Lawyers for Jones are pressing their own case about why investigators
have not questioned the congressman.

They have filed an unusual motion in federal court that raises
questions about whether a Republican administration in Washington
stopped the FBI from investigating a Republican congressman.

The defense attorneys allege that U.S. Attorney General John Ashcroft
or his assistants prohibited the FBI, the IRS and the U.S. attorney
for the Western District of North Carolina from interrogating Taylor
before a federal grand jury.



From The News & Observer, 7/6/03:
http://newsobserver.com/news/story/2...-2478513c.html

Taylor linked to loan fraud

But feds have not questioned him

By PAT STITH, Staff Writer


In 2000 and 2001, the former president of an obscure bank in the
western end of North Carolina admitted to FBI agents that he had
violated federal banking laws.

He also implicated 11th District U.S. Rep. Charles H. Taylor of
Brevard, who founded Blue Ridge Savings Bank and was chairman of its
board of directors.

The banker, Hayes C. Martin of Asheville, and a major borrower,
Charles E. "Chig " Cagle, a political confidant of Taylor, have
pleaded guilty to scheming together to defraud the bank and launder
money.

In FBI interviews, Cagle also said Taylor was involved.

In April, Martin and Cagle testified against the lawyer who helped put
the loan packages together.

The lawyer, Thomas W. Jones, was convicted of bank fraud.

All three now await sentencing.

Taylor, however, has not been charged.

He was not subpoenaed before the federal grand jury that indicted the
others.

And the FBI hasn't interviewed him.

Lawyers for Jones are pressing their own case about why investigators
have not questioned the congressman.

They have filed an unusual motion in federal court that raises
questions about whether a Republican administration in Washington
stopped the FBI from investigating a Republican congressman.

The defense attorneys allege that U.S. Attorney General John Ashcroft
or his assistants prohibited the FBI, the IRS and the U.S. attorney
for the Western District of North Carolina from interrogating Taylor
before a federal grand jury.

Taylor sits on the House Appropriations Committee and a subcommittee
that controls the Justice Department's budget.

Jones' attorneys have asked the trial judge, Graham C. Mullen, to
reverse Jones' conviction because of prosecutorial misconduct.

Forest A. Ferrell, one of Jones' lawyers, said last week that Martin
and Cagle both have told investigators that Taylor knew about the
fraud and took part in it.

"If they knew that then, why did they not interrogate him or ...
compel his attendance before the grand jury?" Ferrell asked in an
interview at his office in Hickory.

"They didn't do that and therefore I must infer that it's because they
could not."

Robert J. Conrad Jr., the U.S. attorney for the Western District of
North Carolina, would not comment last week when he was asked if he
had notified the Justice Department about the Taylor allegations or
comment on what, if any, instructions he had been given.

Monica M. Goodling , deputy director of public affairs at the U.S.
Department of Justice in Washington, also had no comment when asked
whether Ashcroft or his aides had blocked an investigation of Taylor.

Both officials referred a reporter to a document filed in federal
court last month in which Conrad said neither Ashcroft nor any of his
assistants barred his office or the FBI from "speaking to" or
"questioning" Taylor.

Conrad's response does not say, however, whether the Justice
Department barred Conrad from subpoenaing Taylor for questioning
before a federal grand jury.

Taylor's attorney, Joseph B. Cheshire V of Raleigh, said assistant
U.S. Attorney Richard L. Edwards called him about a year ago asking
for an interview.

"They made a request to talk to him [Taylor], but logistically it
never worked out," Cheshire said.

"It died on the vine."

The News & Observer left messages last week at Taylor's congressional
office in Asheville and at his home in Brevard.

He did not return the calls.

Taylor, 62, has represented 15 of the state's western counties since
1991.

In his congressional financial disclosure report this year, he valued
his stock in Blue Ridge Savings at between $5 million and $25 million
and said he owned $25 million to $50 million worth of stock in the
bank's holding company, Financial Guaranty Corp.

Overall, he reported assets of at least $34 million.

At Jones' trial, Ferrell introduced records of FBI interviews with
Martin and Cagle in 2000 and 2001.

In an interview, he said anyone who read those reports would find it
"amazing" that Taylor has never been compelled to tell what he knows
about the loans.

"According to the evidence," said Ferrell, a Democrat who was a
Superior Court judge for 24 years, "he knew just as much about it as
Hayes Martin, the banker. And 'Chig' Cagle, his political crony."

Ferrell used those FBI reports to hammer away at Martin -- the former
bank president -- during Jones' trial this spring, the transcript
shows.

"So he [Taylor] knew everything that you were doing, that you pled
guilty to, didn't he? Isn't that right?" Ferrell asked Martin.

"He [Taylor] was aware of everything, yes sir," Martin answered.

Fraudulent loans

Blue Ridge Savings Bank is a state-chartered savings bank with offices
in Asheville, Brevard and Hendersonville.

It is regulated by the state and by the federal Office of Thrift
Supervision because its deposits are insured by the Federal Deposit
Insurance Corp .

Based on the bank's capital, the maximum amount federal regulations
allowed it to lend to any one person was $500,000.

Martin was president of Blue Ridge from 1991 to 1996 , when federal
bank examiners began unraveling the fraudulent loans and forced his
resignation.

Martin, 56 , and Cagle, 70, admitted that they conspired from 1992 to
1995 to get around the $500,000 loan limit by lending money to Cagle
in the name of his mother, his mother's estate, and his daughter and
son-in-law, Jamie and Cheri Espinosa.

The loans totaled at least $1.3 million.

Cagle, who owned a Ford dealership in Sylva, told the FBI that he made
up a fictitious Social Security number for the two loans to the
Espinosas and forged both their names on the loan documents without
their knowledge.

The Espinosa loans totaled $467,000.

Martin and Cagle said they had known Taylor for 30 years and were
friends through Republican politics.

Martin was treasurer of the "Taylor for Congress" campaign from the
early 1990s to 1996.

Cagle had been chairman of the Republican Party in Jackson County, one
of the counties Taylor represents in Congress, and chairman of the
party in Taylor's district.

He told agents he had made many $1,000 political contributions to
Taylor.

The congressman's campaign contribution reports show Cagle gave him
$6,000 from 1990 to 1995.

Cagle said Taylor often called him on Thursday nights, when he
returned from Washington, to talk politics.

Taylor was a micro-manager, Martin said.

He told FBI agents that Taylor telephoned the bank 10 to 11 times a
day, that Taylor would regularly call him and ask, "How much money
have you made for me?"

And "When can you pay me dividends?"

Even when Taylor was not a member of the bank's board of directors, he
attended all of the board meetings, Martin said.

He said Taylor became a director in 1992 and subsequently became
chairman of the board.

Taylor's wife, Elizabeth, owned 20 percent of the stock in Blue Ridge
Savings Bank, according to Martin.

The rest was owned by Financial Guaranty Corp., the holding company
controlled by Taylor.

Martin said loans were approved by the bank's loan committee, which
included Taylor, his mother-in-law and sister-in-law, or by the board
of directors after the loan committee was dissolved.

According to Cagle, Taylor knew about Cagle's loans from the start.
Cagle said he met with Martin about June 1992 and asked to borrow
$950,000.

The FBI report says Cagle told agents, "Martin indicated that he
needed to check with Charles Taylor ... regarding the loan request.
Subsequently, Cagle was asked to step out of the room while Martin and
[an attorney] made a telephone call to Taylor. The loan[s] was
approved."

The first loan, made in the name of Cagle and his wife, was for
$500,000, the maximum allowed by the Office of Thrift Supervision.

But before the year was out, Cagle was back for more.

The FBI report on one of the interviews said, "Cagle recalled one
meeting in Taylor's office in which Taylor advised that the 'Feds are
giving us [blank] about the Espinosa loans ... that's your loan isn't
it?' Cagle stated that he [Cagle] responded 'Yes' and further
explained that Taylor knew that he [Cagle] was the recipient of the
money from the Espinosa loans."

When federal bank examiners, acting on a tip from the FBI, started
investigating the Cagle loans in 1995, they accidentally gave away the
FBI informant, Martin said.

Martin told FBI agents that an auditor from the Office of Thrift
Supervision left a document in the bank that named a female bank
worker who had given the FBI information.

Martin said that he told Taylor and that Taylor responded, "Get her
the hell out of there."

Martin said the woman was transferred to another branch office.

Ferrell said he tried to subpoena Taylor to testify in the Jones trial
last fall, when the trial was scheduled, and again in April when it
took place.

"We had a private investigator retained," Ferrell said.

"No progress, could not get to him. Tried it again this last time, for
about six weeks. Couldn't get him, couldn't find him."

__________________________________________________

Another day another messy Republican scandal.

Harry