On November 21 Princeton residents Ford Graham, 56, and his wife, Katherine, 55, were arrested and taken to the Metropolitan Correctional Center in Manhattan, accused of contempt of court for failing to comply with a court order in a case that dates back to the invasion of Iraq in 2003.
The arrest was ordered by federal judge Loretta A. Preska on August 26 and goes back to a lawsuit filed by a former saleswoman for Ford Graham’s Company, Vulcan Power Group. She sued Vulcan and Graham over salary and commission she was owed for brokering the sale of mobile power generators to the U.S. military for restoring power to Iraq.
The arrest took place just months after New Jersey authorities filed a lawsuit against the Grahams in an unrelated case, accusing them of operating a $5 million Ponzi scheme.
These developments add to the lengthy legal paper trail that Ford Graham’s business career has created.
Over and over again, Graham and his business partner, Kevin C. Davis, got into court disputes with executives, other companies, employees, and national governments, many of whom said that Graham’s company, Vulcan Capital Management, and its various subsidiary companies did not pay what they owed or did not perform work they were supposed to do. Vulcan often lost or settled the lawsuits and then allegedly failed to pay what it had been ordered to pay. Then, lawyers who defended them in these cases often said they weren’t paid for their work.
Iraq War Contracting: In 2002 Vulcan Power Group bought Advanced Mobile Power Systems (AMPS), a former Enron company, for $4 million at a bankruptcy sale. The company’s focus was developing and building gas-powered electricity-generating turbines that could produce 20 megawatts of power and were capable of being transported by trailer. By the time it was sold to Vulcan, AMPS had built one such power unit but had not tested it.
World events would soon place this kind of equipment in high demand. The 2003 Iraq War left large sections of the country without basic utilities, and the U.S. Army Corps of Engineers was scrambling to rebuild Iraq’s electrical grid, contracting with various companies to bring Iraq’s damaged power plants back online and install new generators.
In 2003 Vulcan agreed to deliver two AMPS units to an engineering company, Washington Group International, to be installed in the Iraqi city of Baiji. According to reporting by Sourcewatch, a nonprofit watchdog group, Vulcan provided the first AMPS unit (the prototype they already had) but did not build a second one and instead purchased a GE mobile unit as a substitute, which WGI did not accept.
Sourcewatch says the AMPS unit didn’t get online until August, 2004, and operated only for two months. (The city’s electricity struggles are not over. In 2014 Baiji’s power plant was destroyed by ISIS, and it has yet to be rebuilt.)
In the end the U.S. Army paid WGI and Vulcan $22 million for their services in Iraq. The saleswoman who brokered the contract, Susan Flannigan, sued Vulcan Power Group, Ford, and Davis for the 4 percent commission she was owed, which would amount to nearly $1 million. (She was only paid $125,000.) In 2009 the case was settled with $470,000 awarded to Flannignan.
In 2005 one of Ford’s companies signed another major contract that quickly went awry. Vulcan Energy Solutions signed a $64 million contract with Iraq’s minister for electricity, Aiham Alsammarae, to fix the Mulla Abdullah power plant in Kirkuk. An employee, J.C. Adams, was at the meeting and had worked on some of Vulcan’s subcontracts in Iraq, and later testified that he was owed $150,000 in unpaid salary. Adams testified that he had been told he would finally be paid his salary if Vulcan won the Mulla Abdullah contract, and that Ford Graham told a group of employees that he had agreed to include a $3 million “engineering fee” in the final contract as a bribe to get the contract.
Court documents state that the contract was signed and included the $3 million engineering fee. But there was a problem: Vulcan Energy Solutions didn’t have the men, equipment, or money to begin work. The contract also included a $12 million “mobilization fee” to be paid up front. However, the Iraqi government balked at paying the fee for a no-bid contract and said that Alsammarae had never had the authority to sign the contract. Vulcan took the ministry to arbitration for breach of contract, seeking to get the $12 million mobilization fee, but the arbiter ruled in favor of the Iraqi government.
These contracts also generated at least four lawsuits by people who say that Vulcan never paid them: One was Flannigan. Another was AIG, which says Vulcan never paid for insurance for its personnel in Iraq. A third was a company called PEPCO, which said Vulcan never paid it for engineering services. PEPCO took Vulcan to court and received a $314,000 judgment, according to court documents. Lastly, a security company, Sabre International, received a judgment against Vulcan and Ford for not paying $250,000 for escorting Vulcan personnel during their time in Iraq.
Vulcan later sued Adams over his arbitration testimony. The lawyers representing Vulcan, from the firm Greenberg Traurig, LLP, tried to withdraw from the lawsuit because they said Vulcan did not pay them.
Vulcan also filed countersuits against Flannigan, which culminated in the 2014 court order against Vulcan that resulted in the Grahams’ recent arrests. A jury awarded nearly $2 million in damages for retaliation and failure to pay her. The Grahams have yet to comply with that order, resulting in a warrant issued for their arrest in August, 2019.
Other lawsuits: In 2006 Vulcan was hired by the government of Bangladesh to do a comprehensive review of power plants and perform power plant installation. In 2007 Vulcan hired Northwest Corporation to do geological survey work related to the project. Later, Northwest took Vulcan to arbitration for $125,000 in unpaid bills. The arbiter’s decision was scathing towards Graham: “If ever there was an example put before me on a witness stand to typify what I believe Wall Street and the general business community do not want to put forward as how business should be run, Ford F. Graham has filled the role,” he wrote. The arbiter said Graham had avoided paying Northwest by shifting resources between various companies he controlled in a “three card monte scheme.”
Former corporate officers Daniel O’Hare and Michael Stewart sued Vulcan Capital Management for fraud and settled for $2 million, of which they were only paid $19,000. They went back to court and won an $8 million judgment against Vulcan but the amount was reduced by half on appeal. During the trial, in 2010, Davis testified that Flannigan’s settlement had driven the company out of business.
Seven law firms that represented Graham and Vulcan Capital through all these disputes and various other lawsuits say they were not paid what they were owed, according to legal documents.
Ponzi Scheme: On January 29 New Jersey Attorney General Gurbier S. Grewal filed a lawsuit against Ford and Katherine Graham and several companies of theirs — Specialty Fuels Americas, Aries Energy Group Venture, CCC Holdings, Rattler Partners, and Vulcan Energy International — for fraudulently selling $5 million worth of unregistered securities to investors. About $1.9 million of that total came from members of the Graham’s social circle in Princeton, where they lived.
According to Grewal’s suit, the Grahams sold what they said were low-risk, high-reward investments in oil and gas projects but used the money to buy luxury vacations at five-star resorts, private school tuition, summer camp payments, and a country club membership. He also put money into joint bank accounts, repaid prior investors, and took out cash, according to the complaint.
The lawsuit alleges that Graham sought to raise $1.5 million so that one of his companies could buy a controlling interest in SFB, a ship bunkering and fuel distribution company that operates in the Gulf of Mexico that was owed between $7 and $9 million by BP for the 2010 oil spill. Graham did raise the $1.5 million, the lawsuit says, but used some of the money to pay off previous investors in a “Ponzi scheme” structure.
Much of the rest of it was taken out at ATMs, spent at the Carlisle Bay Resort in Antigua, went to a membership at the Bedens Brook Country Club, or for various other personal expenses, according to the lawsuit. More than $3,000 was spent at Nieman Marcus, Blue Mercury, and Williams Sonoma, and $1,331 was spent at liquor stores.
The lawsuit describes a second scheme, in which Graham allegedly took $40,000 from investors to buy notes to participate in a Dominican oil transaction. The lawsuit accuses Graham of using the money for personal expenses and to perpetuate the Ponzi scheme.
According to the suit, Graham took $100,000 from an investor supposedly to build a tank, with $120,000 to be returned to the investor a year and four days later. Instead, the money was spent on payments to Graham’s business associates, cash withdrawals, sent to Katherine Graham’s personal bank account, and spent at a gun and outdoor clothing store.
The lawsuit describes similar transactions involving investments in a Nigerian oil project, Vulcan Energy International, and Vulcan Minerals & Power Limited, where money was allegedly taken from investors and spent on cash withdrawals and at stores like Petsmart and Target.
This item in Gerwal’s suit is not Vulcan’s only involvement in Nigeria. Sourcewatch also cites Nigerian newspapers investigating a Vulcan Energy International project in Nigeria in which the company was allegedly paid $11,500,000 to build a power plant but had produced only a hole in the ground, leading to allegations of corruption.
The New Jersey fraud lawsuit describes similar schemes involving a gas transportation and storage operation called “Project Delta” that never came to fruition, and a Pennsylvania oil and gas drilling operation called the “Rattler Project” that never happened.
The lawsuit says that Katherine Graham acted as a “cheerleader” for her husband during these transactions, and that she met one of the investors in the kitchen of her family home on many occasions.
It is also not the Graham family’s first exposure to Ponzi schemes. Ford Graham’s father, John J. Graham, was involved in the Prudential Bache/Graham Resources scheme in the 1980s that is said to have defrauded investors out of $8 billion.
Arrest: According to court documents, it was the Graham’s failure to comply with the court order to pay Flannigan that led to their arrest. In July of 2019, the U.S. Southern District of New York court ordered Ford Graham to pay Flannigan $4,167 a month until they had paid what they owed, and also to pay her legal fees. However, on August 26, Judge Preska wrote that the Grahams had failed to inform the court of their current address and that their whereabouts remained unknown, and ordered U.S. Marshals to locate the couple and take them into custody.
James Wilson Clark, 95, on August 6. A World War II veteran, he served for eight years as deputy director at the Princeton Plasma Physics Laboratory. He later served as a senior associate at Mathtech in Hamilton. A memorial service will be held Saturday, December 21, at 1 p.m. at Nassau Presbyterian Church in Princeton.
Bruce R. Campbell, 83, on November 28. He was deputy commissioner for the state Department of Education and later a hearing officer. He became an administrative law judge while still attending law school. Services will be held Tuesday, December 10, at noon at St. Matthew’s Episcopal Church, 300 South Main Street, Pennington.
Lila Howley Cipriano, 86, on November 30. She was the Director of Culture for the City of Trenton, where she oversaw the day-to-day operations of the Ellarslie Museum, Trent House, and Mill Hill Playhouse. In 1946, Lila and her sister, Alberta, opened the Howley Sisters School of Dance in Trenton. After 52 years, the school was transformed into the Howley Preschool, where Lila worked until her death.
Claude Mastrosimone, 82, on September 10. He founded Cardinal Publishing Company in Lawrenceville in 1980. Services will be held Friday, December 6, at 10 a.m. at St. Charles Borromeo Church in Skillman.