By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
By the end of 1995 Hofheinz's opinion of the Grahams -- of Mike in particular -- had changed considerably. For one thing, the brothers were found guilty in 1994 of defrauding investors in a scheme to develop six private prisons in West Texas. The untimely conviction of his partners interfered with Hofheinz's efforts to attract investors for the Jena jail project. Hofheinz was also smarting over the failure of Top Rank of Louisiana, led by Hofheinz and Las Vegas promoter Bob Arum, to buy the Minnesota Timberwolves basketball team and move it to New Orleans.
This was a deal apparently conjured out of thin air by Mike Graham, who somehow had secured the lease on a yet-to-be-constructed arena in late 1993. How did he do it? In typical Graham fashion, Mike alluded to connections in high places, namely Edwin Edwards in the Louisiana Governor's Mansion.
"It was always a wink and a nod and 'the guv,' or 'the guv's son,' " recalled one prospective investor in the team, who met with the Graham brothers and Hofheinz in New York in the spring of 1994. "The only problem was, these guys were full of shit. This guy, [Mike] Graham, if you mentioned rocketship-to-the-moon, I'm sure he had a rocketship-to-the-moon deal."
Apparently the National Basketball Association felt the same way. The league's board of governors rejected Top Rank's proposal to buy the Wolves, citing the "speculative nature" of the group's financing.
Between the troubled prison venture and the failed bid for an NBA team, Hofheinz was down about $1.5 million, a good portion of it paid to Mike and Pat Graham and their bad reputations. On top of that, the former mayor had expected to sell 2214 Bluff Creek back to Graham after three years, but Mike couldn't swing it. Graham and his family were "renting" the house, at a cost equal to the annual property tax bill. But Graham didn't pay the taxes, and the Irene Cafcalas Hofheinz Foundation, the trust that bought 2214 Bluff Creek, had already been sued twice for nonpayment.
On April 25, 1996 -- just five days before Mike and Pat went to New Orleans and were deputized by federal prosecutors -- Hofheinz filed papers in court to evict Mike and his family.
Hofheinz declined to be interviewed for this story, citing a gag order issued by the judge in Louisiana barring defendants, witnesses and attorneys from discussing the Edwards-related cases. But in the past Hofheinz has claimed that Mike became a government informant to keep from losing his house.
That was also the reason Rosalind Graham filed for bankruptcy in July 1996. She claimed the house was purchased in 1989 by an entity called Bluff Creek Corporation, of which she was the sole shareholder. According to Rosalind's testimony, Mike sold 2214 Bluff Creek to the Hofheinz foundation without her knowledge.
But the complex two-year proceeding would end badly for Roz. Not only would her husband's credibility be challenged, so would hers.
</1>I<1>n the Grahams' initial meetings with the FBI, Pat apparently provided most of the information. Pat's story was that shortly after he hooked up with Hofheinz on the Jena jail project, the Grahams were introduced to a Eunice cattleman named Cecil Brown, who was a good friend of Governor Edwin Edwards's. Pat met with Brown and was told Edwards's endorsement of the jail could be bought for $350,000.
Shortly after that first meeting, Brown took Graham to Baton Rouge to have lunch with Edwards. Pat told the governor that Louisiana prison officials had indicated they wanted the project to move forward but were stalling on an agreement. Edwards reportedly said he'd take care of it.
A month later the Louisiana Department of Corrections agreed to provide juvenile offenders and funding for the finished facility.
The state's review of the project, however, found that it would cost $35 million, more than twice the original estimate. That meant bond financing, which required additional approval from a state commission. Brown told Pat the price for Edwards's support had gone up, from $350,000 to $2.5 million. Brown said Edwards wanted half the money up front, according to Pat, with the rest due when the financing had been completed.
Pat told the FBI that in late 1992 Hofheinz borrowed $245,000 from the "Asian community." Pat then took the cash to Louisiana, whereupon he and Brown proceeded to the Governor's Mansion. In the parking lot, Brown transferred the cash from a briefcase into a plastic trash bag. Pat waited outside while Brown took the bag to Edwards's office. He returned empty-handed.
This is pretty much the same story Steve Irwin, an assistant U.S. attorney from New Orleans, told Karen Brown, the judge hearing Rosalind's bankruptcy case, in September 1996 -- except for one significant detail: the source of the $245,000. In a closed-door session with Judge Brown, Irwin said that according to Mike Graham, the $250,000 from the Hofheinz trust in October 1992 didn't go to Graham's lawyers, but instead "was directly paid to a sitting public official in Louisiana." This is clearly the same payment Pat was talking about, simply because, according to the Grahams' story, it was the only payment made at that time.
The original source of the alleged payoff is significant because what Irwin told Brown that day wasn't true, at least according to Mike Graham himself. In February 1997 Mike admitted in sworn testimony that the money from the Hofheinz trust did, in fact, go to his lawyers. Mike would reverse course again a year later, but for purposes of the bankruptcy case, the damage had been done. Brown's order dismissing Rosalind's claim on 2214 Bluff Creek pointed out that bank records proved the $250,000 had gone to Mike's attorney.