CPA testifies of Joneses’ cash woes

— A certified public accountant hired by the government to analyze the financial records of millionaire real estate developer Aaron Jones and his wife, Abby, testified Wednesday that the couple was having financial “ liquidity problems” when their pricey Little Rock home went up in flames on May 30, 2008.

Jones, 34, is on trial in federal court in Little Rock, accused of intentionally torching the two-story, 5,700-square-foot home at 43 Chenal Circle in west Little Rock for the purpose of collecting insurance money. He is charged with using fire in the commission of a federal felony, as well as three counts of mail fraud related to the mailing of two insurance claims and a check to pay off a lien-holder.

If convicted in the jury trial before U.S. District Judge Brian S. Miller, Jones, originally from Benton, faces up to 30 years on the fraud charges and 10 years to life on the fire charge, in addition to fines. The trial could last three weeks.

Prosecutors focused Wednesday on Jones’ finances to show that debts were closing in on him at the time of the fire, giving him a motive for arson.

Clarence “Al” Hamilton, a forensic accountant who was once chairman of the accounting department at the University of Central Arkansas in Conway, testified that he reviewed eight accounts that the Joneses used at Summit Bank.He also reviewed the records of development companies in which Jones was financially involved, other banks that loaned him money, and the real estate firms that handled the purchases of the $1.6 million Chenal Valley home in 2005 and the couple’s $1.2 million Florida vacation home in 2006.

According to previous testimony, the fire-damaged Chenal Valley home sold for $300,000 in February 2009, and the Florida home sold for $646,000 in March of this year. The lower sales prices were attributed to declining property values.

Hamilton agreed with defense attorney Tim Dudley that at the time of the fire, Jones had an “excellent personal financial statement,”that his net worth was “substantial” and he had a good credit score. But Hamilton said Jones’ investments were concentrated in real estate, an industry experiencing rapid declines, and that in the first five months of 2008, he had to borrow about 80 percent of his funds from the accounts of various businesses, perhaps without his business partners knowing.

“His liquidity was not good at all,” Hamilton said, referring to Jones’ ability to quickly convert property into cash.

While Jones’ self-prepared statements revealed that he had a $4 million net worth - a measurement of his assets minus his liabilities - that “is not as important as liquidity,” Hamilton testified. He said liquidity is “an important component in determining whether you’re struggling financially.”

Focusing on a 13-month period between June 1, 2007, and June 30, 2008, Hamilton said the Joneses took in and paid out roughly $1.3 million, or an average of $100,000 a month. He testified that the couple’s spending during that time included the purchase of a Toyota Land Rover and a Mercedes, $4,800 for Christmas decorations and $53,000 for clothing.

He broke the clothing expenses down to $36,000 for Abby Jones, spent mostly at Feinstein’s, and $17,000 for Aaron Jones, spent primarily at Baumans Fine Men’s Clothing, both in the Heights neighborhood of Little Rock.

The couple paid a $9,200 mortgage payment each month for the Little Rock home and a $6,500 payment on the Florida house. Then when an employee of Aaron Jones’ moved out of a Benton house that Jones owned, he also took over that $990 monthly payment.

Meanwhile, Aaron Jones made a monthly $4,500 contribution to a retirement account, Hamilton testified.

He showed jurors checks that Jones wrote on the accounts of Central Arkansas Developers, his law firm and other businesses that ended up being deposited into either his personal account with his wife or his personal investment account. Some of the checks were made out to a different payee, didn’t list a payee or weren’t endorsed.

Hamilton said he believed that Jones’ law partner didn’t know what Jones was doing, but Dudley said jurors would hear otherwise when the partner testifies later in the trial.

Dudley criticized Hamilton for “ignoring” Jones’ sources of available cash beyond his bank account, such as more than $200,000 in bonds and a $70,000 insurance policy that he could borrow against, but Hamilton said he analyzed only the sources that Jones actually used.

Hamilton acknowledged that he didn’t look into whether Jones had the authority to write checks on his law firm or other business accounts.

Aaron Jones contends that one or more intruders broke into his Chenal Valley home early on May 30, 2008, when he was home alone asleep. He claims they bound him with duct tape and then set his house on fire. He said he escaped after they left by hopping out a back patio door.

On Tuesday, Assistant U.S. Attorney Julie Peters told jurors that prosecutors found some duct tape with Jones’ DNA on it in a trash compactor in the house. Dudley then told jurors that a singed 18-inch hair was found stuck to the duct tape and didn’t match hair from the partially bald Jones.

“It proves,” he said, “that somebody else was in that house that night.”

Dudley also said that whoever poured diesel fuel to start the fire “tried to do a very thorough job,” even soaking insulation in the attic, where investigators found a cigarette butt and a match. Dudley noted that neither of the Joneses, nor the previous owners, who built the house, smoked.

Dudley promised jurors that he would show that police had other leads that they didn’t follow.

The trial is to resume at 9 a.m. today in front of an all woman jury. Miller excused the lone male juror Wednesday and replaced him with a female alternate after the man said he realized upon seeing Hamilton that he knew him and that he would be inclined to give Jones’ testimony extra weight.

Arkansas, Pages 7 on 09/23/2010

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