Sylva attorney found guilty of bank fraud

By Lisa Majors-Duff

In his closing argument Thursday (April 9), Assistant U.S. Attorney Richard Edwards called attorney Tom Jones, 60, "the linch pin" in the plan to defraud Blue Ridge Saving Bank of some $1.3 million over a two-year period in the mid-1990s.

That's when former Jackson County Republican Party Chairman Chig Cagle, 69, of Sylva, found himself $800,000 in debt for vehicles delivered to his Ford dealership, the former Cagle and Son Ford. Cagle, who pleaded guilty to bank fraud and money laundering charges in 2001, testified against Jones as part of a plea agreement.

On the stand Wednesday Cagle said he turned to Asheville attorney Bob Long, who represents Taylor and his bank, for advice about how to pay his debts.

Long introduced Cagle to Blue Ridge President Hayes Martin, who also pleaded guilty to bank fraud charges in 2001 and agreed to testify against Jones. (Sentencing dates for Cagle and Martin have not been announced.) When Cagle explained he needed $800,000, Martin informed him of the loan-to-one-borrower rule, which put a limit on a loan to Cagle of $500,000.

After securing the first $500,000 loan, Cagle needed a way to get around the LTOB rule, the government said. That's when Martin suggested Cagle put property in family members' names to be used as collateral on additional loans. Both Martin and Cagle indicated during their testimony that Congressman Taylor, who has not been charged in connection with this case, was aware of the amount of the Cagle loans.

In March 1993 Cagle had Jones prepare the necessary documents to put property in his daughter and son-in-law's name, Cheri and Jaime Espinosa. These holdings were then used by Cagle to secure another loan, with the proceeds going to Cagle, not the Espinosas.

The problem, according to federal prosecutors, was that Cagle had forged the Espinosas' signatures on the deed of trust and Jones knew it.

"Mr. Jones at this point had joined the conspiracy," Edwards told the jury during his closing argument. "If Mr. Jones had said, 'There are no Espinosas here, no power of attorney, no proof they had signed the deed of trust,' it would have ended with regard to him. But he had the documents notarized even though he knew they were not valid."

Still in need of money, Cagle again called upon Jones in January 1994 to complete the paperwork to refinance the Espinosa loan, bringing the total loaned on the second set of forged documents to more than $248,000.

"Mr. Cagle and Mr. Martin were clearly involved, but they needed an attorney to help them," Edwards said of the conspiracy. "The bank could not have gone through with (the loans) without relying on the word and work of the lawyer."

In defense of his client, Gene Sigmon told the jury that the government had made a "bad trade" by making deals with Cagle and Martin in exchange for testimony against Jones, who he called "an honest man" who "got caught in a conspiracy."

"He's not guilty because he never intended to commit a crime," Sigmon said of his client. Instead, Sigmon questioned the U.S. attorney's decision not to charge Congressman Taylor for his part in the Cagle loans.

"Someone else should have been here to testify," Sigmon said. "He should have been here to say, 'This is my bank.' But you aren't going to hear from him.

"No one is above the law," he said. "Where are all the conspirators?"

Edwards reiterated that the investigation of Blue Ridge Savings is not over.

"(The defense) seems to be saying we traded a big fish for a guppy," Edwards said. "Never have we said this is the end of the investigation of the bank."

Neither, Edwards said, did the government intend to show that Jones was a "terrible person. Even those people who have followed the rules their whole lives can break the law."

And that's what the jury decided, as well. Jones was convicted on one count of aiding and abetting bank fraud, making false statements to a bank and conspiracy to commit money laundering.

Sentencing in the case is at least 120 days away, most likely more, said U.S. Department of Justice spokesman Suellen Pierce.

"While I cannot comment on the specifics of my case, I want to thank the people of this community, my friends and fellow attorneys for their unwavering support of me and my family during these trying times," Jones said following the verdict.

The N.C. State Bar, the organization that licenses and disciplines lawyers in North Carolina, is aware of the conviction against Jones, a spokesman said Monday, though she would not comment on a specific investigation of Jones or a possible outcome with regard to his license.

Back to Archive: 04/17/03.