For Immediate Release - June 16, 2010

Professional Fundraiser Indicted for Stealing Over $360,000 From Worcester Catholic School

School undertook multi-million dollar expansion based on fundraiser's fraudulent promise of anonymous donation

WORCESTER - A professional fundraiser from Rhode Island has been indicted in connection with allegedly stealing over $360,000 from a Catholic elementary school in Worcester, and orchestrating a sophisticated scheme to mislead the school into believing that a well-known philanthropist was prepared to make a multi-million dollar donation. Michael Hlady, age 37, of Greenville, Rhode Island, was indicted by a Worcester County Grand Jury on the charges of Gross Fraud, Identity Theft and Larceny over $250 by Continuous Scheme.

Hlady was arrested on March 31, 2010, by Massachusetts State Police assigned to the Attorney General's Office and arraigned the following day in Worcester District Court. The arrest came as the result of an extensive three-month investigation by Attorney General Coakley's Office and Massachusetts State Police. Authorities allege that Hlady used the funds that he received from this scheme on such personal expenses as travel, gambling and other adult entertainment. At his arraignment in Worcester District Court, Hlady pled not guilty and was ordered held on $250,000 bail. In the event that Hlady does post bail, Hlady must report daily to the Department of Probation by phone and in person once a week. He was also ordered to surrender his passport.

"Our office alleges that Mr. Hlady accepted numerous payments from Venerini Academy for fundraising services, given by the school to Mr. Hlady based upon the erroneous belief that a well-known philanthropist cultivated by him would be donating millions of dollars to the school," said Attorney General Coakley. "As a result of this deception, Venerini undertook a multi-million dollar expansion project and was left without the capital funds to pay for the project."

Venerini Academy is a private Catholic school in Worcester that offers education for children in grades kindergarten through eighth grade. School administrators have been cooperative with the Attorney General's Office during this investigation.

In August 2008, Venerini hired Hlady and his company, KAM Fundraising, Inc. of Greenville, Rhode Island, to assist the school in raising funds for a planned $3 million expansion.

According to authorities, in late 2008, Hlady informed school officials that he had contacted a well-known philanthropist in the Worcester area who contributed regularly to educational and other charitable organizations through his foundation, and that this donor wanted to contribute millions of dollars to the school for its planned expansion. Over a period of months from the summer of 2008, into 2010, Hlady allegedly indicated to school personnel on multiple occasions that the prospective donor was planning to contribute anywhere from $3 million to as much as $14 million to the school.

Hlady allegedly represented to the school personnel that the prospective donor was living out of state at the time. During this time period in 2008, an individual who the school personnel believed to be the prospective donor, known as "Arthur," called them on multiple occasions, and during these conversations, told the school that Hlady was "doing a good job" on their behalf, and specified the amount that the school should pay Hlady for his services. Based on these conversations, beginning in September 2008, the school made numerous payments by check to Hlady for his services. From September 2008 through February 2010, Venerini paid Hlady approximately $360,000 for his services.

In April 2009, based on assurances from Hlady that the donation from the prospective donor was forthcoming, Venerini retained a local construction company to be the general contractor for the planned expansion project. On three occasions, in April, May and September of 2009, Hlady arranged for two school officials to travel to Florida to meet with the prospective donor to discuss the donation, however, once they arrived in Florida, Hlady allegedly told them the donor was not available, and they returned home without meeting with him.

In June 2009, despite the fact that Venerini had yet to receive any funds from the prospective donor, demolition and construction of the expansion began, and over a dozen sub-contractors were hired to work on the project. By September 2009, the total cost of the demolition and construction was slightly under $3 million, and the construction company had not received payment for a substantial amount of work performed and billed. As a result, the construction company suspended work on the project.

In December 2009, the matter was referred to the Attorney General's Office for investigation by Worcester authorities. At this time, Venerini has not received any funds from the prospective donor, and no further work has been done on the expansion. During the course of its three-month investigation, the Attorney General's Office found that the known philanthropist was not offering a large donation to the school. Authorities allege that Hlady used the identity of this donor in order to steal funds from the school in the form of payment for his services. Authorities believe that the individual who spoke on the phone to school officials on multiple occasions masquerading as the donor was either a co-conspirator of Hlady, or Hlady himself. Over the course of his relationship with the school, authorities allege that Hlady was paid over $360,000 in fees for fundraising services when he in fact did not raise any funds for the school. Based on their investigation, authorities believe that Hlady used the funds that he received from this scheme on such personal expenses as travel, gambling and other adult entertainment.

On March 31, 2010, Hlady was arrested at his home in Greenville, Rhode Island, by the Rhode Island State Police with the assistance of the Massachusetts State Police assigned to the Attorney General's Office. On April 1, 2010, Hlady was arraigned as a fugitive from justice in District Court in Providence, Rhode Island, at which time he waived rendition. Hlady was then transported to Massachusetts that same day for arraignment in Worcester District Court. Hlady pled not guilty and is currently being held on $250,000 bail.

A Worcester County Grand Jury returned indictments against Hlady today. He will be arraigned at a later date in Worcester Superior Court.

The investigation remains ongoing at this time. This case is being handled by Assistant Attorney General Lee Hettinger of Attorney General Coakley's Corruption and Fraud Division. It was investigated by Massachusetts State Police assigned to the Attorney General's Office, with the assistance of investigators Paul Stewart and James McFadden. The Rhode Island Attorney General's Office and Rhode Island State Police also assisted in the investigation.

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