THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

1 held in scam at Catholic school

New classes built on fund-raiser’s bogus promise

Michael P. Hlady was arraigned in Worcester District Court on a charge of larceny over $250. More charges may be filed. Michael P. Hlady was arraigned in Worcester District Court on a charge of larceny over $250. More charges may be filed.
By Jonathan Saltzman
Globe Staff / April 2, 2010

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Sister Sandra Napier had hoped a professional fund-raiser hired by her Catholic elementary school in Worcester was going to lock up a multimillion-dollar contribution from a wealthy anonymous donor, but several things worried her.

For one thing, the fund-raiser — Michael P. Hlady of Greenville, R.I. — had misstated how the Venerini Academy planned to spend $3 million it wanted to raise in written pitches he prepared, said Sister Napier, principal of the school.

Then Hlady arranged three trips to Florida for school officials to meet with the prosperous donor who supposedly wanted to contribute as much as $14 million, Sister Napier said. Each time school officials arrived, Hlady said something unexpected had come up and the prospective donor could not meet them.

Yesterday, Attorney General Martha Coakley provided an explanation for the odd behavior, announcing that Hlady, 37, had been arrested at home Wednesday in the alleged theft of $370,000, all the fees the school paid him. It turned out, she said, that the donor Hlady said was poised to pony up millions was a phantom and that Hlady had allegedly spent what he was paid on gambling, prostitutes, strip clubs, hotels, and travel.

Sister Napier, whose school built nearly $3 million worth of new classrooms on the promise of the donation, likened Hlady to one of the biggest con artists in history.

“I can only compare him to Madoff,’’ she said in a telephone interview. “We got suckered in.’’

Hlady waived extradition and was arraigned in Worcester District Court yesterday on a charge of larceny over $250, a felony punishable by up to five years in prison.

Judge Robert G. Harbour ordered him held on $250,000 cash bail. Coakley said more charges could be filed.

Hlady’s lawyer, Vincent F. Ricciardi , of Worcester, could not be reached for comment.

Coakley said school officials were perhaps naive to launch a construction project before they had the money but added that swindles of nonprofit organizations are all too common.

“It seems like it was an extraordinary story of faith, without much to back it up,’’ she said at a press conference.

The Venerini Academy apparently was not Hlady’s only alleged victim.

Esselton McNulty, general director of the YMCA of Pawtucket, R.I., said yesterday that Hlady worked as a fund-raiser for the association for about 18 months but that his contract was not renewed in 2008 because he fabricated pledges.

McNulty said Hlady did raise about $1 million for the YMCA, but it became obvious that other pledges were bogus. Unlike Venerini Academy, the YMCA did not start a construction project it had planned.

“I would think he enjoyed the celebrity that comes with success, and he wanted to keep his contract going,’’ McNulty said of Hlady’s work for the YMCA.

The YMCA did not file a complaint with authorities.

In May 2008, the Rhode Island Department of Business Regulation fined Hlady’s company, KAM Fundraising Inc., $3,000 for failing to register with the state.

Venerini Academy opened in 1945 and serves about 330 pupils, from prekindergarten through eighth grade. School officials wanted to remodel an old convent on the property to house classrooms because space was tight.

Sister Napier said the school originally began dealing with Hlady in 2007 through his employer at the time, Daniel R. Barry and Associates of Narragansett, R.I. But Hlady left that fund-raising firm, started KAM Fundraising, and continued to work for Venerini Academy.

The school treasurer and assistant treasurer dealt most with Hlady, she said, and were delighted when he said a local donor wanted to contribute $3 million to $14 million.

The supposed donor spoke to school officials several times on the phone, identified himself only as Arthur, told them that Hlady was doing a good job on their behalf, and specified what the school should pay Hlady, Coakley said.

Based on those conversations from September 2008 through February 2010, the school paid Hlady $370,000. Investigators now believe that the person on the phone was a coconspirator or Hlady himself.

The scheme unraveled when a handful of contractors who had worked on the construction project sued the school in Worcester Superior Court for failing to pay them.

The contractors also contacted Coakley’s office, which launched an investigation.

Sister Napier, who plans to resign as principal on June 30, said the head of the religious order that runs Venerini Academy believes it can pay off the construction debts and keep the school open.

Saltzman can be reached at jsaltzman@globe.com.

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