Local businessman named in federal civil suit

Elizabeth Johnson

Charles “Chuck” Jones, CEO of CA Jones Management

David Griffin of Nashville, Tenn., filed a complaint on Feb. 28 in U.S. District Court Western District of Kentucky in Paducah against Charles “Chuck” Jones, Sarah Jones and five companies.

The companies include CA Jones Management Group, LLC; Integrated Computer Solutions, Inc.; Blackrock Investments, LLC; South Eastern Book Company, LLC; and College Book Rental Company, LLC, all of which are based in Murray.

Charles Jones serves as chief executive officer of CA Jones Management Group while Sarah Jones serves as president of the company.

The civil suit lists 11 counts as follows:

1. Appointment of a receiver against Integrated Computer Solutions, Blackrock Investments, South Eastern Book Company, College Book Rental, and CA Jones Management;

2. Securities fraud, violation of 15 U.S.C. section 78J against Charles Jones, Sarah Jones and CA Jones Management;

3. Breach of fiduciary duties against Charles Jones, Sarah Jones and CA Jones Management;

4. Fraud against Charles Jones, Sarah Jones and CA Jones Management;

5. Misappropriation against Charles Jones, Sarah Jones and CA Jones Management;

6. Breach of contract against Integrated Computer Solutions;

7. Breach of contract against Blackrock Investments;

8. Breach of contract against South Eastern Book Company;

9. Breach of contract against College Book Rental Company;

10. Unjust enrichment against Charles Jones, Sarah Jones and CA Jones Management;

11. Constructive trust against Charles Jones, Sarah Jones and CA Jones Management.

Jones was named Citizen of the Year by Murray-Calloway County Chamber of Commerce in July 2011. He employs approximately 300 workers at his businesses.

According to the complaint, Griffin and Charles Jones are business partners. The complaint states, “With Griffin committed financially to those companies by late 2008, C. Jones realized the potential for how lucrative the businesses could be for him if he had completely control and the ability to cause Griffin to provide even more money to make the businesses more valuable.”

A memorandum in support of expedited motion to appoint receiver or, in the alternative for entry of a preliminary injunction, filed on Feb. 29 by Griffin’s attorney, states that the Joneses were using his investments for their personal gain.

“After Griffin invested in two business in 2008, C. Jones created a web of companies that he controlled and by which he implemented a scheme of undisclosed, self-dealing to funnel significant money for his family’s personal gain that Griffin had invested in the companies for legitimate purposes,” reads the memorandum.

“Through this scheme, C. Jones created a lavish lifestyle – complete with, among other things, a $7.5 million house, a lake house, a 30-foot boat, trips on private jets, and numerous civic and charitable donations to promote his family’s statue in the community – that cannot be maintained without his continuing, unfettered control over the businesses and their steady flow of additional money.”

The memorandum states that CA Jones Management “is the primary entity by which C. Jones has siphoned millions of dollars from the companies.”

The memorandum goes on to state Griffin was misinformed about business operations and that he would have acted differently if he had been privileged to accurate information.

Griffin was asked to provide additional money when the companies faced a cash flow shortfall, the document states.

“Those requests were made with assurances that revenues were increasing and the future value of the companies were expected to be substantially more valuable,” reads the memorandum. “(CA Jones Management) and C. Jones concealed, however, the significant sums being transferred to (CA Jones Management) and used for the Joneses’ personal gain.”

In the complaint, the plaintiff lists financial numbers showing that while businesses were losing money annually, management fees paid to CA Jones Management and charitable donations given to organizations throughout Calloway County continued to increase.

“When faced with an operational shortfall, (CA Management Group) and/or C. Jones asked Griffin to invest money into the companies to cover those expenses while making assurances that revenues in the companies’ values were increasing, but concealing the significant sums being transferred to (CA Management Group) and uses for the Joneses’ personal gain,” the complaint states.

While the plaintiff does not list a specific amount of money to be paid, the complaint shows that Griffin has invested approximately $27 million in the companies in addition to $15 million in bank and/or trade debt.

The plaintiff also seeks award of punitive damages, attorneys’ fees and costs and a constructive trust of the assets of the Jones’ and CA Jones Management Group.

Griffin’s attorney has not returned phone calls.

When contacted, Charles Jones issued a statement via email.

“David Griffin and I are 50-50 partners in several companies managed by C.A. Jones Management Group,” Jones’ statement reads. “Around a year ago, Mr. Griffin decided he deserved to own more than 50 percent. After several months of trying to negotiate a suitable resolution to his wishes, he was still not satisfied unless he owned substantially more of the businesses than me. When he determined I was unwilling to give into his demand he decided to file this suit. In my opinion it is baseless and has no merit. I believe that we will prevail in this suit.”

An answer to the complaint has not been filed in court, said Kelly Harris, deputy-in-charge/case manager for the Paducah office. The defendants have 21 days from the time the original complaint was filed to enter a response.