A mentally ill man got a $22,500 settlement in a lawsuit against a Bryson City police officer who hit him multiple times with a baton and sprayed him with pepper spray.

The settlement came more than three years after the incident, which involved a 25-year-old with schizophrenia. The man sustained physical injuries and mental trauma after a Bryson City police officer hit the man repeatedly with a baton while serving involuntary commitment papers on him outside a downtown pizza restaurant.

The out-of-court settlement was reached through mediation in November.

The settlement is being paid by the town’s insurance company and not out of town coffers. In fact, the town didn’t even know it had been settled, said Bryson Town Manager Larry Callicutt.

Callicutt said he found out last week that the case had been settled by the insurance company back in November.

The suit by Jacob Grant claimed Bryson City Police Office Leon Allen sprayed him with pepper spray and hit him on the head, face, shoulders, stomach, back and legs, even after he was already on the ground. Grant’s family had petitioned for involuntary commitment because they feared Grant was not taking his medication.

When Allen tried to take Grant into custody, Grant asked to see the commitment papers, Allen couldn’t produce them, and a verbal argument ensued that allegedly escalated into Allen beating Grant. Ten witnesses stepped forward and filed police brutality complaints against Allen.

Allen, meanwhile, claimed Grant assaulted him. Grant was charged with assaulting an officer but those charges were dropped when Grant agreed to plead guilt to the lesser charge of obstruction of justice.

Allen was placed on leave while the department conducted an internal investigation, but was eventually reinstated on the force. He later left the Bryson police department and went to work in another county.

The settlement was signed on Bryson City’s behalf by Attorney Sean Perrin with Womble and Carlyle law firm out of Charlotte, who specializes in liability claims against police departments. The insurance company hired and paid for the attorney.

Grant was represented by Asheville attorney Andrew Banzhoff. The civil suit was filed almost two years after the incident, just shy of the statute of limitations cut-off.

Banzhoff said he could not discuss the settlement due to confidentiality provisions.

A lawsuit filed last week claims $17 million has been hijacked from public coffers over the past two decades by a mental health nonprofit.

A regional mental health agency filed the suit in hopes of recouping the lost money, as well as millions worth of property, that the nonprofit has amassed over the years.

The suit claims Evergreen Foundation strayed from its core mission of supporting mental health services in the region, and instead has been hoarding public money to build up its own war chest.

Smoky Mountain Center for Mental Health claims in the suit that millions in state mental health dollars were placed in trust with Evergreen Foundation, but Evergreen has violated that trust. Smoky Mountain Center oversees mental health services for a 15-county area and is based in Sylva.

Smoky Mountain Center for Mental Health established Evergreen as a support arm for the agency, but Evergreen has since severed its ties with Smoky Mountain Center and absconded with millions of dollars in cash and assets in the process, the suit claims.

Evergreen’s director, Tom McDevitt, previously served as the director of Smoky Mountain Center — in keeping with the historic practice of the sister organizations.

However, McDevitt resigned under pressure from Smoky Mountain Center four years ago amid allegations he used his position for personal financial gain. Even after he was no longer running the mental health agency, he managed to retain his position over the nonprofit Evergreen.

The relationship between the sister organizations became strained after McDevitt’s departure. McDevitt said he was not surprised by the suit, given that Smoky Mountain Center has been threatening one against Evergreen for two years. McDevitt also said that he is disappointed that both organizations will have to expend money on a lawsuit that could be used to help people with mental health issues and disabilities.

“Although Evergreen has tried to maintain a good working relationship with Smoky Mountain Center — and will continue to do so — SMC’s issue will now have to be resolved in court,” McDevitt said in a written statement.

The suit was filed by Attorney John Zaloom with Moore and Van Allen law firm in Raleigh. Evergreen has not yet filed a response.

Relationship gone awry

Evergreen once had a symbiotic relationship with Smoky Mountain Center. Evergreen was in fact created by Smoky Mountain Center, and for two decades Smoky Mountain Center ran the nonprofit.

Now, Smoky Mountain Center no longer has control over the nonprofit it birthed and has been unable to tap the $17 million in cash sitting in Evergreen’s bank account, according to the suit.

Evergreen amassed all that cash thanks to money funneled its way by none other than Smoky Mountain Center. Evergreen was initially set up by Smoky Mountain Center as a holding company for property — such as offices for mental health counselors, substance abuse treatment centers, group homes for developmentally disabled adults, and administrative office buildings for the agency.

State law prevented state agencies from buying and selling property, so Smoky Mountain Center used Evergreen as the holding company, which was the sole reason for creating the nonprofit in the first place.

In all, there are roughly 30 properties in Evergreen’s name that were bought and paid for by Smoky Mountain Center.

The lawsuit claims Evergreen unfairly profited off these properties — either in the form of rent or by later selling them — and failed to share those profits back with Smoky Mountain Center as its mission statement requires.

“The Foundation’s conduct has deprived SMC of the beneficial interest to which it is entitled in these properties,” the suit states.

The suit claims Evergreen was merely holding these properties “in trust” for Smoky Mountain Center, and the profits were not Evergreen’s to keep.

The suit claims Evergreen’s “breach and repudiation of the trust agreement” entitles Smoky Mountain Center to the $17 million in cash Evergreen has on its books.

At the very least, the suit says, the money given to Evergreen over the years by Smoky Mountain Center was not used for its intended purpose. The intended purpose was to support Smoky Mountain Center, and instead the money was used to enrich Evergreen, the suit claims, accusing Evergreen of “violation of the uniform trust act.”

Smoky Mountain Center has grown increasingly frustrated that it is expected to pay rent on buildings that it bought and paid for in the first place, allowing Evergreen to amass ever-more wealth.

In many cases, a contract between Smoky Mountain Center and Evergreen stipulates that a building should be provided for the “free and exclusive use” of Smoky Mountain Center, but regardless of the stipulation Evergreen has charged rent anyway.

The money to buy or build these offices to house mental health services originally came from state and federal funds. Nonetheless, Smoky Mountain Center has found itself paying rent to Evergreen — to the tune of $4.2 million over the years, according to the suit.

The lawsuit also alleges deceptive business practices and unjust enrichment by Evergreen. Specifically, Evergreen collected rent for years from a mental health counselors who occupied an office building in Waynesville.

The building, however, wasn’t owned by Evergreen. It is owned by Haywood County and leased to Smoky Mountain Center, yet Evergreen had claimed to be the landlord and was collecting rent from tenants, according to the suit.

Helping hand

The lawsuit alleges that Evergreen has been derelict in its mission of supporting mental health needs, and for “failing and refusing to use the trust assets for their intended purpose.”

From 2002 to 2008, it made only $33,000 in grants. Over the same period, its assets grew from $13.5 million to $20.7 million.

In the four years since McDevitt left Smoky Mountain Center, Evergreen has only provided financial assistance to the mental health agency one time, according to the suit. Evergreen in 2009 gave Smoky Mountain Center a $200,000 grant to help offset state budget cuts of $4.6 million.

But McDevitt claims Evergreen’s mission is not to provide financial assistance solely to Smoky Mountain Center, but rather to support the network of mental health providers in the region. Smoky Mountain Center once served as a service provider, but is now merely an administrative arm, McDevitt said.

“Evergreen has always existed for the benefit of the citizens of WNC with disabilities,” McDevitt said.

Evergreen has made a half dozen or so small grants for other mental projects over the past four years. Exactly how many and for how much is unclear as Evergreen has not provided that information to Smoky Mountain Center.

Evergreen’s unwillingness to share what grants it was making had been a source of contention with Smoky Mountain Center. The lawsuit asks the court to compel Evergreen to produce an accounting for the money coming in and going out, as well as its assets.

Smoky Mountain Mental Health appealed to Evergreen’s board of directors over the past two years to come to a better working relationship — one that would ultimately result in Smoky Mountain Mental Health being able to tap Evergreen’s wealth. But the two failed to come to a resolution, prompting the lawsuit.

At stake is the level of services available to hundreds of people in the seven western counties who suffer from mental illnesses. Smoky Mountain Mental Health has had to scale back mental health services in the face of state budget cuts.

The impact would have been lessened had Evergreen fulfilled its mission and provided financial support for Smoky Mountain Mental Health.

Evergreen’s board of directors has previously asserted that Smoky Mountain Center is trying raid its trust fund in what amounts to a money grab.

Businesses skirting Haywood County’s room tax laws should pay up or they could soon find themselves slapped with a lawsuit.

The Haywood County Tourism Development Authority plans to sue six accommodation owners who have repeatedly and openly neglected to pay the county’s 4 percent tax on overnight lodging, announced Executive Director Lynn Collins at the tourism board’s meeting last week.

“That will set an example,” Collins said. “Let them know that we actually are serious about it.”

Some businesses owe more than three years worth of room taxes, Collins said, and some have openly stated their defiance of the law.

Collins added that she sees places that are not paying the lodging tax with vacancy signs welcoming people. They are clearly doing business but either haven’t been charging the tax in the first place or have been pocketing it instead of remitting it to the county.

The tax is supposed to be tacked on to a tourist’s bill when they stay in a hotel, bed and breakfast or vacation home rental. Lodging owners then remit the tax they collect to the county on a monthly basis.

The tourism agency has not yet chosen which six taxpayers, or rather non-taxpayers, it will sue. But, Collins said it will go after “the most blatantly delinquent” properties.

“(Taking legal action) is the only thing you can do now,” said Al Matthews, Canton town manager and a member of the tourism board.

However, the board will continue to look for ways, such as changing legislation that would give them the authority to impose further sanctions, to bring more people into compliance. Currently, the authority has few options for punishing delinquent lodgers beyond lawsuits and liens.

For years, the tourism authority board has struggled with ways to bring accommodation owners into compliance. Each meeting, the board is presented with an list of people who owe overdue taxes.

“Every month we look at these penalties, and it’s the same people time after time after time,” said Marion Hamel, a tourism board member from Maggie Valley.

The revenue from the room tax is used to promote tourism in Haywood County.

In September, the tourism agency collected more than $96,000 from its 4 percent occupancy taxes — about $8,000 more than its estimated revenue for that month.

The increase is a vast improvement compared to August, when the actual amount of taxes collected came in 20 percent under the TDA’s year-to-date projections. The agency estimates it will bring in a little more than $863,000 this fiscal year.

Haywood County is on the hook for $700,000 after an arbitration panel found the county wrongfully fired the contractor overseeing renovations to the historic courthouse four years ago.

The contractor sued the county for $2.3 million after being fired from the job. The county claimed the contractor was “significantly behind schedule” and was “incapable” of finishing the job they were hired to do.

Meanwhile, KMD Construction claimed it was working off inaccurate blueprints. As a result, the project took a lot longer than expected, and was more expensive.

The county refused to pay for cost overruns, however. KMD says it was left holding the bag and wants the county to pay up. The suit cites wrongful termination by the county and negligence by the county’s architect.

A panel of three arbitrators versed in construction and contract law heard the case this summer, but just issued their decision last week to award KMD damages.

Steven Smith, the attorney for KMD, said the decision proves the contractor was in fact not doing faulty work, despite repeated public criticism by the county accusing KMD of shoddy work.

“I think this vindicates them. I think this exonerates KMD,” Smith said.

The firm won money for change orders the county had never paid for and the unpaid balance on their contract, money the county withheld for work that was in fact completed, plus interest.

The county isn’t pleased about paying up, but isn’t totally surprised either.

“We anticipated we were going to have to pay something,” said Commissioner Kirk Kirkpatrick.

The county had withheld more than $400,000 from what it owed the contractor, citing substandard performance and costs incurred by the county due to the rigmarole.

That money is still set aside, so coming up with the payment won’t be as bad as it sounds. That said, the county would have liked to come out a little better in the arbitration than it did.

“The award was probably more than what we anticipated, but it is obviously much less than what they ever offered to settle for,” Kirkpatrick said. The county attempted to negotiate a settlement but could not talk KMD below $2.3 million, Kirkpatrick said.

In addition to the monetary award, the arbitration panel found that KMD had been wrongfully fired by the county.

Smith said KMD was most excited about that.

“Anytime they did a public bid on a project they had to disclose they had been terminated from a public project and that is huge,” Smith said. “That is like a death sentence.”

Smith said the real issues with the job lay with the architect, which had faulty plans and provided inadequate design direction. But the architect, which apparently had the county’s ear, would blame the contractor.

“I think it is really unfortunate the county didn’t recognize from the outset this is the architect’s fault,” Smith said. “I think they were misled or at least the architects chose to eliminate certain details from the critical decision making process.”

Haywood County commissioners are now deciding whether to go after the architect of the job. They will weigh how much it would cost to sue the architect versus how much they could feasibly recover.

Legal fees have already proved a costly proposition.

The county spent more than $400,000 defending the lawsuit by the contractor.

Kirkpatrick said the county thought long and hard before firing KMD from the job, knowing that a lawsuit wouldn’t be out of the question.

By the same token, the county was paying rent to house its administrative offices elsewhere while work on the courthouse dragged on and on. And, the most important thing was that work would be done properly.

“It was a priority to make sure it was done in a manner the people of the county could be proud of,” Kirkpatrick said. “You certainly don’t want to screw up a building that had been there since the 1930s.”

The fight between Swain and Graham counties is growing ever deeper in a dispute marked by lawsuits, counter suits and pleas to the General Assembly over who is entitled to a greater share of payments off the Fontana Dam.

The stakes are high — hundreds of thousands of dollars are on the table — for the two small, rural counties. The row centers over payment in lieu of taxes, or PILT, the money that counties get when federal land holdings erode the property tax base.

Swain and Graham have gotten PILT funds monthly from Tennessee Valley Authority since the Fontana Dam was erected in the early ‘40s.

The formula for calculating how much each county is entitled to was thrown into dispute last year, however. The N.C. Department of Revenue ruled that Graham should get a bigger share since more of the generators were housed on Graham County’s side.

The ruling in Graham’s favor will cost Swain more than $200,000 a year.

But that wasn’t quite enough. Graham also wanted six decades of back payments they felt they were owed — up to $15 million. So in January, they filed suit to get it.

Swain County, of course, disagrees. They’ve filed a countersuit, decrying Graham’s claims on a multitude of different grounds, hoping that one will stick. Too many years have passed, Swain argued, and if Graham wanted the money, well, they should have spoken up sooner.

But they didn’t stop there. Swain County has countersued claiming that if anyone was slighted their fair share from TVA and was entitled to a back payments, it should be Swain.

While the latest state formula for calculating PILT payments is based on TVA’s property holdings in each county, that’s not always been the case.

Until 2009, state law said that each county was supposed to get PILT money based on the percentage of lost tax revenue. Since Swain gave up more land when the lake was created — 16 percent of the county, as opposed to Graham’s 2.5 percent — it lost far more tax revenue, and thus should have been getting a greater share of TVA’s PILT money all those years.

“If the Department of Revenue had properly calculated the percentage of lost tax revenue to each county and distributed the PILT revenue accordingly, Swain County would have received substantially more PILT revenue than Graham County received,” said the countersuit.

Swain seeks new formula

Concerned, though, that the counterclaim wasn’t quite enough to solidify their position, Swain County commissioners got together to formulate other tactics.

To add firepower to their arsenal, Swain Commissioners are seeking special legislation from the General Assembly.

Swain wants to change the way PILT payments are calculated. Instead of awarding PILT money based on the value of TVA’s assets — such a which county the generators sit in — it should be based on the value of the land removed from the property tax roles by the lake as a whole.

While Graham’s got more of the hydropower equipment on its side of the county line, Swain has a good deal more land under water than Graham does. Swain stands to benefit substantially.

Swain’s proposed formula for calculating TVA payments is consistent with the PILT formula for national forest service land. Each county gets PILT money based on the acres of land that lie in the national forest and thus have been removed from the tax roles.

Swain also wants the property line between the two counties redrawn. The historical property line was the center of the river channel, but that’s not the boundary currently recognized currently by the state — instead the latest boundary line awards more land to Graham. Swain wants the historical boundary be reinstated, since the more land Swain can claim its lost when the lake was flooded, the more it could get in PILT payments.

Chances?

Currently, Swain doesn’t have anyone to sponsor the legislation in either the Senate or House so face, and could be a tough sell.

In the House, Swain is represented by Rep. Phil Haire, D-Sylva. If Haire chose to take up the cause, he could likely face opposition from Rep. Roger West, R-Marble, who represents Graham.

In the Senate, Sen. Jim Davis, R-Franklin, may opt to steer clear, as he represents both counties.

None have yet weighed in, and Swain commissioners were reluctant to address the matter, saying they had a maneuver in the works it was best not to comment on.

Graham officials are similarly tight-lipped, though they declined to speak because the issue is pending litigation.

“We have approached people in the General Assembly, but we haven’t done anything one way or the other,” said Swain Commissioner David Monteith.

For Graham’s part, their attorney Charles Meeker, who is also the mayor of Raleigh, said the county has rejected all of Swain’s claims outright.

“We don’t believe that they are factually accurate,” said Meeker, and that, he said, was that.

The suits are scheduled to come before the Graham County Superior Court in early April, though Swain has applied for a change of venue. There is, as yet, no timeline for if or when the resolutions will see the General Assembly floor.

A lawsuit waged by Swain County Sheriff Curtis Cochran against the county was shot down in court this week.

Cochran accused commissioners of cutting his pay in 2006 as a form of partisan retribution. State statute protects sheriffs from politically motivated pay cuts, making it illegal for county commissioners to reduce the sheriff’s compensation or allowances following the outcome of an election.

In this case, Cochran argued the all-Democratic board of commissioners retaliated against him after he narrowly beat out a long-time Democratic sheriff.

However, Cochran’s civil suit was thrown out by Judge Allan Thornburg this week following a hearing on Jan. 24. Cochran’s attorney David Sawyer said they plan to appeal the decision to the N.C. Court of Appeals.

The judge did not stipulate why he was dismissing the case, so it’s unclear which of the many defenses put forward by the county was the winning one.

One interesting argument in the case centered around whether county commissioners indeed reduced Cochran’s compensation as he claimed. While it seems like a clear-cut matter — either they cut his pay or they didn’t — it gets a little complicated.

Following an election upset by Cochran in 2006, commissioners put an end to a long-standing slush fund enjoyed by prior sheriffs. Prior sheriffs were paid a flat rate to feed jail inmates and could keep the surplus to use as they pleased, whether it was pocketing the difference or using it to subsidize operations around their office.

When making his case that the lost meal money equated to lost pay, Cochran needed to prove that previous sheriffs made a profit on the meal deal and by how much.

“The problem is we don’t know what that number is,” said Mark Melrose of Melrose, Seago and Lay, who represented the county in the suit.

Melrose said any dollar amount would be “highly speculative.”

The county never made prior sheriffs document what they were actually spending on inmates’ food, but instead dolled out a lump sum with no questions asked.

The lack of records means Cochran could not conclusively show how much previous sheriffs made on the meal deal, and thus how much he supposedly lost when it was taken away.

The previous sheriff got $10 per inmate per day. Sawyer said Cochran has complete records of his cost to feed inmates, so while the surplus made by past sheriffs remains a mystery, it would be easy to calculate what Cochran was due if the old formula was still in effect.

The state statute not only bars commissioners from cutting the sheriff’s pay, but also for reducing his “allowances.” Cochran and the county sparred over whether the inmate meal fund qualified as an “allowance.”

“His contention was that it was an allowance. Our argument was that it was a reimbursement for expenditures,” said Melrose.

Rather than paying out a lump sum, the county now reimburses the sheriff for actual food costs at the jail — but it still counts as a reimbursement, not an allowance, Melrose said.

In a dual claim, Cochran sued the county for breach of contract.  

“Cochran argued there was an implied contract based on the county’s dealing with prior sheriffs, but you can’t piggy back on top of that,” Melrose said.

The county commissioners never “implied” they would continue funding inmate meals the same way they had with prior sheriffs. In fact, government entities legally can’t make verbal promises to do business with someone, Melrose said, but must do business in the open through written public contracts.

The county argued that it had sovereign immunity in this case, meaning it could not be sued for such things. Sawyer said granting the county sovereign immunity in this case renders the state statute moot.

“If soveriegn immunity applies here, it is questionable whether there is any mechanism to enforce that statute,” Sawyer said. “We feel it is an important issue for the Court of Appeals to look at.”

But the county did not hang its hat on that defense alone, and it is ultimately not known whether it was the deciding factor for the judge.

“In order to defend the county, we had to recreate all the events of the food being supplied to the inmates for a long time to see what was the practice, what was paid, how was it paid, was there a profit. It was very fact intensive,” Melrose said.

Mike McConnell, an attorney with the same firm as Melrose, was the primary lawyer for Swain County in the case.

Lowest sheriff salary

Auditors had repeatedly warned the county the meal deal wasn’t exactly kosher and should be ended, but it wasn’t until Cochran came into office that commissioners heeded the advice. The county claimed it was simply time to embrace a new, better way of doing business.

At the time, Cochran asked commissioners for a salary increase if they were going to cut out the meal deal.

When Cochran filed the suit he was one of the lowest paid sheriffs in the state with a salary of just $38,000. He’s gotten incremental raises from commissioners since then, bringing his salary to $47,000, but he is still one of the lowest — if not the lowest — paid sheriffs in the state. His salary is the lowest according to a list of sheriff salaries put out by the UNC School of Government, but it shows no data for a few counties. Only two other counties showed sheriff salaries of less than $50,000.

In the end, the county may have been better off giving Cochran more of a raise to offset the loss of the meal deal rather than paying the costs of the lawsuit. County Manager Kevin King said he did not know how much the county had spent in legal costs defending the suit so far.

“To be honest I have not received any bills yet,” said King.

However, Melrose said the county has been billed regularly for work in the suit since 2008.

“There has been a good bit of billing,” Melrose said. “There have been three or four depositions and court hearings and time spent preparing the case. The legal arguments took a lot of time and research.”

King did not return subsequent messages and emails again requesting the cost of the lawsuit to the county. The county hopes to be reimbursed for court costs, but those amount to less than $1,000, a small sum compared to the legal fees for the attorneys.

“The sheriff is willing to talk with the county at any time and would like to resolve this in amicable but if not the appeal is the only other route that we have,” Sawyer said.

When asked whether the county was pleased the suit was dismissed, King directed questions about the lawsuit to county commissioners. Commissioner Chairman Phil Carson did not return a message.

“The only reasonable verdict here is for Sheriff Ashe,” Patrick Flanagan told the jury. “He did not commit any wrongdoing here.”

The eight-person jury in the Bryson City federal courtroom agreed, taking slightly less than an hour to clear Jackson County Sheriff Jimmy Ashe on five complaints that alleged he used his position and influence to interfere with the business operations and free speech of David Finn, owner of Blue Ridge Public Safety. Blue Ridge Public Safety is a private security force hired by upscale developments in the greater Cashiers area to patrol their communities.

The case pitted two of Jackson County’s leading law enforcement officers against one another in the federal district courtroom of U.S. District Judge Martin Reidinger.

Finn’s lawyer, Frank Contrivo Jr., spent three days calling witnesses, reviewing subpoenaed phone records, and otherwise building the case against Sheriff Ashe.

Ashe’s lawyer, Patrick Flanagan took only a few hours to offer a defense.

His message was simple: The only evidence that Ashe had interfered with Finn’s contracts was circumstantial, and Ashe’s own testimony that he had not used his office to put Finn under duress was credible.

Finn first sued Ashe in 2007, accusing the sheriff of using his position to scuttle the sale of Blue Ridge Public Safety to an Asheville buyer named John Hale.

The complaints alleged that Ashe, working in concert with a lawyer for an influential group of Cashiers-area residents, inappropriately shared information that led to a slew of investigations into Finn’s business, which holds security and patrol contracts worth more than $1 million.

The day before Flanagan called his defense witnesses, Contrivo withdrew the leading claim driving the case thus far –– that Ashe had actively participated in ruining the sale of Blue Ridge Public Safety to John Hale for $1.5 million.

With that claim off the table, the case came down to whether Ashe interfered with six existing Blue Ridge Public Safety contracts and on whether he infringed on Finn’s First Amendment right to free speech.

According to Finn, Ashe was motivated to disrupt the business of Blue Ridge Public Safety because of a disagreement between the two men over proposed legislation that would have given company police broader powers, including jurisdiction on U.S. highways adjacent to the communities they patrol.

An important component of Contrivo’s case for Finn was the extent to which Ashe communicated with Cary-based Lawyer Mark Seifert and his clients. Seifert created and represented two groups: the Committee of Sapphire Homeowners and the Sapphire Association of Concerned Citizens Committee.

Seifert testified that he was hired by Cashiers property owners in 2006 to investigate Finn and that his goal was to put Blue Ridge Public Safety out of business.

Contrivo alleged that Ashe and Seifert “were singing a duet” as they worked in concert to manufacture claims against Blue Ridge Public Safety that hurt the business and ruined contracts. He showed through phone records that Ashe and Finn had had extensive contact with one another –– nearly 150 calls amounting to 30 hours of conversations.

“What we’ve seen in the past three days is a snapshot of the nightmare experienced by Mr. Finn’s business,” Contrivo told the jury in his closing argument.

Flanagan, who served as a captain in the U.S. Army JAG Corps, presented an argument that was repetitive, process oriented and clinical. He focused on the fact that not one witness testified to Ashe’s direct participation with Seifert or even to the fact that Ashe had spoken ill of Blue Ridge Public Safety.

“What we didn’t hear at all –– there was no evidence, no testimony –– was that the sheriff has ever made a derogatory comment about Mr. Finn or his company,” Flanagan said.

In contrast, Contrivo at times raised his voice to cajole the jury and at other times spoke in a barely audible whisper to contribute to the gravity of the moment. He tried to paint a picture of Ashe as an expert at behind the scenes deal-making who managed to get away with a crime by staying at arm’s length from it.

“We hear about a man who was turf conscious, jealous of his power, and jealous of what he perceived as a threat to his power,” Contrivo said, pointing at Ashe.

Contrivo asked the jury for $200,000 worth of damages to cover Finn’s lost contracts and legal fees. The jury wasn’t convinced. They cleared Ashe on each charge and entered zeroes in the spaces on the verdict sheet that asked for award amounts.

After the trial, Ashe said the verdict upheld his faith in the system.

“This has been a long process that needlessly burdened the taxpayers of our community,” Ashe said. “The quick verdict of the jury attests to what we have asserted from the beginning of the matter.”

Ashe also indirectly expressed his dismay that he had spent so much time over the past two years embroiled in the civil suit.

“There is no business more important than the people’s business, and I am proud of the confidence that the good people of Western North Carolina have shown in me and our deputies,” Ashe said. “I look forward to many more years of public service, and it’s time to get back on task.”

Neither Finn nor Contrivo responded to requests from comment on the case after the trial, so it is not clear whether they plan to appeal the verdict.

Flanagan said a potential appeal could take two forms. In the first scenario, Contrivo could make a motion to Judge Reidinger to set aside the jury’s verdict in his final judgment, which will be entered in the next few weeks.

A second approach would be for Contrivo to file an appeal with the Fourth Circuit Court of Appeals in Richmond, Va. within 30 days of the final judgment being entered.

A malicious prosecution lawsuit by a woman accused of misappropriating flood relief donations should be dropped, according to the recommendation of a federal magistrate reviewing the case.

Denise Mathis, former director of the Haywood County Council on Aging, claims she was wrongly accused of mismanaging the finances of her former agency. Mathis lost her job and was charged with 14 counts of embezzlement in 2006 for allegedly misappropriating $100,000 in flood relief donations — one piece out of the hundreds of thousands of dollars that poured into the county in the wake of massive flooding along the Pigeon River that wiped out dozens of homes and businesses in 2004.

In an attempt to clear her name, Mathis sued District Attorney Mike Bonfoey and Waynesville Detective Tyler Trantham for malicious prosecution and accused them of inadequately investigating her case. She also sued them for conspiracy and making false public statements.

But the federal magistrate found no evidence that Bonfoey or Trantham set out to malign Mathis. They were acting in their official capacity as a prosecutor and police detective and cannot be sued simply because the target of an investigation doesn’t like the outcome.

“To do so would subject every prosecutorial decision, every investigation that leads to charges, and every decision of a grand jury to be second guessed by a federal court,” Magistrate Dennis Howell wrote in his recommendation.

Whether the case is indeed dropped will be up to a federal judge, who will presumably take the magistrate’s recommendation into account.

“The Magistrate’s ruling confirms the town’s strongly held belief that Officer Trantham acted professionally in all respects and that absolutely no wrongful acts were committed by him or town employees,” Waynesville Mayor Gavin Brown said.

The embezzlement charges against Mathis were ultimately dropped. While the $100,000 in question did not make it into the hands of flood victims as donors intended, it likewise didn’t go into Mathis’ pocket, a police detective and financial investigator determined. It was used to cover salaries and overhead of the nonprofit agency — and it therefore would be hard to make the embezzlement charges stick in court, Bonfoey said of his decision to drop the charges.

A Tennessee man claims he was defrauded of $328,000 by the players behind Cataloochee Wilderness Resorts, a planned mega development in Haywood County that is in the preliminary conceptual stages.

Plans for Cataloochee Wilderness Resorts call for a 4,500-acre development in Jonathan Creek. Five years into the project, however, the developers still do not own any land.

They have neither secured financing for the project nor lease agreements from retailers to occupy a massive shopping center. The project remains controversial due to its scale. Locals have expressed skepticism about it ever coming to fruition.

The lawsuit alleges that Dean Moses, a consultant for the project, got an investor to put up money for down payments on land but then diverted the money to other uses, including the personal gain of Moses and his wife, who live in Clyde. It’s not the first time Moses has courted investors for a speculative development in Haywood County. (see “Lawsuit echoes of past business dealings.”)

John Thornton, a developer from Chattanooga, is suing Moses for fraud, conspiracy, and breach of contract for diverting money earmarked for property purchases to other uses.

Thornton was courted by Moses to invest in the project in 2005. He was first introduced to Moses by a Knoxville attorney, Robert Worthington. Worthington was aiding Moses in the pursuit of Cataloochee Resorts and encouraged Thornton to invest in the project. After their introduction, Thornton met with Moses several times in Knoxville to structure the terms of a joint venture agreement.

The two forged a partnership, creating a corporate vehicle to acquire land for the development. Thornton put up $328,000 to be used for down payments on land, stipulating in the joint venture agreement that if the land deals didn’t go through, Thornton would get his money back, according to Thornton’s suit. The money was held in escrow by a title insurance agency, Investors Title.

After putting up the money, Thornton was told in 2005 that the purchase of property was “imminent.”

“Moses continually represented to Thornton that property was being acquired, that loans were being arranged, that contractors were being contacted, that the projects were moving along,” the suit alleges. But nearly a year later, land had still not been purchased.

In June and July of 2006, Moses arranged two separate transfers of Thornton’s money out of escrow and into a new account.

Moses failed to tell Thornton about the transfers, according to the lawsuit. When Thornton learned of the money transfer, Moses refused to tell Thornton how his money had been used, the suit alleges.

Thornton’s money was transferred into an account held by an entity called Cataloochee Companies. The original entity created by Thornton and Moses had been called Cataloochee Corporation.

Thornton claims the creation of a new entity constitutes another violation of the joint venture agreement. To protect his financial stake, Thornton had stipulated that no additional shares could be awarded that would dilute his 50 percent stake in the development, according to the suit. Moses denies agreeing to such a stipulation.

Along with the $328,000 earmarked for land purchases, Thornton loaned another $275,000 to cover operating expenses for the project. The expenditure of those funds are not contested in the lawsuit.

Arms length

Frank Wood, president of Cataloochee Companies, the entity currently pursuing the development, distanced himself from the lawsuit and from Moses.

“We have absolutely nothing to do with that,” Wood said. “I am not a party to it and absolutely don’t care about it.”

Wood said that Moses is “strictly a consultant” on the project.

In his lawsuit, Thornton objects to the characterization of Moses as merely a consultant, as he considers Moses a major player.

Meanwhile, Moses referred to himself as a “manager” of Cataloochee with the “authority to conduct, manage, and control the affairs and business of the company,” according to Moses’s response to the lawsuit. He also described himself as the primary agent for negotiating deals with property owners, arranging leases with retailers, and securing financing.

Wood said that the company Thornton originally invested in is no longer the developer of Cataloochee Resorts.

“That’s an entity that died,” Wood said.

However, Moses’s response to the suit described Cataloochee Companies as the successor to the original entity created by himself and Thornton, Cataloochee Corporation.

Moses responds

In response to the lawsuit, Moses claims that Thornton isn’t entitled to get his money back because the property deals are still pending. Just because the deals haven’t taken place doesn’t mean they fell through; therefore, there is no reason to refund the money.

At one point, Cataloochee developers had property options on just a few tracts. But those have since expired.

Moses claims that Thornton understood the speculative nature of his investment.

“Thornton was aware that Cataloochee owned no real estate and has no assets other than a business plan and the development plan,” Moses’ reply to the lawsuit states. Thornton “was fully aware of the status, nature, and risks associated with the proposed development.”

Further, Moses points out that Thornton’s loans were to be repaid out of excess funds available — of which there aren’t any.

Moses claims he didn’t need Thornton’s permission nor was it necessary to notify him if his money was transferred out of escrow into another account. He states that the funds were used appropriately “to pay debts and obligations of Cataloochee.”

“Moses denies any fraud or deceit in connection with such transfer,” Moses stated in his reply to the suit.

Moses points out the money in escrow was not actually Thornton’s, but belonged to Cataloochee and had merely been placed in escrow to facilitate property deals. Thornton’s original loan was funneled through Cataloochee on its way to escrow, so when it was no longer needed in escrow, it was appropriate to transfer it back to Cataloochee rather than back to Thornton.

Moses has countersued Thornton for breach of contract. Moses alleges Thornton hamstrung the project by failing to put up more money. Thornton also refused to use his personal credit to help guarantee loans or to help raise additional capital, Moses complained.

Moses described Thornton as “unavailable” and “uncooperative” in advancing the project.

“Moses was left with the task of running the day-to-day operations, as well as arranging for and obtaining loan commitments and all other tasks involved in trying to advance the project’s development,” Moses wrote in his countersuit.

Moses also sued Thornton for defamation for a comment made to the Knoxville newspaper about the suit.

Personal gain?

Thornton is also suing Moses’s wife, Colleen. The suit alleges that Colleen withdrew $52,000 of Thornton’s money from the Cataloochee account and deposited it into a personal savings account in her name at a Blue Ridge Savings Bank.

Colleen was listed as a signatory on the Cataloochee account in Knoxville. Thornton discovered that Colleen was writing checks out of the account and depositing them into her personal bank account, thanks to bank records obtained through his lawsuit.

“Substantial other funds were removed from such account for the personal living expenses of Colleen Moses and Dean Moses,” the lawsuit alleges.

Bankruptcy in the midst

Meanwhile, another player in the Cataloochee Wilderness Resorts development has filed for bankruptcy in Knoxville. Robert Worthington, the Knoxville attorney who introduced Thornton to Moses, has accumulated more than $75,000 in credit card debt and a $240,000 bank loan tied to Moses and Cataloochee Companies, according to bankruptcy filings.

Worthington listed more than $75,000 in debt on six credit cards that he claims were jointly used by Moses, who is listed as a co-debtor for the six cards. Worthington is disputing debt on those cards, with a citation in the filing that they were “used by Cataloochee.”

Moses is also listed as a co-debtor on a $240,000 loan from BB&T. Worthington used his name to guarantee the loan for Cataloochee Corporation.

Fraud lawsuit echoes of past business dealings

Does the name Dean Moses, the subject of a financial fraud lawsuit by an investor in Cataloochee Wilderness Resorts, ring a bell?

It should. Moses was the figurehead behind a string of failed business proposals for the closed-down Dayco factory in Waynesville — a saga that spanned several years and eventually ended in bankruptcy court.

Moses and his business partners created one company after another with plans to develop the dormant industrial site. They solicited capital from private investors and lending institutions, racking up debts on company credit cards in the meantime.

When one company hit a financial dead-end, it was dissolved and a new one created.

The third company in the chain actually landed in bankruptcy court. Undeterred, Moses and his partners created yet a fourth company touting an all-too-familiar development plan. They hoped to leave their debt behind in bankruptcy court while walking away with the property intact and trying again under a new entity.

The bankruptcy court balked and instead ended the cycle by foreclosing on the property. The Dayco site eventually became the property of the Haywood Advancement Corporation and is now a shopping center anchored by Super Wal-Mart.

Landowners have won a lawsuit against Haywood County claiming they were victims of overbearing enforcement of erosion control laws.

Judge Laura Bridges issued her ruling this week, although the case was heard six weeks ago. Bridges ruled in favor of the landowners, Ron and Brian Cameron, who had sued the county to get out from under its erosion enforcement citing a state forestry exemption.

Landowners engaged in forestry are held to less stringent erosion standards than developers. Ron Cameron thinks the county’s erosion control officer Marc Pruett simply doesn’t like the fact that the state forestry exemption trumps the county’s erosion laws.

“Is his argument really with the forest exemption, and I am really just being used as scapegoat?” Cameron said in an interview this week. “Between our costs and the county’s costs, we have spent half a million so far arguing over whether Marc Pruett should have control over this land or the state forest service should have oversight of this land.”

The Camerons built a 1.5-mile road network on a 66-acre tract in the Camp Branch area of Waynesville, claiming it was for logging.

The county argued that the Camerons were merely hiding behind the logging exemption, however. The county claims the Camerons’ real intention was to develop the property, witnessed by the creation of a development master plan, registering a subdivision name with the county and applying for a septic tank evaluation.

Ron Cameron said he was merely exploring options. At the time he built the roads in question, his only motive was forestry, he said. Cameron points to the four different foresters he hired since buying the property six years ago as proof that he was interested in pursuing forestry. The county counters that he never did any logging other than cutting trees that lay in the path of the roads he built.

Judge Bridges apparently wasn’t comfortable assigning hidden motives to the Camerons.

“The Camerons have not logged the property but neither have they developed the property,” Bridge wrote in her ruling. “There are no signs on the ground that a development is planned. No lots have been surveyed or staked. No subdivision roads have been created.”

Bridges, who toured the property as part of the trial, called the road network built by the Camerons “crudely constructed logging roads and not development roads.”

The county claimed the Camerons needed to bring their roads into compliance with the county’s erosion laws. After the Camerons filed a lawsuit protesting the county’s jurisdiction over their roads, the county responded with a retroactive $175,000 fine against the Camerons for refusing to come into compliance.

“The fine was issued in my opinion as an intimidation technique,” Cameron said in an interview this week.

Cameron is seeking his attorney fees and court costs in the amount of $260,000 to be paid by the county.

“We tried various ways to not let this progress this way,” said Attorney Jeff Norris, who represented the Camerons.

Cameron said he offered to drop the case and not pursue damages or attorney fees if the county would drop its fines and let Cameron return to his forestry exemption. The county would not let the Camerons walk away without bringing the roads up to county standards, however.

It is not yet known whether the county will appeal the ruling, staving off the Camerons’ demand for attorney fees barring a second ruling.

“The county is disappointed,” Chip Killian, the county attorney, said of the ruling. “We are looking at it closely and will have to make a decision whether to appeal or not.”

The county has to file notice of its intent to appeal within 30 days. The county could preserve its right to an appeal by filing notice within the window, buying time to work out the details of its appeal and make a final decision whether to go through one.

Both sides in the case have argued that a terrible precedent would be set if the other side won. If the county wins, landowners everywhere will shy away from logging for fear they could never change their mind without their motives being questioned and triggering retroactive fines. On the other hand, if the county loses, it would provide a road map for developers who want to exploit the forestry exemption.