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3 INDICTED ON CHARGES OF CHARITY-FUND MISUSE

The former president of United Way of America and two former executives have been indicted on charges they spent the charity's money on vacations, apartments and personal air travel.

William Aramony, 67, president of United Way from 1970 to 1992, was named in a 71-count federal grand jury indictment announced Tuesday by the U.S. attorney's office.Also indicted were Stephen J. Paulachak, 49, a United Way executive from 1971 to 1988 and president of a spinoff company that was indicted; and Thomas J. Merlo, 63, chief financial officer of the charity from 1990 to 1992.

The alleged diversion of funds caused a shake-up at the national charity organization when it was first reported by the news media two years ago. Contributions to local United Way organizations fell off sharply but have since stabilized.

United Way of America is the national service and training center for local United Way organizations and is financed by dues from the local groups. The local organizations collect contributions and distribute them to charities. They had nothing to do with the alleged wrongdoing.

"Today's news represents a critical step forward because it reinforces all the positive changes that have been made to restructure United Way of America," said Tommy Frist Jr., chairman of the United Way of America, which is based in the Washington suburb of Alexandria.

After the scandal broke, the national group brought in former Peace Corps chief Elaine L. Chao as president, instituted new financial controls, adopted a new code of ethics and gave local United Ways more control over the national organization.

The indictment said more than $1.5 million was diverted, with some of the money spent for purchase of a New York apartment, a Coral Gables, Fla., condominium, a vacation to London and Egypt and a lifetime pass on American Airlines.