Former Art Institute payroll manager gets 3 years for $2.3 million fraud scheme

CHICAGO — The Art Institute of Chicago’s former payroll manager has been sentenced to three years in prison for running a long-term scheme that diverted $2,308,772 of the museum’s money to his personal bank accounts.

U.S. District Judge Manish Shah handed down the sentence on Thursday, bringing a relatively quick end to the case, which federal prosecutors first announced in January.

Michael Maurello, 57, must also pay restitution, a feat his attorney claimed was “impossible” in light of the significant loss the museum sustained and the fact that Maurello is essentially unemployable. He faced a maximum sentence of 20 years on the fraud charge.

Between 2007 and 2020, Maurello directed Art Institute money to his own bank account but made entries in the museum’s payroll system that said the payments were being made to other employees or former employees, prosecutors said.

Federal prosecutors argued in a sentencing memorandum that Maurello “did not need any of that money. Indeed, he used much of it for extravagencies, such as trips to Hawaii and Las Vegas and the purchase of jewelry.”

When Maurello was charged, his Instagram account included many photographs of him posing in exotic, tropical locations with a traveling partner. The account is now private.

Michael Maurello and the Art Institute of Chicago | Tripp From Chicago; LinkedIn

Maurello “has lost everything he cherished in his life,” attorney Frank Cece, Jr. wrote in defense sentencing memorandum. “His husband of 20 years divorced him. Most of his family has alienated him. He is no longer employed or employable due to the [criminal charges] and his medical condition…”

Those medical conditions include the loss of his right leg below the knee due to gangrene, Cece explained.

He “has been involved with his brother, William’s children all their lives; however since this incident, he is no longer welcome into the home or allowed to reside with his brother,” Cece continued. “He has become a recluse by circumstances and not by choice.”

Cece said Maurello has “substantial funds” in a retirement account that could be used toward repaying the Art Institute, but it still will not be enough to make the museum whole.

Among the false reasons Maurello entered into the museum’s payroll system for fraudulent payments he received were “negative withholding of taxes,” “negative payroll deduction for life insurance premiums,” and false payouts for unused paid time off. After receiving the money, Maurello reversed transactions in the museum’s payroll system so employees would not see the payments he received on their year-end tax forms.

The museum’s assistant controller confronted Maurello about a $53,000 payment in January 2020. He brushed it off as a “test” of the payroll system.

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Tim Hecke is CWBChicago's managing partner. He started his career at KMOX, the legendary news radio station in St. Louis. From there, he moved on to work at stations in Minneapolis, Chicago, and New York City. Tim went on to build syndicated radio news and content services that served every one of America's 100 largest radio markets. He became CWBChicago's managing partner in 2019. His email address is