Fundraiser accused of duping Mass. Catholic school into believing donor would fund $3M project

Fundraiser charged in Mass. Catholic school ruse

BOSTON — For the Venerini Sisters, it seemed like the answer to their prayers: An anonymous donor, lined up by a professional fundraiser, willing to give at least $3 million to finance an expansion of a private school run by the order of Roman Catholic nuns.

The would-be benefactor, known only by his first name of Arthur, chatted amiably on the telephone with school administrators. And although no money exchanged hands, trust — or perhaps naivete — led the nuns to hire a general contractor and begin construction on the project at the Venerini Academy in Worcester. The work would stop months later when it become clear there was no money — and no Arthur, Attorney General Martha Coakley said.

“It was an extraordinary story of faith … without much to back it up,” Coakley said Thursday in announcing the arrest of the fundraiser, Michael Hlady, of Greenville, R.I.

The order had been duped into paying $370,000 to Hlady and his company, KAM Fundraising, Inc., between September 2008 and February 2010, money he used on personal expenses, including travel and adult entertainment, Coakley said.

For the Venerini Sisters, the deception has left them with an uncompleted and unusable expansion project and owing nearly $3 million to contractors who have filed civil lawsuits against the school, Coakley said.

“There were no checks from the donor, and there was no money from the school to pay for this construction,” she said. “At this time, we do not believe there was a donor named Arthur, or named anything.”

Thomas J. Conte, an attorney for the Venerini Sisters and Venerini Academy, said late Thursday that officials were in the midst of auditing books and records to reassure donors, students and parents “that the academy is properly managed.”

“Our number one priority at this point is to try to structure a resolution of the contractors who have filed lawsuits in an effort to pay them for their services. We are seeking to negotiate a resolution as soon as possible,” Conte told The Associated Press.

Hlady, 37, pleaded not guilty Thursday to a charge of larceny by false pretenses. He was ordered held on $250,000 bail.

Defense attorney Vincent Ricciardi told the court that his client denied the allegations against him.

“He says he did his best to raise money for Venerini Academy. He wasn’t successful,” Ricciardi said.

Hlady’s arrest was welcome news for the academy, said Conte.

“We see it as a positive event that the authorities have apprehended Mr. Hlady who allegedly defrauded the academy,” he said.

Venerini hired Hlady in August 2008 to help the school raise funds to renovate and expand a convent so it could be used for additional classroom space for the Catholic elementary school, which has about 200 students in kindergarten through eighth grade.

Prosecutors said Hlady later told the school he had found an out-of-state donor who would donate $3 million to $14 million to the school.

Hlady said the donor preferred to stay anonymous, but the donor reassured school officials of his intentions during a series of phone calls in 2008, during which “Arthur” also lauded Hlady’s fundraising work, Coakley said. Investigators did not know whether “Arthur’s” voice was Hlady’s or if another person was involved in the scheme, she said.

Hlady also arranged for school officials to travel to Florida to meet with “Arthur,” but each of the three meetings was later canceled, Coakley said.

Hlady pleaded no contest in 2004 to a charge he defrauded Clear Channel Communications Inc. while working as an account executive for Providence radio stations, said Stacey Verone, chief of the criminal division of the Rhode Island attorney general’s office.

Hlady claimed commissions for radio advertising in 1999 and 2000 that he had not sold, Verone said. He paid more than $46,000 in restitution.

In May 2008, records show Hlady entered into a consent agreement with the Securities Division of the Rhode Island Department of Business Regulation, which said his company had operated as a professional fundraiser without registration, as required by state law. The agreement called for KAM to register and pay an administrative penalty of $3,000.

The Telegram & Gazette of Worcester reported in February that Hlady was hired to raise money for the YMCA of Pawtucket, R.I., in 2006, but fired in 2008 after the organization accused him of fabricating pledges.

The order of the Venerini Sisters was founded by Rosa Venerini, an Italian nun who died in 1728 and was canonized three years ago by Pope Benedict XVI. The order has chapters in the U.S., Italy, South America, India and Africa.