Virtually every popular source of personal financial advice repeats the retirement mantra of the 1990s--sock money away in some form of tax-sheltered plan, like a 401(k).
Nobody talks about what happens if the boss decides to sink the retirement fund into a speculative piece of flood-plain land, and then sues anyone who complains about it.
But that is exactly what happened to Raymond Dake, a 58-year-old Arlington surveyor, and 122 other people who used to work for Grand Prairie-based Graham Associates Inc.
Altogether, the employees contributed about $2.7 million of their profit-sharing to the engineering firm's retirement plan, which was administered by company owner Jack Graham.
About all the workers now have to show for it is part ownership of a desolate piece of real estate and mounting piles of legal bills.
"I thought if it had gone the way it has, Jack Graham would be in a world of hurt," says Dake, who has wanted to get his money out of the plan for the past seven years. "It turns out the government doesn't have the tools I thought they had to stop this kind of thing."
Dake and other former employees of the civil-engineering firm are waiting to see how a federal appeals court in New Orleans will rule in a case the U.S. Labor Department has brought against Graham. The suit seeks to recover the retirement money.
At the same time, Graham is suing Dake and other former employees in state court, accusing the workers of conspiring against him because they complained to the government. Dake has one word for that suit: "harassment."
Graham, who has moved on and now owns a firm in Plano called GDI Associates Inc., and his lawyer did not return phone calls from the Dallas Observer seeking comment. In court papers, they defend the $1.7-million land deal as a sound investment, even though it tied up 63 percent of the employees' retirement money in one piece of vacant land that hasn't made a dime, or attracted a buyer, in 11 years.
Far from Graham's $240,000 home near The Northwood Club in North Dallas, Raymond Dake lives these days in blue-collar east Arlington, in a little house that hardly conjures up thoughts of retirement security.
Paint peels freely from the eaves. A pipe rusts on the roof. And a hole has rotted through the garage door.
Dake looks to need some work as well. A white T-shirt tenses around his gut as he edges himself up to his plastic-covered kitchen table. Behind wire-rimmed glasses, his face gathers in a kind of post-middle-age sag.
He must have looked a lot younger when he went to work for Graham in 1972. "Construction was going great guns and we were, too,'' he says, describing how he moved to the area from Tulsa to take the job.
By the early 1980s, Graham's firm had more than 230 employees and Dake was vice president of operations, running 15 surveying crews that were busily subdividing the prairie.
Employees of Graham Associates were offered a profit-sharing deal in which they received 15 percent of their salary in a tax-deferred retirement plan. Graham was the sole trustee for the fund and made all the investment decisions.
"I was hiring people and telling them about this great plan," Dake says. "I told 'em it was protected by the government, so there's nothing that could happen."
Dake himself kicked about $200,000 into the plan.
Bobby Shawn, a 55-year-old engineer from Grand Prairie, says salaried workers at the company were expected to put in 50- to 60-hour weeks, and the plan was their reward. "It wasn't gravy," he says.
And it wasn't the easiest plan to join. By Graham's rules, an employee would be vested--meaning entitled to collect in the future--after four years, and then at only 40 percent. It took 10 years to become fully vested, which former employees say was hard to do because there are always layoffs in the up-and-down engineering field.
For the first 10 years, Graham conservatively invested the employees' money in certificates of deposit and the like.
But in April 1985, his strategy changed. He took $1.7 million of the retirement fund's money and bought 24.2 acres of undeveloped land at the northern edge of the Great Southwest Industrial District, just east of State Highway 360.
Unknown to many employees, the 185 acres adjacent to the retirement fund's land was owned by two partnerships. Graham held an interest in each partnership, 33 percent in one and 95 percent in the other.
One of the parcels owned by a Graham partnership, in fact, would become much more marketable if it could be combined with the land Graham purchased with the retirement money, according to later testimony by Dudley Watson, a real-estate agent who listed the property.
Graham almost immediately put the plan's 24 acres up for sale along with part of a 170-acre tract one of his partnerships owned.
Before anything sold, though, the mid-'80s bust hit.
Graham laid off almost half his employees, and in 1988 sold the company. The plan was terminated in 1989, according to court papers, and the Internal Revenue Service informed Graham that he should liquidate the assets and distribute them to the employees.
The question, of course, was, how? Nobody was interested in buying the plan's big asset: a piece of dirt covered in waist-high Dallis grass. The land is so distant from the surrounding suburbanization, people can be heard using an adjacent stand of woods as an illegal shooting range.
In 1991, responding to complaints from Dake, Shawn, and others, the Labor Department sued Graham in federal court, accusing him of failing to properly manage the plan and asking him to cough up the $1.5 million the employees claim was lost in the land deal.
Meanwhile, Graham and the company's new owners began struggling over control of the plan. Graham resisted all attempts to remove him as sole trustee.
"He's still in control," says a lawyer familiar with the case. "He still has the checkbook."
After a three-day trial in September, U.S. District Judge Joe Kendall ruled that Graham had done nothing wrong.
Kendall found that investing 63 percent of the fund's money in one piece of land met the government's broadly worded requirement that such retirement funds be diversified. He also had no problem with Graham's purchase of property next to land he already owned. It wasn't self-dealing, the judge ruled.
Government lawyers are appealing Kendall's ruling, but Shawn and Dake have more than the outcome of the appeal to worry about.
A week before Christmas, Graham filed suit in Dallas against Dake, Shawn, and several other former employees. He also sued Graham Associates' current owners and their lawyers, the high-powered firms of Haynes & Boone and Fulbright & Jaworski. Graham is alleging that the actions of ex-employees and their lawyers in the federal case amounted to a conspiracy, costing Graham more than $600,000 in legal fees, plus "extreme mental anguish and distress."
"It seems kind of weird to me that I'm being sued when all I did was ask the Labor Department for information about something to which I'm entitled," says Dake. He was forced to hire a lawyer, to whom he already owes "a ton of money."
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Dake's son, Brian, an aircraft mechanic from Tulsa, says his father would be doing "pretty darned good for himself" if it was not for the way Graham treated him.
Even a conservative mutual fund would have doubled his retirement investments during the past decade.
By most accounts, Graham is a basically likable guy. But his handling of their retirement money, ex-employees say, is proof that greed often is banal.
"Other than the fact that he won't shut down the plan and pay us what we're owed, and the fact he's suing me and costing me a lot of money I don't have, he's a pretty good ol' boy," says Dake of his former boss.