United Way Finally Beats Convict Aramony.

The United Way of America will not have to pay all of William Aramony's pension benefits after all. The Second Circuit Court of Appeals reversed an earlier United States district court decision in favor of UWA's former president and chief executive officer.

The decision means Aramony is not entitled to approximately $2 million in benefits. Aramony will not go empty-handed, however. He is entitled to the $2.4 million awarded to him earlier by the district court, though that amount, was offset by a $2.02 million award for UWA.

Aramony will net $7,871 after paying the award against him, the amount he owed UWA after the New York state attorney general's judgement against him, applicable income tax withholdings, and attorney's fees. "Mr. Aramony will not be entitled to any additional distribution," stated Chris Amundsen, UWA's interim president.

The heart of the appeal was whether UWA had a contractual obligation to provide benefits to make up for the effects of tax provisions limiting benefits to highly compensated nonprofit employees. "The tax provision was not enacted until after UWA adopted the pension plan in question," Amundsen said in a statement. "It was UWA's position that the plan did not provide the additional benefits and that the court violated well-established principals of contract interpretation in failing to interpret the document in that manner."

The disputed benefits fell under the UWXs replacement benefit plan (RBP). In the district court for the Southern District of New York, Judge Shim Scheindlin had held the replacement benefit contract was ambiguous and the extrinsic evidence showed that Aramony's contract provided the disputed benefits.

The Appeals Court, however, ruled that the contract did not provide the disputed funds. The RBP is extremely precise," the appeals court wrote. "It defines the scope of the replacement benefits with clarity and precision, in a manner that does not include benefits to be lost because of future amendments to the Internal Revenue Code."

It later remarked, "It was always within contemplation that, just as Congress had limited qualified pension benefits with the passage of Section 415, it might do so again in Unforeseeable ways. Aramony knew, or should have known, that the REP as drafted did not protect against that risk. He could of course have bargained for broader protection. But the REP is the contract he had, and he is bound by its terms, which unambiguously do not replace benefits lost as the result of the passage of Section 401(a)(17)."

Aramony's 22-year tenure as UWA president ended abruptly in 1992, when he was alleged to have directed UWA funds for personal use. Several of UWA's nearly 1,400 affiliates discontinued paying dues to the national association and distanced themselves from the misdeeds as much as possible. Collectively, giving to United Ways dropped in 1992 and '93 as a result of the scandal.

Aramony, convicted in 1995 of fraud against the UWA is scheduled to be released in October of this year.