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Wyoming County Council on Aging Director Bob Graham walks in downtown Bluefield Monday following the first day of his trial. Graham is accused of using tens of thousands of dollars in ill-gotten sick leave benefits to pay for trips to strip clubs and breast implant surgery for a woman who worked at Southern Xposure, a federal prosecutor said Monday.

BLUEFIELD — Federal prosecutors said Wyoming County Council on Aging Director Bob Graham not only used illegally obtained funds to enrich his own personal wealth, but also spent thousands of dollars on strip club visits and breast implants for an exotic dancer.

“He needed money for his relationships with dancers at Southern Xposure,” U.S. Attorney Hunter Smith said in the opening day of the federal trail.

The 60-year-old Graham is charged with multiple counts of mail fraud, filing false personal income tax returns, theft in receiving federal funds, engaging in illegal banking transactions, and various other illegal transactions while serving as director of two Wyoming County non-profit companies that provided services for senior citizens receiving Medicaid benefits.

The most interesting opening day testimony came from a former exotic dancer, Stephanie Hudgins.

She testified that she was working as a dancer at Southern Xposure in Princeton using the name “Bailey” when she met Graham.

She said the relationship began when he visited the club and she would perform private dances for him.

“The dances were mostly in the VIP room and involved full nudity,” Hudgins said.

She said a 30 minute dance cost $500 and she would receive half of the money from the club.

“Normally he would spend one to three hours at the club and spend around $2,000 a night,” she said. “The most he spent in one night was around $8,000.”

Hudgins said the private gentlemen’s club prohibited dancers from spending time with customers away from the establishment.

“They wanted us to keep him happy and keep him coming back to the club,” she said. “But we were not supposed to see him away from work.”

She said the club’s managers told her they wanted to “hook” Graham on coming to the club and that despite another dancer being fired for violating company policy, she began having a relationship with Graham outside of the club.

“I was told he was very wealthy and I never met someone with that much money,” she said.

Hudgins said Graham took her on trips to Charleston, Roanoke, Pigeon Forge and Charlotte.

“We would sometimes go to the movies, out for drinks, and we went to a strip club together twice,” she said.

Hudgins said she and Graham made a “couple” of overnight trips.

She told federal prosecutors that Graham said he “owned the Wyoming County Council on Aging” and that was how he made so much money.

“He said he owned the company and he worked for it,” she said.

Hudgins said when Graham began receiving negative media attention over his high salary she began to worry that he might lose all his money.

“He said he put the money where nobody could get it,” she said.

The former stripper also said Graham told her he could “use the money to get him out of trouble.”

Hudgins said Graham bought her a camera, jewelry, clothes and a cellular telephone.

“He bought me all kinds of stuff,” she said.

The breast implants were purchased by Graham on a credit card for $5,000 and he was called to approve the transaction, according to Hudgins testimony.

Hudgins said Graham told her “people were just jealous and wanted his money.”

“He said he couldn’t see me anymore,” she said.

Hudgins added that Graham told her not to speak to anyone about their relationship.

“He told me to stay out of it and just don’t say anything.”

While cross-examining Hudgins, one of Graham’s defense lawyers, Mike Carey, asked if Graham tried to hide their relationship.

“He wasn’t trying to hide the things you did together did he?” Carey asked Hudgins.

She replied, “No.”

However, under re-direct by prosecutors, Hudgins did say Graham never wanted to be photographed with her and he almost always picked her up at night, except when they were headed on an out-of-town trip together.

In opening statements, prosecutors also accused Graham of illegally cashing in almost $200,000 in sick leave benefits between 2002 and 2004 to pay for the expenses at the strip club, with Hudgins, and others.

The federal government also alleged that Graham used his agency’s tax exempt status to save thousands of dollars on a big-screen television and directed an employee to drive from Welch to Itmann to set up the TV in time for him to watch the Super Bowl in an apartment he resided in above the senior center.

Another one of Graham’s lawyers, Jack Kessler, requested the bench trial.

Kessler has said Judge David Faber will treat Graham fairly and predicted the judge and courtroom observers will understand his client is innocent by the end of the week.

Graham is accused of embezzling more than $356,000 from the nonprofit agency to fund a lavish lifestyle for himself and his family, including vacations, a luxury car and a personal tanning bed.

The charges involve not only Graham’s alleged actions while directing the council on aging, but also his alleged actions while running All Care Home and Community Services. The nonprofit business is geared toward assisting the elderly and receives federal funding.

Graham became well known in 2004 when his annual salary of $457,000 and perks worth more than $100,000 a year were disclosed. The average West Virginia senior center director was earning $42,000 at the time. Graham, who was suspended from his job in February and had his salary reduced to $99,000, has pleaded not guilty to all the charges.

If convicted of all counts, Graham faces a prison sentence of up to 112 years and a $5.2 million fine.

The trial is schedule to continue today beginning at 9 a.m. at the federal courthouse in Bluefield.

— The Associated Press contributed to this story.

— E-mail:

fpace@register-herald.com

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