Thursday, October 18, 2012

Ex-project manager at Breakell is indicted

Jamie Carl Graham, 32, is charged with cheating the firm out of more than $1 million and mail fraud.

A former project manager for Breakell Inc. has been charged with cheating the prominent Roanoke construction company out of more than $1 million.

Jamie Carl Graham, 32, was indicted late last week on 15 charges of mail fraud.

While declining to speak in detail because the case is pending, Breakell's top executive said losses from the alleged scam have put the company in a perilous position.

"I will say that it's a real tragedy for Breakell, and it's had a tremendous bearing on our financial situation," said Stan Breakell, chairman and CEO of the company.

An indictment returned by a grand jury in U.S. District Court in Roanoke accuses Graham of using his position of trust with the company to orchestrate a scheme in which costs were shifted from one project to another.

Among the allegations: Graham renovated his own home and billed the costs of labor and materials to Breakell construction projects he was overseeing at the time.

Using the same scheme, the indictment alleges, Graham had Breakell pay for work done on a beach home on the Outer Banks of North Carolina that was owned by a friend of his.

The criminal charges are the latest sign of problems for Breakell, a general contractor with a 50-year history in Southwest Virginia of handling government, commercial, industrial and private construction projects.

In June, an insurance company that issued construction bonds to Breakell sued the company, claiming it owed $1.2million for defaulting on two projects it could not complete.

Asked Wednesday if the financial problems described by the lawsuit were related to the alleged fraud by Graham, Stan Breakell responded: "Absolutely."

Graham was hired by Breakell in November 2008, according to the indictment. As a project manager, his duties included bidding for jobs, hiring subcontractors, supervising the crews, ordering supplies and materials, and communicating with the owner of the project on Breakell's behalf.

Not long after he began his job, Graham found a way to abuse a coding system that Breakell used to assign costs for each project handled by the company, the indictment alleges.

Graham would switch the costs of labor and materials from one project he was overseeing to another, with the actual benefits going to himself or "his friends and associates," the indictment alleges.

To conceal cost overruns caused by the miscoding, authorities further allege, Graham would forge change orders that resulted in Breakell paying for additional costs.

"As a result of the fraudulent acts of ... Graham, Breakell received invoices for labor and materials that it was misled to believe were associated with certain specific projects," the indictment states.

In addition to diverting funds to cover the renovation of his home and that of a friend in Avon, N.C., Graham is also charged with miscoding invoices for work done on a hair salon in Salem.

A series of checks from Breakell to various vendors and building supply companies totaled more than $1.2 million. Because the checks were sent by mail, authorities charged Graham with mail fraud.

The construction projects involved — and the friend of Graham's who allegedly benefited from the scheme — are identified only by initials in the 10-page indictment.

The document raises the possibility that the owners of projects handled by Breakell might also have lost money to the fraud, but includes no details. Federal prosecutors declined to comment on the case.

At a hearing Monday, U.S. Magistrate Judge Robert Ballou set a $20,000 unsecured bond for Graham. Graham's attorney, federal public defender Randy Cargill, could not be reached for comment.

Breakell has been involved in a number of high-profile construction projects over the years, serving as general contractor for Sixteen West Marketplace in downtown Roanoke, renovations to a former warehouse that is now the headquarters for software business Meridium, and the construction of a new town hall annex in Blacksburg.

The company is also recognized for its "green" policies and leadership in environmental stewardship, which was cited by the Roanoke City Council when it named Stan Breakell as the city's 2009 Citizen of the Year.

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