DETROIT -- Kenneth Graham, retired CEO of steel supplier Thyssen-Krupp NA, finds nothing unusual about giving his attorney $550,000 in loans without a written agreement.
"I had no concern," Graham said in court testimony. "I knew he would pay me back. He didn't think it was necessary, and neither did I."
Nor did he find it odd that the attorney, Jerome Allen of Bloomfield Hills, Mich., might repay the money by coming to Graham's home and writing checks for luxury cars, construction of vacation homes and other household expenses.
Now Allen has testified against Graham in a federal trial here alleging that Graham masterminded a lucrative kickback scheme. Graham's fate depends on whether jurors believe he has an explanation for his unusual business practices, in which large sums flowed between Graham's private safes and business associates. A jury decision in U.S. District Court is expected this week.
Graham, 69, and retired Thyssen-Krupp executive vice president Kyle Dresbach, 68, are charged with several felonies resulting from the alleged kickbacks. Federal prosecutors say the scheme reaped $6.5 million from 1991 to 2001. The federal indictment says they had equipment suppliers to the steel supplier charge inflated prices, then funnel money back to the executives through a consulting firm and the firm's attorney, Allen.
The defendants have offered testimony that:
In the trial, which continued last week, Graham and Dresbach are charged with federal conspiracy, money laundering, tax fraud and mail fraud. Murdoch, who is suffering health problems, is an unindicted co-conspirator. Allen pleaded guilty to reduced charges in return for his testimony against Graham and Dresbach. In testimony, Allen said Graham recruited him for the kickback scheme and told him to work with Dresbach on it.