Sylva attorney to face bank fraud charges

By Lisa Majors-Duff

The charges against Tom Jones, 58, county attorney from 1994-98, date back to 1992, when he was retained by Chig Cagle, then owner of Cagle and Son Ford Inc., to assist with closing a loan from Blue Ridge Saving Bank in Asheville. At the time, Cagle was indebted for more than $800,000 to Community Bank and Trust in Sylva, according to the indictment.

Cagle, who entered into a plea agreement in September on one count of bank fraud and one count of conspiracy to commit money laundering for his part in the case, is said to have chosen to borrow money from Blue Ridge Savings because of his friendship with its owner, Congressman Charles Taylor, R-Brevard.

Cagle and Taylor's relationship was not limited to banking. A former chairman of the Jackson County Republican Party, Cagle contributed financially to Taylor's campaigns and actively worked for him during his re-election efforts.

The problem Cagle faced, according to Tuesday's indictment against Jones, was that Cagle had reached the federal $500,000 "Loan-to-one-Borrower" rule limit.

"To evade the limit, Cagle transferred certain real property in Jackson County into the name of his mother," the indictment reads. "Jones prepared the deed to accomplish that transfer."

Using this property as collateral, Cagle's mother borrowed $315,000 from Blue Ridge Savings; Jones again handled the legal paperwork and closing, according to the indictment. The money was deposited into Jones's trust account and $250,000 was disbursed to Community Bank and Trust, while another check for $62,036 was written to Cagle's mother, minus fees and expenses.

"By March of 1993, Cagle needed to borrow more money," the indictment says. "To accomplish this, and again to evade the $500,000 LTOB limit at Blue Ridge, Cagle decided to secure a loan falsely in the names of his daughter and son-in-law, Cheri Espinosa and Jaime Espinosa.

"Cagle completed a loan application and submitted it to Blue Ridge in the names of the Espinosas," the document says. "Cagle forged the signatures of both Jaime Espinosa (whose name he misspelled as "Jamie") and Cheri Espinosa on the loan application. The Espinosas lived in California and were unaware that their names were being submitted as loan applicants."

Cagle again went to Jones, who had no comment about the indictments when reached Tuesday, to help him secure this new loan for $280,000. According to the document, this loan was closed in Jones's law office in March 1993.

"The Espinosas were not present for the closing, nor had they signed any type of power of attorney designating anyone to sign documents in their names," the indictment reads. "Indeed, the Espinosas were not aware of the loan or of the closing.

"Instead, with the knowledge of Jones, Cagle forged the signatures of Jamie and Cheri Espinosa on the promissory note, the deed of trust, and other legal documents. Knowing that the Espinosas' signatures had been forged, Jones nonetheless directed his legal secretary, who was also a notary public, to notarized the Espinosas' signature and to certify falsely that the Espinosas had personally appeared before her and had acknowledged the execution of the deed of trust."

The loan was approved by Hayes Martin, 54, then Blue Ridge Savings president. Like Cagle, Martin admitted his guilt in the case and agreed to a plea arrangement in June. Sentencing for both Martin and Cagle most likely be postponed until Jones's case is finalized, said Department of Justice spokesman Suellen Pierce.

As was the case with Cagle's mother's loan, Jones is said to have deposited the funds when they arrived from Blue Ridge Savings. He then wrote a check out to the Espinosas and gave it to Cagle, who again forged his daughter and son-in-law's signatures in order to deposit the funds in his own bank account.

According to the indictment, additional land transfers were arranged by Cagle and Jones, and another loan - this time for $187,000 - was secured in the names of the Espinosas in January 1994. Once again, Jones is said to have been aware that the Espinosas's names were being fraudulently used for these transactions.

Other family members were similarly used by Cagle in this manner to secure Blue Ridge Savings loans, the indictment says, all with Jones's legal assistance.

"Eventually, Cagle became delinquent on his payments with regard to these loans as well as other loans he had obtained from Blue Ridge," the indictment reads.

The nature of the loans came under scrutiny in 1997, when, in an attempt to collect on the loans, Blue Ridge Savings sought to foreclose on the Espinosas, who hired Sylva attorney Raymond Large to defend them. Jones, who was called to testify during a hearing in this matter, is said to have lied under oath about meeting with the Espinosas during the closings.

"Jones's testimony was intended to continue to conceal and disguise the true nature, location, ownership and control of the proceeds of the loans which had supposedly been made to the Espinosas," the document says.

The court determined in the foreclosure proceedings that the Espinosas's signatures had indeed been forgeries. Since Blue Ridge could no longer pursue its money from the Espinosas, the bank filed suit against Jones in 1998 for his part with regard to the fraudulent loan applications.

In a deposition for this case, Jones is said to have again made "false statements and falsely claimed memory lapses in order to continue to conceal the true location, ownership and control of the Espinosa loan proceeds," the indictment says.

The indictments against Jones and the bills of information containing allegations against Cagle and Martin are the result of an ongoing investigation conducted by the Federal Bureau of Investigation and the Criminal Division of the Internal Revenue Service, U.S. Attorney Robert Conrad said Tuesday.

The date of Jones's preliminary hearing in Asheville should be determined by early next week, Pierce said.

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