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Massachusetts gives former Arizona GOP chairman lifetime securities ban

By: - September 25, 2018 10:25 am

Former Arizona Republican Party Chairman Robert Graham has been permanently banned from the securities trading industry in Massachusetts, and must pay a $15,000 fine after after losing $400,000 that a 67-year-old artist invested in one of his projects.

According to consent decrees that Securities Division of the Massachusetts Office of the Secretary of the Commonwealth entered into with Graham and North Carolina-based Capital Investment Group, Graham in 2012 convinced the woman to invest in Groveton, an entity controlled by another company owned by him and business partner Eric Wnuck. (In 2010, Wnuck briefly ran for Congress in AZ-05.) According to the website Financial Planning, which broke the news of Graham’s banning, the Groveton project was to dismantle a New Hampshire paper mill for the steel, copper and wood it contained.

The investor lost the entirety of her investment, which came from two trusts she oversaw for her mother and brother.

Documents signed by the investor stated that her risk tolerance was relatively low, and Graham was aware of this, according to the consent decrees. Nonetheless, the investor “suffered substantial losses through risky investments made on Graham’s recommendation,” the consent decree stated.

Capital Investment Group, which employed Graham at the time, must provide restitution to the investor and pay $50,000 in fines. Groveton and Green Steel, the company that owned the project, were not part of Capital Investment Group, and the company had the investor sign a “hold harmless” letter indemnifying it. But Massachusetts officials said Capital Investment Group failed to adequately supervisor Graham, and because it approved the investment, it was legally obligated to supervise the transaction as if it were conducted on the company’s behalf.

Graham ultimately raised $1.8 for Groveton, which is now owned by a demolition company that was involved in the project, Financial Planning reported.

The Office of the Secretary of the Commonwealth’s Securities Division found that Graham violated Massachusetts law, though under the consent decree, Graham did not admit to any violations. He told Financial Planning that he properly disclosed the project’s risk to the investor up front, and said weather and commodities prices played a part in the Groveton project’s failure. He said he ended up having to pay vendors using his own personal funds.

Graham’s consent decree also stated that he solicited the investment in Groveton without Capital Investment Group’s knowledge, and that he didn’t disclose that to the company until about four months later. Graham told the Arizona Mirror that was incorrect and that he informed the company in a timely manner, but he was unable to find documentation proving it before the consent decree was finalized. Since then, he said he’s found the relevant documentation, and is hoping to get Massachusetts authorities to amend the consent decree to reflect that.

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Jeremy Duda
Jeremy Duda

Jeremy Duda is a Phoenix native and began his career in journalism in 2003 after graduating from the University of Arizona. Jeremy Duda previously served as the Mirror's associate Editor. Prior to joining the Arizona Mirror, he worked at the Arizona Capitol Times, where he spent eight years covering the Governor's Office and two years as editor of the Yellow Sheet Report. Before that, he wrote for the Hobbs News-Sun of Hobbs, NM, and the Daily Herald of Provo, Utah. Jeremy is also the author of the history book “If This Be Treason: the American Rogues and Rebels Who Walked the Line Between Dissent and Betrayal.”