Audrey Stanton
BLUEFIELD — The final witness in the federal government’s case against Bob Graham said Wednesday he helped Graham use the Wyoming County Council on Aging’s tax-exempt status to purchase a high definition plasma television, which he later installed at Graham’s home.
“He wanted to have it done before the Super Bowl,” said Larry Reed, the council’s information technology specialist.
Reed explained how he found, bargained for and purchased the $15,000 television — a 50-inch Pioneer plasma HD-TV with external speakers and a warranty — on company time for a little more than $6,306 with a government discount.
But a witness from People’s Bank of Mullens testified Graham put the cost of the television back into the council’s account with a personal check, and Reed may have lost credibility with the court when he admitted he’d spent company time pirating current movies from the Internet on his work computer.
On this third day of bench trial before U.S. District Judge David Faber, the government presented the remainder of its evidence against the 59-year-old suspended executive director of the Wyoming County Council on Aging, who stands accused of embezzling more than $356,000 from Wyoming County Council on Aging and All Care Home and Community Services to fund a lavish lifestyle for himself and his family, including vacations, a luxury car, a personal tanning bed and one high-end television.
Reed said he drove 45 minutes from the council’s Welch office in a snowstorm the morning the television arrived, at Graham’s order. He and two other employees then drove a council van another 15 to 20 minutes to Graham’s home, where they installed it. Despite their efforts, a part had to be ordered, and Graham was not able to watch the big game in high definition. Still, Reed said, Graham paid him cash for the work in addition to his hourly wages.
It wasn’t long after that when federal grand jury indicted Graham on multiple counts of mail fraud, filing false personal income tax returns, theft in receiving federal funds, engaging in illegal banking transactions, illegally buying out sick leave and various other illegal transactions while serving as director of two Wyoming County nonprofit companies that provided services for senior citizens receiving Medicaid benefits.
And shortly after Graham was indicted, Reed’s relationship with him turned from office “brown noser” to employee in need of discipline for not installing things and repairing software as directed, Reed testified.
But under cross-examination, Reed admitted he’d been in trouble with Graham even before Reed thought Graham wrongly blamed him for calling authorities after Graham had been indicted and was seen removing documents from his office. He told defense attorney Jack Kessler he had, in fact, spent company time pirating movies from the Internet and that Graham had asked him to stop doing so.
The television also worked its way into testimony from People’s Bank of Mullens President and CEO Ronald Bowling.
Bowling noted that $6,306 had been debited to the council’s account on Feb. 9, 2004, and that Graham had deposited a personal check into the council’s account in the same amount at the end of January.
Defense attorney Mike Carey brought that issue up later in the day when he made a motion for acquittal. Even Faber verbally noted that people often get other people with special status to make personal purchases for them so they can save money.
“It’s just not felony conduct, your honor,” Carey said. He also noted Graham needed no board approval to purchase the television since he wasn’t purchasing it for the council.
If Faber finds that argument to be true, it would also negate one of the mail fraud counts since the check to pay for the television was mailed, Carey said.
He argued that employees doing personal work for Graham on company time wasn’t worthy of a federal felony conviction.
“If that’s misappropriating funds, it’s certainly not worth more than $5,000,” Carey said.
“I’ll bet you the time Mr. Reed spent pirating movies on his computer at the Itmann center far exceeded time spent on the Internet looking for the TV,” he added.
Carey also called for dismissal of charges relating to the council and All Care’s simplified employee pension fund IRAs based on his belief the government failed to prove Graham schemed to defraud anyone, especially in light of the fact he was willingly and successfully audited on an annual basis.
Gavin Chaffin of the Internal Revenue Service had testified that in his role with Tax Exempt Government Entities he reviewed the pension plan for the council and All Care from 1999 forward. He said it was never a qualified plan because all eligible employees were not included, and they should have been. The plans are not tax-free unless all eligible employees participate.
“The problem with this plan was that they weren’t including a lot of the employees who should have been included,” Chaffin said, adding those who should have been participating could be entitled to retroactive status, meaning the council could have to make up five years of contributions plus earnings.
But Carey argued prosecutors failed to prove Graham knowingly left out employees from the plan. Faber, who said he would rule on the acquittal motion later in the proceedings, appeared to be leaning toward agreeing with that argument when said to the prosecutors: “What evidence is there that this wasn’t just a mistake? ... You don’t have any proof other than circumstantial evidence.”
Carey also said no false tax returns were filed because there was no official proof the simplified IRA plan was disqualified.
Again, he noted, if the judge finds that argument to be true, he must also acquit Graham on related mail fraud charges.
As to the sick leave issue, Carey said board members had ample opportunity to question Graham’s controversial $160,000 sick leave buyout, yet they did not.
“They (prosecutors) want you to believe that because they were elderly and hard of hearing, they weren’t competent,” Carey said.
Also revealed Wednesday, state Public Employees Insurance Agency representative Keith Huffman said Graham’s ex-wife, Sherylan Brown, remained on Graham’s insurance policy until the beginning of 2006, despite the fact they divorced in December 2004.
Graham’s current wife, Elizabeth Carol Gentry, who also works for the council, had notified PEIA that same month that her marital status had changed and that her new name was Elizabeth Carol Graham, Huffman said.
Huffman admitted that as wrong as it may sound, Brown’s coverage had only a “small effect” on the council financially because Graham had other dependents on his policy and his premium would not have been affected by the inclusion of her name unless he had a single policy. Yet, had she incurred a serious injury or medical condition, PEIA would have been responsible. The impact on the council could have been that PEIA would have to pursue the amount of the claims back from them.
Huffman said PEIA learned of this only in recent weeks and that it could possibly seek a recovery.
Auditor John Empson, the defense’s first witness, took the stand late Wednesday and will continue discussing his successful audits of the council and All Care when the trial resumes at 9 a.m. today.
He admitted already that the amount of Graham’s accumulated sick leave “raised a flag” as an “extraordinary expense” and liability.
— E-mail: bnaudrey@register-herald.com
