Former Breakell manager to pay $1.3 million in restitution for fraud

Nov. 19--A judge ordered a former Breakell Inc. project manager Monday to pay more than $1 million in restitution and serve three years and five months in prison for a fraudulent scheme that drove the recession-weakened commercial contractor out of business.

Speaking after the sentencing hearing for ex-employee Jamie Carl Graham, CEO Stanley Breakell said the commercial building industry reacted to the recession a bit later than some industries. In 2010, with Breakell still in a slowdown, Graham rolled out a deceptive scheme in which he managed projects way outside company guidelines and reaped a little side compensation by fixing up his house and the business of a friend.

"All the things he did and all his cover-ups turned into a huge blindside at the time we could very least afford it," Breakell said. "Either one of them on their own," he said, referring to the recession and Graham's fraud, "we could have weathered."

Instead, the firm entered a spiral that ended with closure, quieting a local advocate for green building technology. Between 50 and 70 people lost employment, Breakell said.

Earlier Monday, Graham, who previously pleaded guilty to a single count of mail fraud, apologized in a short statement to a federal judge in Roanoke.

"I made some terrible mistakes," said the 34-year-old man, dressed in jail overalls.

Judge Glen Conrad told Graham he must make financial amends to Breakell and one of its insurance companies even if it takes his entire life.

"Someone needs to be compensated for this loss," Conrad said, adding a few moments later: "You owe $1,290,624.31."

Graham, who has been held since February, was led away to begin his sentence.

The Roanoke man became a Breakell manager in 2008, landing a high-responsibility job in which he bid, subcontracted and supervised a portfolio of construction jobs, including the face-to-face interaction with clients. Although the company trusted Graham, he repeatedly deceived Breakell in 2010 and 2011, according to his indictment.

Given a set of codes designed to align the labor and materials expended on each job with the billing process, Graham monkeyed with the coding to shift labor and materials among jobs. To conceal cost overruns from miscoding, he forged the names of clients on change orders.

In turn, Breakell furnished materials, billed clients and paid invoices in ways it wouldn't have otherwise done, the indictment said. Assistant U.S. Attorney Dan Bubar said Graham acted as if the company's money was his.

Bubar argued that Graham deserved a significant sentence, even though his personal gain was small in comparison to the more than $1 million scope of the fraud. His own gain fell below $50,000, Bubar said, and was related to the completion of some physical improvements to his home and the building housing a domestic partner's business.

Defense attorney Randy Cargill hinted at a larger motive for the crimes when he said Graham got in over his head, caught up in the culture of the construction-trades practice to bid low and make up for overruns with contract changes. He erred in trying to resolve his predicament, Cargill said. In the end, some Breakell customers received work they did not pay for, Cargill said, adding that now Graham will have to pay for it.

The judge's order directs Graham to pay $1.05 million to Breakell and $240,000 to Great American Alliance Insurance Co., starting at $50 a month, or half his monthly prison income, whichever is less.

No information given in court or court papers explains whether authorities think Graham will have the means to reimburse his victims the nearly $1.3 million. Restitution is set without regard to a defendant's ability to pay.

Stanley Breakell, who was not at the hearing, said in an interview that he now is an energy management and sustainability contractor.

"I'm trying to close the books on that whole unpleasantness," he said.

Toward that end, Breakell and his company have settled a lawsuit by Hanover Insurance Co. that issued construction bonds on two projects Breakell Inc. could not complete, court papers said. Following a foreclosure auction, SunTrust Bank owns the company's former Patterson Avenue office, according to city records.

Breakell said he is sorry people lost jobs, but he hears most or all "landed somewhere."

Breakell Inc., which was started by Stanley Breakell's father Stanley and William Watts, halted operations late last year.

It will not be restarted, he said.

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