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Ex-President of United Way, 2 Others Face Fraud Charges

September 14, 1994| From Associated Press

ALEXANDRIA, Va. — The government charged the former president of United Way of America and two fellow executives with conspiracy, mail and tax fraud Tuesday, accusing them of lavishly spending the charity's money on vacations, real estate and air travel.

The 71-count federal indictment named William Aramony, 67, president of United Way from 1970 until 1992; Stephen J. Paulachak, 49, a United Way executive from 1971 to 1988; and Thomas J. Merlo, 63, chief financial officer of the charity from 1990 to 1992.

The diversion of funds caused a shake-up at the national charity organization and depressed contributions to local United Way organizations.

The indictment said more than $1.5 million was diverted, with some of the money spent for purchase of a New York City apartment, a Coral Gables, Fla., condominium, a vacation to London and Egypt and a lifetime pass on American Airlines.

Some of the money went to Aramony's girlfriend, who was not named in the indictment, which was handed down by a federal grand jury and announced by the U.S. attorney's office.

The indictment charged Aramony, Paulachak, Merlo and a spinoff company, Partnership Umbrella Inc., with conspiracy to defraud United Way, mail fraud, wire fraud, interstate transportation of fraudulently acquired property and money laundering.

Aramony, Paulachak and Merlo were accused of filing false tax returns and Merlo was charged with perjury.

Walter J. Bonner, Paulachak's lawyer, said: "Partnership Umbrella Inc. and Mr. Paulachak entertain no doubt, whatsoever, that following a trial . . . they will be found innocent . . . ."

John Hume, Merlo's lawyer, said his client "was a victim of circumstances."

Aramony's lawyer could not be reached for comment.

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