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Former Head of United Way Is Convicted

April 04, 1995|SAM FULWOOD III | TIMES STAFF WRITER

WASHINGTON — The former head of United Way of America was convicted Monday of charges that he lived lavishly and romanced women with thousands of dollars of the charity's money.

After three weeks of trial arguments, a federal jury took seven days to find William Aramony guilty on 25 of 27 counts of fraud, conspiracy and money laundering. The jury also found that Aramony aides Thomas J. Merlo and Stephen J. Paulachak were guilty of diverting money donated to the organization and using it for improper and personal reasons. Merlo was convicted on 17 of 18 charges, and Paulachak was convicted on eight of 12 counts.

Sentencing was set for June 14, when, according to federal guidelines, Aramony and Merlo facepotential prison sentences of about five years and Paulachak could be sentenced to two years. All could be forced to pay fines of hundreds of thousands of dollars.

Assistant U.S. Atty. Randy Bellows, who prosecuted Aramony, charged that the former United Way president spent $600,000 of the organization's money on elaborate vacations, dinners and gifts for girlfriends and others close to him.

"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," Bellows said after the jury decision was announced at midafternoon.

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.

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William B. Moffitt Jr., Aramony's attorney, did not refute the charges of womanizing against his client. At the start of the trial, he hinted that he would argue Aramony suffered from brain atrophy, which impaired his judgment. But after a succession of prosecution witnesses took the stand, Moffitt changed his strategy and called no witnesses and offered virtually no defense of his client.

Instead, during his closing argument, Moffitt lobbed a countercharge against the United Way's board of directors and staff, accusing them of poor oversight and incompetence. Moffitt also described Aramony as "a fall guy."

Bellows, however, said in his final arguments that Aramony knew what he was doing as he treated girlfriends to good times on the charity's dollars.

"The United Way was not the private play toy of Mr. Aramony," Bellows told the jury. "It is the dimes and the dollars of men, women and children of the United States, given to the United Way to help the needy and the less fortunate."

After news reports in 1991 detailed Aramony's improper use of United Way money, the ensuing scandal led to a dramatic drop in donations to the charity, which had been collecting millions of dollars annually from the paychecks of Americans. Since then, the organization has hired a new management team and has seen its trust partly restored, although not to the same level of $3.1 billion it received in donations in 1990. Aramony resigned in 1992.

The lost trust in the organization stemmed from the titillating and scandalous details of Aramony's actions. In news reports and, later, in court testimony, a succession of female employees said that 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.

Several women testified about Aramony's behavior during his 22-year tenure as head of the organization.

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. "I told him I thought he was a sex maniac or a pervert or whatever you want to call it," Florence said. "And I didn't want to be around him anymore."

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.

Bellows lampooned Aramony's attempt to hide Villasor's services on the United Way payroll. He drew deep laughs when he argued that she worked longer hours testifying against Aramony than she did to earn her salary.

In testimony during the trial, Edward A. Brennan, the chief executive of Sears, Roebuck and Co. and the 1990 United Way chairman, said that he confronted Aramony about rumors of womanizing and lavish spending habits. Brennan said that Aramony deflected the allegations, saying he was impotent and incapable of sex since his treatment in 1988 for prostate cancer.

Aramony, Merlo, 64, and Paulachak, 49, were accused of stealing nearly $600,000 from the charity.

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.

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