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The former employee further testified that she told Taylor and then-bank president Hayes Martin that OTS examiners wanted Cagle's loans classified as "criticized assets," meaning they were in arrears. Bank examiners also questioned the bank's appraised value of the property Cagle used as collateral verses, she said.
Court records show at least six foreclosure hearings were held in Jackson County in 1997 against Cagle, his Ford dealership, a cousin and the estate of his deceased mother. Those loans totalled nearly $2.5 million, including a $400,000 loan from Financial Guarantee, a holding company that owns Blue Ridge Savings and is also owned by Taylor.
One loan in particular under review involves a $280,000 payment to Cagle's daughter and son-in-law, Cheri and Jaime Espinosa, in 1993, which was refinanced in 1994 for an additional $187,000. When the bank attempted to foreclose on the Espinosas' loan, the couple said they never asked for the money, never signed an application and never received any funds.
The Espinosas retained Sylva attorney Raymond Large to defend them. Mrs. Espinosa testified during the May 1998 session of Jackson County Civil/Superior Court that in addition to forgeries, the loan applications contained other false information, including phone numbers, Social Security numbers, addresses, non-existent bank accounts in California and employment history. Mr. Espinosa's name was also misspelled on the documents, which he also testified to.
Though the N.C. Supreme Court last year determined the bank could not foreclose on the Espinosas due to the forged signatures, Blue Ridge Savings has filed another suit against the couple hoping to collect the money it says it loaned them.
The bank has also filed suit against Jones, who was employed by Blue Ridge Savings to close the Espinosas' loans and into whose trust account the money was deposited for disbursement. They allege Jones should have known about the forgeries, and that he was negligent for not supervising the loan closing. They also allege that Jones did not deposit the entire loan amount, citing a cancelled check for a portion, some $187,000, endorsed by both Jones and Cagle and stamped with a First Citizens Bank mark.
Jones had no comment on the suit.
Bob Long, an Asheville attorney who represents Blue Ridge Savings on other matters, said Tuesday that it was his understanding the matter involving the Espinosas and Jones had been resolved through mediation.
"I agree with Bob Long's statement that the parties met, and it was my understanding as well that the issue had been resolved," Large said Tuesday. "But recent communications with representatives of Blue Ridge Savings leads me to question whether the issue has actually been resolved."
Current bank President Dwayne Wiseman, who has held the position since July 1999, had no comment on the status of either the Espinosa or Jones cases, nor would he comment on bank leading policies prior to his employment.
When reached Tuesday, Cagle said, "I have no comment. There's nothing, as far as I know, going on. It was a surprise to me. Everybody I talk to say it is just politics. There is no federal investigation."
The "politics" Cagle referred to seems to surround the election-year battle of the press releases being waged by Taylor and his Democratic opponent, Sam Neill of Hendersonville. In a press release from the Taylor for Congress campaign, a spokesman blamed the Neill campaign for Taylor's troubles with the Jackson County tax collector, who garnished Taylor's congressional salary to collect more than $18,000 in back taxes. Taylor paid a portion of his debt "under protest," he said, in June and the remainder just weeks ago after similar action on the part of the local tax collector.
Neill shot back with his own press release, calling Taylor's charges against him "unbelievable."
Taylor also accused Neill of "spending tens of thousands of dollars hiring San Francisco researchers and private detectives to dig up dirt...," to which Neill said in another release, "The federal grand jury subpoenaed court files in April of this year. Their investigation is clearly current and ongoing. Mr. Taylor has a pattern that when misconduct is discovered, he claims it is political and blames someone else."
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