Dominant Media Cover-up?
Congressman Taylor testified under oath

The attempt to defraud the Blue Ridge Savings Bank & what the dominant media didn’t tell you

By David Morgan

The Tribune Papers

copyrighted

fter watching with fascination as The LA Times, The San Francisco Chronicle, and most of the media

tripped over themselves competing to find any dirt they could, authenticated or not, to diminish Arnold

Schwarzenegger during his run for governor of California, it seemed prudent to take a fresh look at the local

mass media’s recent coverage of Congressman Charles Taylor and the reported events at the Blue Ridge

Savings Bank. The large corporate media seemed to be in a feeding frenzy mode of “report first – ask later,”

and we wondered if the same approach might have found its way into the large corporate media outlets located

in western NC with regard to Charles Taylor.

In the spring and summer the dominant print media in our area had produced a series of “news articles.”

Later, many of those ‘articles’ appeared on TV news as well. However, upon comprehensive and time

intensive review of all the documents in this case, we have discovered that those reports may have been

an animated attempt to paint Rep Charles Taylor into a political corner. We'll present the evidence. But first,

more background.

This latest series of Taylor focused articles came as a result of the convictions of Mr. Tom Jones and Mr.

Charles “Chig” Cagle. Loans were made to Cagle that attempted to defraud the Blue Ridge Savings Bank.

Mr. Cagle was the one to benefit from the transactions. At the time the loans were made, the president of Blue Ridge Savings Bank was Hayes

C. Martin.

Charles Taylor, the founder of the bank, is currently the chairman of its board of directors. Martin was president of the bank from 1991 to 1996.

“Chig” Cagle was the owner of a Ford dealership in Sylva, NC, which had gotten itself into financial difficulties and needed funds. Thomas E.

Jones was a lawyer who represented Cagle and who handled the paperwork and closed the loans for Cagle with the bank.

Over the past few months, we've researched numerous news articles from various sources, researched official documents, and read reports from

the FBI. We've found sworn depositions that have never been reported (until now), and spent hours pouring over court transcripts. As we

compiled all of this evidence, it became more and more apparent that writers and editors of the dominant media had worked feverishly to craft

striking headlines, to select and to spin choice tidbits of news they had, and to report (or not to report) certain facts. The pattern was inescapable.

The question begged to be asked, was this intentional? Was it meant to maximize an unfavorable view of the Congressman?

Here is an in-depth report on what we found. We'll let you decide what you want about the various media outlets and the way they reported, or

didn't report, on this key local issue and on the implications for other issues about which they report.

The Background

“Chig” Cagle loan and the initial Bonnie Cagle loan

In mid-1992 Charles E. “Chig” Cagle took out a loan from Blue Ridge Savings Bank for $500,000. At the time, $500,000 was the legal limit

that Blue Ridge Savings could loan to any one individual.

The Bank was told that the funds were needed to purchase some property at the corner of Webster Road and Rt. 107 between Sylva and

Cullowhee, NC. However, it was later learned that Cagle needed the funds to help keep his car dealership afloat, as he owed some $800,000

to the Ford Corporation for car inventory he had sold but had not paid to Ford.

In December 1992 his mother, Bonnie Cagle, also took out a loan from the bank for $315,000. Both these seemed to be perfectly legitimate

loans, and each was covered by adequate collateral. “Cagle …recalled that $100,000 from this loan ultimately went to Blue Ridge Savings

Bank, to be kept on deposit in case he had defaulted on any of the other loans.”

However, in early 1993 Cagle approached Martin and told him he needed additional funds for his business. His first approach was to secure

an additional $280,000.

The first Espinosa loan application for $280,000 (Espinosa was Cagle’s daughter’s married name)

According to Federal Bureau of Investigation documents, “Cagle recalled that prior to the Espinosa loan (in 1993), that he (Cagle) approached

Martin and advised that he needed more money for his business. Martin replied that ‘we need to come up with another name (to use as the loan

recipient).” (Due to the $500,000 individual loan limit.)

According to other FBI documents, Martin recalls it somewhat differently.

“Martin advised that “Chig” Cagle approached him for an application for a loan (for $280,000) which Cagle’s daughter Cheri and son-in-law

Jamie Espinosa were going to apply for…(they) were moving back east from the west coast and needed money to put a down payment on a

house in Atlanta, Ga. Martin gave an application to Cagle who then supposedly took it to Atlanta for the Espinosas to complete. Martin had no

reservations concerning this loan because it was secured by a piece of property located in the area…”

The rub in the story, as it later turned out, was that the Espinosas maintained they knew nothing about any such loan. “Cagle advised that with

regard to the Espinosa loan that he made up a fictitious social security account number and signed both of their names on the loan documents,

and recalled that during the meeting with Martin that Martin had to leave the bank to go to the rest home that his mother (Martin’s) was in. Cagle

left the loan application documents on Martin’s desk…”

The first Espinosa loan closing

There are differences in the documented stories of Cagle and Martin regarding the actual closing of this loan.

The loan was closed at the law offices of Thomas Jones in Sylva, NC. “Cagle advised that Cagle, Jones and Martin attended the closing, but

the Espinosas said they (the Espinosas) were not there, and in fact maintained they had no knowledge of this loan. Cagle admitted that he had

signed their (Espinosas) name on the Note and Deed of Trust at Jones office, while Jones and Martin were both present. Cagle stated that there

was no Power of Attorney from the Espinosas regarding this loan.”

“Martin stated that he did not attend the closing of the Espinosas loan, however, recalled that he had dropped the paperwork off at Tom Jones

law office…Martin explained that he had a standard policy of not going to closings, partially because the closing attorney is responsible for what

happens during that event. Martin advised that the closing attorney (Tom Jones) is responsible for doing the title search.”

Addition to Espinosa loan, bringing total up to $463,000

Several months later, in January 1994 an additional $187,000 was added to the first loan (of $280,000) that was also signed by Cagle and

closed by Jones. (Additional property owned by Cagle’s daughter, Teri Jenkins, was transferred to the Espinosa name to provide adequate

collateral.) Cagle states that Martin was at this closing also, but “Martin advised that his calendar shows he was not there.”

In any case, according to court transcripts, what happened was that Cagle forged both these loans under the name of Espinosa. In addition,

Jones later admitted on the stand that he knew that Cagle had forged his daughter's signature and that he, Jones, had asked his secretary to

notarize them, even though neither Jones nor his secretary had witnessed the signatures.

Addition to the Bonnie Cagle loan (Cagle’s mother)

In July 1995 Cagle needed more funds, and after discussions with Martin, Cagle agreed to put up additional properties as collateral for increa-

sing the amount of the Bonnie Cagle loan by $185,000. This brought the Bonnie Cagle loan up to $500,000, the maximum.

All these loans amounted to the following: $500,000 to Chig Cagle, $500,000 to his mother Bonnie Cagle, and $463,000 supposedly to his

daughter and son-in-law Cheri and Jamie Espinosa, for a total of $1,463,000.

Moreover, while all this was happening, Jones and Martin were both borrowing money from Cagle. In 1993 Jones borrowed $25,000 from

Cagle and in early 1995 Martin borrowed $35,000.

After the loans

Up until early 1996, for 5 or so years, the payments on all the loans had generally been made on time, and hence there was no real indication

to others at Blue Ridge Savings that anything was wrong. As a matter of fact, Cagle often had come into the bank and made the payments on

all the loans himself, but that did not seem particularly unusual.

However, as business conditions deteriorated for Cagle, some of the payments began to fall behind, and by early 1997 the bank began foreclo-

sure proceedings.

This usually involves several steps. Initially the Clerk of Court holds hearings to determine if, indeed, foreclosure is justified. When a lawyer

closes a mortgage loan, two things happen. The title or deed passes from the seller to the buyer, and secondly, if a mortgage is involved, the

buyer gives a note and a Deed of Trust to the lender. This Deed of Trust in effect says that the lender now owns the property in Trust as spelled

out in the deed or title; however, so long as the buyer makes the proper payments and conforms to the other loan stipulations, the lender cannot

take over the property.

In this case, when the Clerk held the hearings, the Espinosas showed up and said that they had never signed for any loan and had never signed a

Deed of Trust. The Deed of Trust that the bank thought they owned that was given them by Jones (Cagle’s lawyer) was a fake. It might as well

have been title to the George Washington Bridge.

At that point, in 1997 Blue Ridge Savings Bank began legal action against Jones’ insurance company who held insurance to cover any title

discrepancies and other problems under an “errors and omissions” clause, in order to be sure the Bank recovered all of its funds.

At the same time, bank officials and its attorneys contacted all the other appropriate banking authorities about the forged loan and sent them a

“suspicious activity report.”

Hayes Martin had departed the bank a year earlier for employment with another financial institution.

Taylor testified under oath

The insurance company began its investigation in late 1997, and it worked diligently to get to the bottom of matters. It reviewed numerous

documents and spoke to nearly all of the employees. The investigators’ job was not to give money to the bank without covering all possible

bases. Insurance companies are reluctant to make any payments unless they are sure that such payments are totally justified, and they go to

great lengths to defend themselves.

In early 1998, as part of its investigation, the insurance company researched the matter thoroughly with various top officials of the bank, particul-

arly to see if anyone else knew anything about the forgeries. One of those key officials was Charles Taylor, Chairman of the Board. The

insurance company’s investigation was thorough. Blue Ridge Savings Bank officers and Board members cooperated fully, and their officers

provided a substantial portion of the evidence in the case and submitted sworn statements.

On May 4, 1998 as part of the insurance company’s civil litigation investigation, Charles Taylor gave extensive testimony under oath regarding

all of the issues that might have aroused any suspicion with regard to the loans. The deposition was held at the Jackson County Courthouse in

Sylva, NC in the afternoon and is known as the General Court of Justice File No: 97 SP 48, Deposition of: Charles Taylor.

The entire deposition runs some 87 pages, and the questions are very pointed and straightforward. In the deposition, the investigators’ lawyers

asked Taylor numerous questions about his knowledge of various events, and particularly of his reaction when hearing about the problem with

the Espinosa loan. Taylor’s answer, in that case, was, “total disbelief.”

In the end, the insurance company honored the claim of the Blue Ridge Savings Bank

by paying them any losses due under the policy.

No money was ever lost in the Martin, Cagle, and Jones affair by the FDIC or Blue Ridge Savings Bank depositors. In 1996 Taylor, as

Chairman of Blue Ridge Savings Bank, stepped forward, replaced those involved, and made sure that all reserves were adequate so that the

bank remained well capitalized.

The media viewpoint

When the trials of Jones, Martin and Cagle began, the large dominant media would have little to do with what the case really involved.

The case contained two separate elements of substance:

The loan cap to one person of $500,000 was one element.
Falsifying and forging signatures was another element.

According to Hayes Martin’s testimony, when he was asked “…who had the responsibility ordinarily on loans to decide whether to approve

them or not?” he replied, “I did.” Blue Ridge Savings is a collateral lender. That means it will make loans more on the value of the property as

opposed to the absolute credit worthiness of the borrower. “…If they have a problem, we can liquidate the collateral and cover their loan.”

First off, if a loan is made to person X and the loan is covered by adequate collateral, is it up to the bank to tell that person what he or she can

do with the money? If X wants to give or lend the money to Y, is X not allowed to do so even if their loan is adequately collateralized? Should

a properly collateralized loan to a person not be made because a friend or relative has already borrowed up to the limit allowed? This is an area

that involves significant grayness and is surrounded by technicalities. It certainly deserved more investigation than was given.

The second element in question was that of the borrower falsifying signatures with the knowledge of his lawyer, and with the possible knowledge

of the bank’s president. This is fraud, pure and simple.

What the media did at every opportunity was to “muddy up the waters” in their headlines by making every effort possible to link both these

elements together and to somehow tie Charles Taylor to the worst aspects of whatever they could find, never bothering to ask questions that

should have been asked. Throughout the process they were also implying that the bank was having troubles by their choice of words and by

ignoring any positive information they were given.

Notice these blatantly misleading headlines from The News & Observer that were reported as though they were fact.

“Taylor linked to loan fraud

But feds have not questioned him”

“Taylor’s bank falsified papers

Ex-president said Taylor aware of it”

And this one from the Asheville Citizen Times:

“Testimony closes in fraud trial linked to Rep. Taylor”

To begin with, no bank authority had ever accused Blue Ridge Savings or Taylor of falsifying papers.

However, the implication in all these headlines is that Charles Taylor was closely “linked” to someone borrowing $463,000 from Blue Ridge

Savings Bank by forging a false signature.

First of all, the dominant media reporters never raised the question as to why would he do this? Did Taylor stand to make a great deal of money

by making a loan at 1% over prime on $463,000? Would he let a loan go into default if he had been involved in an illegal forgery in a loan that

would insure that the loan would be investigated? The media has always been happy to announce how many millions Taylor is worth. So what

would be his motive for doing something so stupid? Wouldn’t it seem logical that he would have continued to see that the payments were made

so as not to draw attention to the loan?

Another one of the implications made by the media was that the borrower was a large political donor. Taylor’s five campaigns between 1988

and 1996 cost him and his opponents over $5 million. Cagle’s donations to Taylor of approximately $1,000 per election were among some

18,000 to 20,000 donations received by Taylor over the course of those campaigns.

In addition, the media happily harped on Martin’s statement that Taylor ‘micromanaged” the activities of the bank when he was in Washington,

DC and “called the bank 10 or 12 times a day.” The desired implication was that obviously he knew every detail of what was going on with

these and all loans. Anyone with any knowledge of a day’s work in the life of a Congressman has to know that calling the bank that many times

a day on a regular basis simply didn’t happen. Of course Taylor was interested in knowing what was going on at the bank. The bank and its

Board of Directors approve about 100 to 150 loans each month at their meetings, and it is of course reasonable to assume that Taylor was aware

of some of the larger ones. But to attempt to link any such knowledge of a loan by Taylor to some sort of conclusion that he was sneaking

around in Sylva, NC overseeing forged signatures seems ridiculous.

The editors of most newspapers are extremely interested in what is going on with the work at their own newspaper. Some might refer to this as

‘micromanaging’. Yet, we all recall that The New York Times only recently was shocked to learn that a reporter named Jason Blair was

falsifying all sorts of news stories on a daily basis right under their noses.

And this happened while the editors were there every day, received numerous warnings, but instead did nothing to correct the situation. But no

one “reported” that the publisher of The New York Times was “linked” to these false stories and to the reporter.

Here is another headline from The Asheville Citizen Times, dated April 17, 2003:

“Taylor mum on loans”

What the headline really meant is that Taylor did not respond directly to nine questions that the Citizen Times had delivered to him and wanted

him to answer. As though, for some reason, this “mum-ness” meant that he was hiding something. The subhead said he was “tight-lipped on bank

fraud investigation.” This was simply another implied spin that his silence proved some sort of “linkage” to forgeries on the part of a borrower.

In fact, the bank had issued its own reply, which the paper decided to cut short when publishing it. The Citizen Times blatantly left out the first

short paragraph, which read as follows: “Since December 31, 1996, our Bank’s assets have grown from $58,591,025 to $158,664,862 at

December 31,2002, an increase of over 270%. The Bank has converted to a Federal Charter from its NC State Savings Bank Charter, opened

two new branches, and created fifteen new jobs since 1996.” This bit of positive factual information seems to tell a story that is contrary to the

one that the dominant media wanted its readers to believe - that Taylor and Blue Ridge were in deep difficulty.

Moreover, in an editorial, the Citizen Times declared that “the silence from the Taylor camp is deafening…Rep. Taylor has not been accused of,

or charged with, a crime. But allegations have been drip-drip-dripping for month upon month out of this case.” They were right about that.

Most of the allegations that were dripping out were due to their own spin that they kept putting on stories on which they did little or no

investigative work. It would seem that Taylor’s sworn testimony, which the media had not bothered to report, should have sufficed as “talking”

about the case and not being “mum.”

As another example, it had been alleged by Jones’ attorney that they had hired a detective who spent many, many months trying to issue a

subpoena to Taylor. The corporate mass media had reported it as fact. However, some simple checking in Taylor’s office with his staff members

showed that not one of them had ever seen any sort of ‘detective’ looking for Taylor to try to serve him a subpoena. Besides, he is just not that

hard to locate. He gives a lot of speeches. His home is fairly easy to find. His office is in downtown Asheville, NC. His home phone number has

been publicly listed for the 13 years he has been in Congress. And in the “Response by USA to Tom Jones Motion for Judgment of Acquittal of

June 6, 2003” federal officers stated “They (Jones) had knowledge of the entirety of the government’s case for almost 15 months before the case

began. The defendant and his attorneys had ample time to interview Mr. Taylor and to subpoena him to trial.”

Again, in an editorial, the Citizen Times stated that “The Justice Department is accused of shielding Taylor, and given that Attorney General

Ashcroft is to government secrecy what Elvis was to rock’n roll, that doesn’t score the seven term congressman any public relations points,

either.” An AP story in The Charlotte Observer headlined “Attorneys say Ashcroft blocked Taylor queries in bank fraud case.”

But nowhere – absolutely nowhere - was it ever pointed out that this entire case began unraveling in 1996 and was being investigated by the

FBI and other federal agents from 1997 thru 2000. These were the Clinton years, and Attorney General Janet Reno was in charge of such

investigations. Taylor was voting for the impeachment of Clinton. It doesn’t take a rocket scientist to figure out that if there was anything at

all that could be pinned on Taylor, that Reno and Clinton would have jumped all over it. But they didn’t.

Finally, throughout news stories and editorials of the dominant media, there is this constant harping that Taylor needs to testify under oath inorder

to clear the air. Yet not once does any media discuss the fact that Taylor, in an eighty-seven-page document, had already given sworn testimony

to the insurance company regarding this entire matter. Not once. Was this some secret that was being hidden from the media? Or was the large

dominant media just hiding it from its readers?

In attempting to discuss what its newspaper was reporting, an “editorial” in the Citizen Times says, “Being a government watchdog, holding

officials accountable to the people, is the reason newspapers exist.” That’s close, but it misses what the media should really be doing.

The real reason for the First Amendment’s existence is so that the media can report the truth and give the people the facts so that they can

make proper decisions when voting for and selecting government officials. It is not the role of the media to muddy up the facts, leave out

important information, and generate agendas in their news coverage of events so that the people will fall in line with the media’s wishes. It is

their job to report all the facts.

In the case of the bank and Rep Charles Taylor, the dominant corporate media has done the people a real disservice and are the ones who

should now be answering questions.

Dominant Media Cover-up? Congressman Taylor testified under oath