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Ex-United Way Chief Convicted Aramony Stole Nearly $600,000 And Spent It On Young Women

Tue., April 4, 1995

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 only in their teens.

A federal jury deliberated more than seven days before finding Aramony guilty of 25 counts of fraud, conspiracy and money laundering.

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.

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 Monday.

Aramony and Merlo could get about five years in prison. Paulachak could get about two years.

During the three-week trial, the government depicted the 67-year-old Aramony as a dictatorial executive who treated girlfriends and cronies to all-expenses-paid vacations and tried to intimidate or buy off those who might expose him.

Prosecutors said he repeatedly propositioned younger women and romanced them with United Way money, billing the charity for getaways to London, Paris, Egypt, Las Vegas and other spots.

One prosecution witness testified Aramony propositioned her at a business meeting with a Roman Catholic priest.

The defense contended that Aramony, who led the charity for 22 years until he resigned in disgrace in 1992, suffered from brain atrophy that made him more impulsive and less able to reason.

They also argued that any abuses resulted from lax oversight by United Way’s board of directors and bumbling by his staff. The defense rested without calling any witnesses and Aramony left the courthouse without making a statement.

The jury reviewed more than 1,000 documents ranging from income tax forms and accounting ledgers to a letter detailing Aramony’s affair with Lori Villasor, who was 17 when their four-year romance began in 1986.

Juror Alan Hannen, a driver for United Parcel Service, said the most convincing evidence related to Villasor. “For me, it was all the money that went to Lori for doing very little work,” Hannen said.

Villasor testified she was paid a salary for more than two years, but performed only “an hour or so” of work. In closing arguments last week, Bellows drew laughs when he pointed out that Villasor put in more hours testifying in the case than she did earning the approximately $80,000 she was paid.

United Way money bought a luxury apartment in New York City that Aramony had told United Way officers was a business office, but for which only he and Villasor had keys, according to testimony.

Witnesses said the pair often met in New York, where Aramony had standing orders for a limousine driver to greet Villasor at the airport with 18 yellow roses.

The charity also paid for tickets to Broadway musicals and dinners at New York’s Tavern on the Green, according to testimony.

Villasor’s younger sister, LuAnn, told of a first-class trip to New York and Las Vegas - her high school graduation gift from her older sister and Aramony. The younger Villasor said that while Aramony was shooting craps, he paid her $100 just to smile at him.

Merlo, 64, was a consultant and then chief financial officer for the charity from 1990 to 1992.

Paulachak, 49, was a United Way executive from 1971 to 1988 and president of a spinoff company, Partnership Umbrella Inc.

The spinoff company, which had been set up to pool the purchasing power of local United Way chapters, was charged as a conspirator but was acquitted.

Merlo’s lawyer, Richard Heideman, said his client was hurt by the seamy details of Aramony’s sex life, though he wasn’t accused of similar behavior.

“I think the jury was unable to separate the sexual evidence that was presented in this case against another defendant,” he said.

MEMO: This sidebar ran with story: EFFECT After the scandal broke in 1991, donations to United Way fell sharply but have been bouncing back.

This sidebar ran with story: EFFECT After the scandal broke in 1991, donations to United Way fell sharply but have been bouncing back.


 

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