For Immediate Release - June 27, 2011

Professional Fundraiser Pleads Guilty, Sentenced 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 sentenced to serve time in State Prison after pleading guilty to stealing over $360,000 from Venerini Academy, 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, Attorney General Martha Coakley's Office announced today.

"Mr. Hlady preyed upon the trusting nature of the Venerini Sisters to defraud the school of a substantial amount of money," said AG Coakley. "With today's conviction and prison sentence, he has been held accountable for the crimes he committed, and he is also now responsible for paying restitution back to the school."

Michael Hlady, age 37, of Greenville, Rhode Island, pled guilty in Worcester Superior Court today to the charges of Identity Theft, and Larceny over $250 by False Pretenses. After the plea was entered, Superior Court Judge James R. Lemire sentenced Hlady to serve two years in State Prison on the charge of Larceny over $250 by False Pretenses. On the charge of Identify Theft, Hlady was sentenced to two and a half years in the House of Correction, suspended for a probationary period of 10 years, to begin following the completion of his State Prison sentence. Judge Lemire also ordered Hlady to pay full restitution back to the school in the amount of $363,620.75. Hlady was also ordered to undergo counseling for gambling addiction.

Hlady was arrested on March 31, 2010, by Massachusetts State Police assigned to the Attorney General's Office. The arrest was the result of an extensive investigation by AG Coakley's Office and Massachusetts State Police. A Worcester County Grand Jury returned indictments against Hlady on June 16, 2010.

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 18 months from the summer of 2008, into 2010, Hlady 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 represented to the school personnel that the prospective donor was living out of state at the time. From September 2008 through February 2010, 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, "Arthur" and several other fictitious individuals created by Hlady that the donation was forthcoming, Venerini retained a 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 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 two 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 by Worcester authorities to the Attorney General's Office for investigation. During the course of its three-month investigation, the Attorney General's Office determined that the known philanthropist was not offering a large donation to the school. Hlady used the identity of the donor to steal funds from the school in the form of payment for services he never actually performed. Authorities believe that the individual who spoke on the phone to school officials on multiple occasions masquerading as the donor and several other individuals was Hlady himself. Over the course of his relationship with the school, Hlady was paid over $360,000 in fees for fundraising services when he in fact did not raise any funds for the school. Forensic examination of Hlady's computer proved that documents he provided to the school in support of the scheme were created by Hlady. Hlady used the funds he received from this scheme on such personal expenses as travel, gambling and 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. At his arraignment in Worcester District Court, Hlady pled not guilty and was ordered held on $250,000 bail. Today, he pled guilty to the charges, was sentenced and ordered to pay full restitution.

This case was handled by Assistant Attorney General Lee Hettinger, Chief of AG Coakley's Western Massachusetts Office and AAG Jill Ambrose of the Fraud and Financial Crimes Division. It was investigated by Massachusetts State Police assigned to the Attorney General's Office, with the assistance of Chief of Financial Investigations Paul Stewart and Victim Witness Advocate Shannon Legrice. The Rhode Island Attorney General's Office and Rhode Island State Police also assisted in the investigation.