizing and his free-spending habits. Brennan said Aramony deflected the allegations, saying he was impotent and incapable of sex ever since treatment in 1988 for prostate cancer.
Merlo was the charity's chief financial officer from 1990 to 1991, and Paulachak was a United Way executive from 1971 to 1988. Paulachak then was president of a spinoff company, Partnership Umbrella Inc., which was created by the United Way board of governors in 1986. The Partnership, which pooled the purchasing power of the local chapters, was charged, but acquitted, of one count of conspiracy. ILLUSTRATION: [Color Photo]
William Aramony was convicted of 25 felony counts, including charges
of conspiracy, fraud, money laundering and filing false tax
returns.
KEYWORDS: FRAUD VERDICT TRIAL CONSPIRACY MONEY LAUNDERING
UNITED WAY WILLIAM ARAMONY by CNB