U.S. probing possible illegality in United Way funds transfers


WASHINGTON -- The Justice Department has subpoenaed extensive records from the United Way of America and several organizations it controls to determine if any federal criminal law was violated by the charity's transfer of millions of dollars to the spin-off organizations.

Federal subpoenas were delivered Tuesday night to the home of John Glaser, executive director of United Way International, one of the smallest of the spin-offs, ordering him to turn over financial and travel records for at least the last six years as well as records of any transactions with the other spin-offs or with the United Way of America, people familiar with the organization said yesterday.

The subpoenas are the first indication that the authorities are investigating the transactions that led to the ouster of the United Way's president, William Aramony, in February and have prompted the majority of local United Ways to withhold financial support, at least temporarily.

Mr. Aramony retired under pressure Feb. 27 amid accusations of lavish personal expenses and questions about the operation of the spin-off companies.

Some of these locals have returned to the fold after numerous meetings between the United Way of America's interim president, Kenneth W. Dam, and local charity officials in cities like Dallas, Boston, Chicago and Charlotte, N.C.

But the dues payments of $3.1 million so far this year represent less than 40 percent of the amount the United Way of America had received at the same point a year ago.

Mr. Dam has said that the organization was borrowing money and economizing drastically to keep operating.

It could not be immediately determined whether the investigation was focusing on the financial dealings of Mr. Aramony and his former aides, Stephen Paulachak and Thomas J. Merlo, or more broadly on the relationship of the United Way of America to the seven spin-offs created by Mr. Aramony in his two decades as head of the nation's largest charity.

The subpoenas were issued at the request of the U.S. attorney for the Eastern District of Virginia. Justice Department officials in Florida and New York, where funds of United Way of America were used to buy condominiums, were also involved, said a person familiar with the investigation.

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