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Wednesday I: Center v. Foundation
posted at 2008-04-02 23:07 | Last modified 2008-04-03 13:32
Another interesting day at the Wake County Courthouse today, where the criminal trial of former State Rep Thomas Wright slogged through a third day. It started with testimony from the corporate representatives who okayed the charitable donations to the Community’s Health Foundation that ended up in Wright’s pocket.
It wasn't a great moment for the prosecution: all three said they had no opinion about what a charity ought to do with their money, and two allowed they’d be okay with Wright using it to reimburse himself for past outlays on behalf of the charity. (We haven’t yet seen documentation of those expenditures, but Wright’s attorney Doug Harris says we will before it’s over.)
The next witnesses seemed to have been called specifically to torpedo Harris’s contention that Wright’s career was untarnished except for one failure – the mortgage deal.
Both were representatives (past and present) of Southeastern Community Credit Union. They testified that Wright had taken out an unsecured $10,000 line of credit in the Foundation’s name, run it down to literally zero, and then defaulted. We also learned that Wright had a rocky personal credit history, having accrued a number of charged-off (aka defaulted) debts in the past.
The difference this time was that the bank loaned the money to the Foundation, not Wright, and it was a business loan specifically aimed at minority economic development and job creation. (No, no one explained how it was supposed to create jobs – it seems no one even asked Wright how he’d use the money. Must be nice to be a public official.) Because the loan was for Economic Development, the bank was eligible for reimbursement when Wright defaulted on it.
Where's Umphlett?
After that, an SBI agent took the stand. But it wasn’t the one we were expecting. Turns out Special-Agent-in-Charge Johnnie Umphlett had a medical emergency – kidney stones – that necessitated surgery this afternoon. So instead, we got the second agent on the case, K. Perry, who’d attended Wright’s SBI interviews with Umphlett, but hadn’t taken his own notes, so he had to use Umphlett’s synopsis instead – a point of some legal contention.
Perry’s testimony was interesting stuff. First, he confirmed that there had been two applications, not one, for financing for the building Wright wanted to buy for the 1898 museum – a house owned by James and Helen Lofton, whose son James Wayne was Wright’s friend. James, the father, was one of Wright's Foundation directors.
Application #1
The first bid was submitted in the name of the New Hanover Community Health Center. Wright helped found the Center in 1992 and sat on its board of directors. Perry said Wright told him he made the bid because the Center needed more space (although it had already bought an adjoining lot). He said Wright couldn’t say whether the board had ever discussed purchasing the property, and said the Center’s Treasurer didn’t know about it either.
For some reason, Wright’s offer on behalf of the Center didn’t work out. He told the SBI that the Center didn’t have the liquidity needed to buy the property and didn’t want to go into debt. (One wonders how they weighed in if he hadn’t told them he wanted to buy it. But I digress.)
Application #2
Perry testified Wright told him the second loan application for the property was prepared by himself and Lofton, who had power of attorney for the sellers, Lofton’s parents. The Foundation application said Wright would secure federal and state grants to pay back the loan. It also said Wright had made an earnest payment of $25,000, but Perry testified Wright told him no earnest payment was ever actually made.
That application was accepted. Wright’s attorneys say paperwork for the loan was initiated March 5th, ten days before Torlen Wade wrote his letter falsely promising state money, so the promise of the grant couldn’t have influenced loan officer Ronnie Burbank’s decision.
But I’m starting to wonder whether the March 5th bank paperwork might not have been for the first loan application, the one on behalf of the Center. Perry testified that financial documents for the Center were later found in the file for the Foundation’s loan application.
For whatever reason, the loan was approved. Wright and the Foundation defaulted on it about a year later. The Loftons got their bank note paid off in the deal, but forfeited any profit they might have made on the property. That’s all we know for now, but I’m sure we’ll hear plenty more from the defense tomorrow.
The rest of today’s story is over here.
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