By Clint Parker-
Feb. 20, 2003
Squashed by the Federal Justice System, Terry Stewart continues his fight from a cell in McDowell County Jail, where he has been since his conviction in November of 2001. He has yet to be sentenced by Judge Thornburg and cannot appeal his conviction until he has been sentenced.
Reporter’s note: This report is about one man’s trip through the Federal Justice System in Asheville, North Carolina.
What kind of Federal Justice System do we have? Many people continue to ponder just that question and wonder whether there ” is any justice left in the federal justice system?”
Terry Stewart, a resident of Lewis County, Tennessee, is about to mark his two-year anniversary in jail. He was convicted a little over a year ago in a federal court in Asheville, NC. He has yet to be sentenced for the crimes he was convicted of, and he claims that he is innocent. Until he is sentenced, Stewart cannot appeal his convictions, and presiding Judge Lacy Thornburg seems to be in no hurry to sentence Stewart.
Stewart went through the federal court without a lawyer because his wife, Jeni, said that they couldn’t find a lawyer in Asheville who had won a case in federal court.
In fact, according to Jeni, when they were looking for a lawyer to defend Terry, they called 22 attorneys to check their record of wins at the federal court level. Jeni said that not one in the 22 had won a case. Furthermore, Jeni said the lawyers they spoke with considered a plea agreement a win. Terry refuses to plea bargain crimes he says he never committed.
So how can a citizen get justice in Asheville’s Federal Court?
Here’s the story in which you can decide.
Who is Terry Stewart?
Terry Stewart spent 26 years in the Marines. Part of that time was spent in Vietnam, where he was stationed for almost four and a half years.
Terry’s military record was impeccable. In fact, during his career he was awarded two Purple Hearts, a Bronze Star with combat “V” for Valor, the Navy Commendation Medal, the Vietnam Cross of Gallantry with Bronze Star, a National Defense Medal, a Vietnam Service Medal, a Vietnam Campaign Medal with 9 clusters, the Presidential Unit Award, the Navy Unit Award, and the Marine Corps Unit Award.
He also got an accelerated promotion, a Combat Meritorious Promotion to sergeant, a Combat Meritorious Promotion to staff sergeant, early selection for gunnery sergeant and was a member of the Superior Performance Group Program. After marrying Jeni, Stewart retired in October of 1991, as a master gunnery sergeant from the Marine Corps Air Station Cherry Point, Havelock, North Carolina, where he was Provost Sergeant.
After leaving the Marines and searching for something interesting to do, Terry started learning things he didn’t like about the government he had served for 26 years.
Most of what Terry learned led him to believe that the government’s taxation of its citizenry was unconstitutional. Terry also learned how the rich and famous protected themselves and their assets from lawsuits and government taxation. “He decided that the domestic enemies [of the country] were more serious than the foreign ones were,” said Jeni.
Terry wanted to share his newfound knowledge with others, so in the summer of 1994 he started a business that would help him do just that and would pay the bills too. Terry and Jeni started conducting seminars about the advantages of private trusts. Acting as independent contractors, the Stewarts started selling products offered by a California-based Commonwealth Trust Company.
During that time Jeni said their tax attorney wrote a series of letters questioning the IRS about the taxes they might be liable for. The letters stated that the Stewarts would pay all of the taxes for which they were liable and to identify which ones they Stewarts should pay. They received a signed letter from the IRS in 1997 stating the questions were being researched and to take no further action until they heard back from the IRS. They haven’t heard from them about their income tax situation since.
Jeni told the Tribune that the seminars she and Terry offered were informative in nature and anyone wanting to learn more about trusts could ask. The seminars were also open to the public and anyone could attend. According to Jeni, Terry’s seminars started getting good attendance, including members of the IRS and the FBI. However, this didn’t seem to worry Terry. “His philosophy was that he was not saying or doing anything that was untruthful so therefore he should be safe in what he was doing,” explained Jeni.
Things were going well for Terry until the fall of 1996, when he met Phillip Mark Vaughan, owner of a Charlotte-based investment firm named Banyan. Jeni said that Vaughan told them he specialized in high yield, guaranteed rate-of-return investments for trusts, non-profit organizations and other entities. According to Jeni, Vaughan claimed his investment group was located offshore and had no reporting requirements in the United States.
As time went on, the Stewarts and Vaughan started doing referral business. If someone were looking for a trust, Vaughan would send them to Terry, and if someone with a trust were looking for an investment with a high rate-of-return, Terry would send them to Vaughan or to someone in Vanghan’s group.
However, Terry provided information regarding other investment opportunities to individuals requesting that type of information. Jeni said Banyan was not the only investment contact provided by Terry. Jeni told the Tribune a trust that was managed by the Stewarts had an account with Banyan, but no Banyan money was ever deposited into that account other than interest earned by the account.
According to Jeni, the only other financial dealings the two ever had was when Banyan, on approximately six occasions, bought lunch for attendees of Terry’s seminars. Also, Banyan was given a $200 referral fee for people who had been referred to Terry for a trust and had bought one, which is a Commonwealth Trust Company requirement for all referrals.
Jeni said that Terry never received a referral fee, nor a finder’s fee, from Vaughan or Banyan; nor was he ever a Banyan employee, officer, account signatory or a part of the decision making process for Banyan activities. According to Jeni, Terry was not involved in Banyan’s business, nor was Banyan involved in Terry’s business.
In November of 1999, Terry and Jeni moved from South Carolina, where they’d been living, to Lewis County, Tennessee. In December of 1998, one of the trusts they managed bought a 40-acre farm with an old house at 761 Grinder Creek Road. In July of 1999 the trust bought an adjacent 5-arce tract at 765 Grinder Creek Road, and the Stewarts moved to that property.
Jeni told the Tribune that the reason for the move was the fear and uncertainty surrounding Y2K. The farm was in the country and offered a means of being self-sufficient if predicted problems associated with Y2K did come true. Terry and Jeni had checked all their money out of the bank and placed it in cash and gold and silver coins that they kept at their home. The amount of money was approximately $130,000, and represented their entire savings.
As Y2K came and went without much notice, life returned to normal for most citizens who had fears about the Y2K bug. The same was true for Terry and Jeni. They kept the money at their home and went on as business as usual. However, the Stewarts were about to receive a visit from federal agents.
According to Jeni, unbeknownst to her and Terry, Banyan was under investigation by federal agencies because Vaughan had been using United States banks to distribute funds to investors.
On March 28, 2000, the Stewarts decided to go on a family fishing trip with their son and his family. They left about 8 a.m. When they returned in the afternoon, they found federal vehicles surrounding their home and agents inside. Jeni said that the raid included the Secret Service, FBI and the IRS Criminal Investigative Division. “There were cars all over the property. All over,” said Jeni. “I believe it was just divine intervention that we weren’t home.”
Jeni said that at the same time their home was raided in Tennessee, Vaughan’s was raided in Charlotte and his stepmother’s in Atlanta, GA.
Why was the government raiding the Stewarts? According to Jeni, the government believes that Terry was a part of Banyan’s operation.
Jeni said the warrant was very specific about what agents were supposed to seize at 765 Grinder Creek Road. The warrant identified “All records for Banyan International, Ltd., (BIL) and the Commonwealth Trust Company (CTC) for the time period of January 1, 1995, to the present . . .” and gave more details about documents, records and computer files.
It didn’t include any money.
However, Jeni said the feds seized the approximately $130,000, even though cash and coins were not listed on the warrant. When Terry learned that the Stewart’s life savings were being taken during the search, he asked the lead agent, IRS CID Agent Michael Boone, why he was taking the cash, which was not on the warrant. Boone’s response was that he was just taking it. Terry then asked Boone for a receipt, which would include a count of the cash and coins and identification of all money taken. On two separate occasions, Boone denied the request and he left without giving the Stewarts a receipt, along with boxes and boxes of the business papers, which the warrant allowed.
Terry and Jeni tried to assess what all the IRS had taken from them besides their money. Business records of course, that were identified on the warrant, but according to Jeni, lead agent Boone also allowed his task force to remove files containing all of Terry’s military retirement papers and legal research, their marriage license, dog’s AKC papers, Social Security cards, birth certificates, one son’s dependent military identification card and many other things too numerous to mention, none of which were included in the warrant’s description of what should be taken. They also took letters between the Stewarts and the IRS about their tax liability.
The agents did not arrest Terry, but his ordeal with the federal government and court system was just beginning.
Several months pasted after the raid with nothing occuring. Because the Stewarts said there were improprieties that occurred during the raid, they, along with the Vaughans and Banyan, filed a civil RICO suit in August of 2000. The suit named many of the law enforcement agents (in their personal capacity) along with other individuals the Stewarts say violated the law while conducting the raids
Terry also attempted to file criminal charges against the lead agent who was IRS Criminal Investigation Division Agent Michael Boone. Boone, who led the raid, was charged with unlawfully taking money and also with taking documents, records, etc. from property that was not included on the search warrant.
Local and state authorities ignored Terry’s criminal complaint against Boone. The local sheriff, magistrate, local attorney general and several other state agencies refused to accept the criminal complaints against Boone.
Jeni said that the local sheriff did say that when money is seized, a complete accounting must be provided to the individual(s) before the money is removed, which prevents any of the funds from “disappearing” after they are taken.
After the RICO was filed, things were quiet on both sides until a Case Management Conference (CMC) was held on January 5, 2001. This type of proceeding is held to establish the timelines for the discovery process, to establish the schedule for pre-trial hearings and to set the jury trial date. “It really was not a CMC…Everybody there was grilled on Banyan’s business, who had what to do with Banyan,” says Jeni.
Just five days after the conference on January 11, 2001, an indictment was issued for the arrest of Phillip Mark Vaughan, Terry W. Stewart and Philip B. Greer, who was the “trader” for Banyan’s funds. In March and again in May, 2001, the initial Indictment was modified, which resulted in two superseding indictments. The final indictment, entitled “Second Superseding Bill of Indictment”, was issued on May 10, 2001, and named an additional two defendants that were Banyan employees, Howard T. Prince and Timothy B. Burnham, both from the Shreveport, LA area.
The indictment charged Vaughan, Terry and Greer with 37 counts of conspiracy, mail fraud, wire fraud, bank fraud and money laundering.
According to the Stewarts, even the indictment has errors and misinformation. An excerpt from the first paragraph of the indictment reads: “Beginning in or about April 1995, Phillip Mark Vaughan, Terry W. Stewart and Philip B. Greer, and others known and unknown to the Grand Jury, devised and executed an elaborate Ponzi scheme.” However, Terry did not meet Vaughan until the fall of 1996, and has a notarized affidavit from the man that introduced him to Vaughan to support that fact. Terry didn’t meet Phil Greer until September, 1997. Greer stated on the witness stand, under oath, during Terry’s trial that Greer met Terry in September, 1997. None of these facts have had any effect on the government’s pursuing charges against Terry as one of the original founders of Banyan and being responsible for devising and continuing the so-called Ponzi scheme.
In many of the counts listed in the indictment, the names of Vaughan, Stewart and Greer are listed and the illegal activity that they committed is described in detail. However, Terry’s roles in the activities are not included in the description.
The same is true of the sworn grand jury testimony given by United States Postal Inspector Robert Ridgeway from Charlotte, NC on January 11, 2001.
For example, an excerpt from Ridgeway’s sworn Grand Jury testimony states: “…In or about November of 1997, and between then and March of ’99, Vaughan, and Stewart, and Greer defrauded BB&T Bank here in Charlotte, the Chase Manhattan Mortgage Corporation, and other lenders by providing false representations about their employment, their income, their assets and liabilities in order to obtain loans.”
Ridgeway proceeded to give specific details relating to the false statements made by Vaughan and Greer, the amount of money each received from the lenders and what each of them did with the loan proceeds. However, once again there is no mention of any loan application(s) completed by Terry Stewart, no accounting of money he received from a lending institution and no mention of Terry’s use of the loan proceeds.
Jeni told the [ITALIC] Tribune [ITALIC END] the only mortgage she and Terry ever applied for was in the spring of 1991 for the purchase of their home in South Carolina. She also claims the evidence supporting Ridgeway’s sworn testimony to the grand jury cannot exist, because since 1991 Terry has never applied for a mortgage with “BB&T, the Chase Manhattan Mortgage Corporation and other lenders”. Jeni says no evidence was presented to the grand jury that would support those accusations.
In addition, Ridgeway told the grand jury that “…beginning in about April, 1995, Mark Vaughan, and Terry Stewart, and Philip Greer made an agreement or joined together to market these investment opportunities.” It has already been mentioned Terry did not meet Vaughan until the fall of 1996 and Greer in September of 1997.
Jeni says even though the sworn grand jury testimony of Ridgeway was less than accurate and detailed about Terry, it was pivotal in getting an indictment issued with Terry’s name on it.
Terry was arrested at his home in Tennessee on April 21, 2001. He was held in Tennessee until the end of May, when he was extradited to North Carolina. He arrived in Asheville on or about June 9, 2001.
On June 11, 2001, the first hearing was held with Magistrate Judge Max Cogburn presiding, at which time Assistant US Attorney Anne Tompkins made a motion for Terry to be held in jail instead of being released on bond. As a result of her motion, a detention hearing (bond hearing) was set for June 13, 2001 to determine if Terry was a “flight risk” and a “danger to the community.”
At the detention hearing, which was also presided over by Judge Cogburn, IRS CID agent Boone testified under oath as a witness for the government. The testimony was a complete surprise to Terry. He had not been informed the government would be presenting a witness. Assistant US Attorney Jill Rose acted as prosecutor.
Jeni says that under Rose’s questioning, Boone attempted to paint a very negative picture of Terry Stewart’s character, but that in Cogburn’s estimation, Boone didn’t present any information that would prove Terry to be a flight risk or a danger.
Terry presented in his defense an affidavit addressing his character from a lieutenant colonel who was his commanding officer at Cherry Point and had known Terry for 20 years. In part, the affidavit stated, that “…his integrity and honor will prevent him from fleeing before his day in court or from harming others”.
In Cogburn’s closing remarks he stated, “These specific charges – this is not a tax case or tax protest case…I’m not going to release you today, but I’m going to hold off ruling until I get some further information on this – find out who this Lieutenant Colonel is. And if the government has any further information it wishes to submit, I would want to get copies of that to Mr. Stewart and have him a chance to rebut it before I consider it. And, Mr. Stewart, I’m going to go ahead and just try to make some decision on this, if I can, this week, but no later than Monday [June 18, 2001] on this matter…”
On the afternoon of June 20, 2001, Jeni said she went into Judge Cogburn’s courtroom and spoke with his clerk to find out when Terry’s next hearing was going to be scheduled. Judge Cogburn spoke with Jeni and stated that he would be holding a hearing in the morning, Thursday, June 21. Assistant US Attorney Jerry Miller was in the courtroom at the time and Cogburn told Miller to notify his office that Terry would have a hearing the next morning.
On June 21, 2001, Cogburn held a bond release proceeding. Assistant US Attorney Jerry Miller was present. Judge Cogburn ordered Terry to be released on a signature bond, which was signed by Jeni and Terry. Once he arrived home, he was to be electronically monitored by an “ankle bracelet”. Before the hearing was adjourned, Judge Cogburn gave the government an opportunity to appeal his decision. A short time later, Miller came back into the courtroom after contacting his office and stated, “Your Honor, on the Stewart matter, we are not going to request a stay or appeal in that.”
Terry’s freedom was short lived. Approximately five days after Terry arrived home he received a phone call and then a visit from a US Marshal, who served Terry with an order signed by Judge Lacy Thornburg to appear at a hearing to be held in Asheville on July 2, 2001. The government had submitted a request to revoke Terry’s bond and an order that he be immediate re-arrested. Thornburg denied the re-arrest, but ordered a hearing at which the government would “show cause.”
Terry arrived in court on July 2, 2001 prepared to address the six issues identified in the government’s notice; however Jeni said that opening remarks from Assistant US Attorney David Brown set the tone for the hearing.
Brown stated that reason the government had asked for the new hearing and a request for a re-arrest was “…the detention hearing arose within about 30 – with 30 minutes notice to the government.” This statement contradicts Jeni, who says Cogburn notified Jerry Miller the day before the hearing in her presence.
In addition, the transcript from the June 13 Detention Hearing shows that Judge Cogburn intended to hold another hearing once he made his decision regarding Terry’s bond. He also stated, “And if the government has any further information it wishes to submit, I would want to get copies of that to Mr. Stewart and have him a chance to rebut it before I consider it.”
Brown continued by saying “…these defendants [tax protestors] in particular have no respect at all for the authority of the Court and therefore present a detrimental flight risk and the likelihood of their appearing either for Court appearances or, if convicted, for sentencing is slim to none.”
After Mr. Brown’s opening statements, Assistant US Attorney Anne Tompkins stepped in as prosecutor. Again, IRS CID agent Michael Boone was the government’s only witness. He covered the same topics as before, but in greater detail and Jeni says with additional embellishment this time.
Jeni states it was apparent to her that the purpose of the hearing was to do a total character assassination of Terry, and it was accomplished. Jeni says Thornburg played along by chastising Terry for not having an attorney and made comments like, “it appears that you don’t desire counsel or intend to wait until you can convince someone…to represent you…”
At the end of Terry’s cross examination of Boone, Jeni says Tompkins handed Thornburg a stack of evidence that had been used to support Boone’s testimony, some of which he had referred to during the time Tompkins was questioning him. Jeni said that Terry had not been provided with a copy of the documents and so Terry asked for a copy. Thornburg told him that the US Attorney’s office had an open file that contained the documents and he could obtain a copy from that office, a difficult task to accomplish from a jail cell.
The hearing ended with Terry’s bond being revoked, and he was taken back into custody immediately following that hearing and has been in jail ever since.
Jeni said that a couple of facts that were not taken into consideration in the hearing were that his probation officer submitted a report stating that Terry had totally complied with all of the requirements of his bond. He also stated that Terry wasn’t on electronic monitor for approximately 22 hours from the time he was released until he met with his probation officer in Tennessee, or that he also had 26 hours of not being monitored from the time he left Tennessee to return to Asheville for the July 2 hearing. Plenty of time to make preparations to disappear if that was his intention.
Leading Up To Trial
According to Jeni, it was never Terry’s intention to go to trial without an attorney. His attorney of choice was in Indianapolis, and Terry planned to obtain permission from the Court to travel to Indianapolis to meet with that attorney while he was out on bond.
When his bond was revoked, it became impossible to use that attorney because Terry and Jeni couldn’t afford to pay the attorney’s travel and lodging expenses to Asheville. When IRS agent Boone took the $130,000 from the Stewart’s residence, their ability to pay for an attorney was taken also.
Once Jeni had done the research on 22 local Asheville attorneys that could have been court appointed, it became apparent that a plea bargain was what they were familiar with and Terry was not looking to plead guilty to something he didn’t do.
Were the Stewarts completely naïve of this country’s judicial system? To this day Jeni will tell you that they both believed, because Terry was innocent, that all he would have to do was to bring out the truth, and he couldn’t be found guilty. Therefore, Terry decided to go to trial on his own. According to Jeni, they weren’t prepared for the twists and turns given to the truth during the trial.
Terry filed several motions prior to his bond revocation hearing. The motions asked the Court to order the government to provide a bill of particulars. If granted, the government would have to identify the essential elements of all charges in the indictment instead of relying on the vague statements it currently contained. The US Attorney’s office responded, but incorrectly addressed the envelope that was sent to Terry. By the time he received his copy, the ten days in which he had to reply had passed. Thornburg denied the bill of particulars.
During the Discovery period – the process during which Terry was to review all of the evidence against him – there were numerous problems.
First, Terry had 18 days to go over more than 100 boxes containing approximately 5,000 pieces of paper each, as well as to review file drawers that contained transcripts of some Grand Jury testimony and interviews. The government had 18 months to review the discovery material.
Terry submitted a motion asking that Jeni be allowed to help him review the discovery material, but Thornburg denied the motion. In an effort to help Terry with the discovery process, Cogburn asked a paralegal if she would help.
On October 10, 2001, she appeared at the facility where the documents were stored, was introduced to Terry and was allowed to inspect the documents. Later, when Jeni spoke with her on the phone, Jeni said the paralegal indicated that the amount of material was overwhelming and that there wasn’t enough time to review it and refused to help.
Once he began reviewing material, Terry noted that each piece of paper had a sticker on it and was sequentially numbered. As he sorted through the boxes, it became apparent that many documents were missing. He started making a record of the missing documents, knowing that the law mandated that all material taken during the raids was supposed to be available to him. He was allowed to make copies of the things he felt would be pertinent to his defense. Many of the things that Terry knew were in the materials taken from his home were not found in the boxes supposedly containing his former possessions. Terry also knew co-defendant Vaughan had been interviewed by the federal agents, but the transcripts of those interviews were not found. Terry asked for copies of them on more than one occasion, but they were never provided.
Jeni said that there were more than nine typed pages of missing document numbers. Terry filed a motion requesting dismissal of the case for failure by the government to comply with the Federal Rules of Criminal Procedure relating to evidence. Thornburg again denied his request.
On Monday, November 5, 2001, Terry’s trial began. Prior to jury selection, there were a couple of unanswered motions that Terry filed the week before the trial began, that needed to be addressed. First, he requested a continuance due to the fact that he had only reviewed about 40% the discovery material, and that another 15% of the documents were missing. Thornburg denied his request.
Also discussed was a motion that addressed the actions of IRS agent Boone during the raid of the Stewart’s home. In response, Assistant US Attorney Anne Tompkins stated that Boone was not available for a hearing at the time, but would be the next day.
Next Terry explained that he had been without pencil and paper from the previous Thursday morning up until to the present, and he had therefore been unable to prepare for an opening statement or anything else. He also requested a haircut, since he had not had one in eight weeks, and hadn’t shaved for four and a half days. Thornburg’s response was, “…You certainly look well dressed to me…and you appear to be well groomed from this position. So, I’m going to overrule that motion.”
The last thing Terry requested was for Jeni to sit at the defendant’s table with him. Thornburg granted his request, as long as she didn’t interrupt the trial proceedings.
After jury selection, the government’s first witnesses were all Banyan clients. They all told financially catastrophic stories that effected everyone in the courtroom. Terry objected several times because the questions made it appear that Banyan and Vaughan were on trial, but his objections were over ruled.
During cross-examination, Terry tried to established that it was Vaughan’s requirement that trusts or other entities were to have the financial relationship with Banyan rather than individuals, that Terry had never been involved in the financial discussions between the witnesses and Vaughan or the other Banyan employees, had never given them any Banyan paperwork to complete, and had never handled any funds on behalf of Banyan.
On Tuesday morning, Nov. 6, without the jury present, Terry requested that Vaughan, who was in jail in Charlotte, be brought to Asheville to testify as Terry’s only witness.
Thornburg issued the order for that to be done. Tompkins asked Thornburg if Vaughan’s attorney shouldn’t be notified that he was going to be moved. Thornburg responded if Vaughan wanted to contact his attorney it would be up to him. This was to become an important event in the trial.
During Tuesday’s trial, US Postal Inspector Robert Ridgeway, who was the lead agent of the raid on Vaughan’s home, provided a long, detailed testimony, covering many documents that were taken from Vaughan’s home.
After the jury was dismissed for the day, the hearing regarding the search of Terry’s home was held. Under questioning by Assistant US Attorney Joseph Bender, Boone gave a great amount of detail regarding all of the research that he had done at the Lewis County, Tennessee Courthouse prior to the raid, relating to property that Terry owned. Boone stated that the address of the property to be searched was 765 Grinder Creek Road, Hohenwald, Tennessee.
During the search, Terry’s closest neighbor was questioned by Boone, at which time the neighbor mentioned some backhoe work he had done around a blue storage building on the property next door. Jeni said that the testimony given by Boone relating to that conversation is considerably different than a notarized affidavit given to Jeni by the neighbor.
Boone contacted the Assistant US Attorney’s office in Nashville to make sure that by searching the blue storage building, he was not reaching beyond the latitude given in the search warrant. However, Boone did not explain to the attorney that the building was on a different piece of property.
Bender then asked Boone what his search entailed, to which Boone responded that they were looking for documents, Banyan and Commonwealth records, computers, “…as well as any gold, silver, cash…” The government did not enter any evidence into the record to support Boone’s testimony.
Upon cross-examination, Terry told Boone that the blue storage building was on an adjacent piece of property, not on 765 Grinder Creek Road. Boone’s response was that he had a map with him the day of the search and made the decision that it was on the property.
Terry then asked Boone about his having mentioned that the gold and coins were on the search warrant, and could Boone tell Terry where they were listed. After giving testimony about a warrant in Charlotte, Boone responded that “…it was not in the search warrant”. Boone then stated that after he had seized the cash and coins he contacted Ridgeway to “make a return”, but because the money was not covered, Ridgeway refused. Boone stated that he then “…contacted the U.S. Attorney’s office and received guidance that we should prepare a seizure warrant for those items. And the FBI seized those items from me, I believe, the very next day.” Terry again asked where Boone received the authority to take the cash and coins, to which Boone responded that he thought the items were covered under a seizure warrant in North Carolina. When asked if Boone had possession of the warrant the day of the search so he could refer to it, Boone responded that he did not have it with him.
When Terry questioned Boone about not providing an itemized receipt for the cash and coins that were taken, Boone responded that he had given Terry an accounting in the inventory list of what was taken during the search. Terry stated that the inventory list identified that a box of coins and a box of cash were taken, but that did not constitute an itemized receipt.
Terry then asked Boone as to the specificity of the search warrant relating to Commonwealth and Banyan documents, and where Boone obtained the authorization to take Terry’s military retirement papers, legal research documents, his marriage license and birth certificate, children’s birth certificates, his dog’s AKC papers, or his son’s military identification card. Boone answered, “I’m unaware of each and every item that you just mentioned, but the items that were taken from your home, I believed at the time, were covered under this search warrant and that’s the reason that they were taken.” Terry continued his line of questioning, which caused Bender to object. Thornburg sustained the objection, but then asked Boone if he had “any of those materials that he’s [Terry] describing in your custody now?” Boone’s reply was that he did. Thornburg then ordered Boone to give them back because he was not entitled to keep all those things and they shouldn’t have been taken to start with.
Terry responded by asking if the return order included the cash and coins that were not on the search warrant, but Thornburg denied the return of the money, and also denied the motion relating to the search of the property at 765 Grinder Creek Road. On Wednesday, Nov. 7, the first witness was Giesela Crider, Vaughan’s employee that acted as his assistant. She identified by name all of the individuals associated with Banyan, but did not name Terry. Then a document listed as government evidence was put on the screen that listed all of the sales staff and the trader for Banyan. Terry’s name wasn’t included. She discussed the fraudulent employee verifications that had assisted people in getting mortgages, but again there was no document with Terry’s name on it.
There were some documents relating to financial transactions between Banyan and the trust which the Stewarts managed, but Jeni says Terry wasn’t concerned about them because he knew Vaughan’s testimony would clarify the situation and absolve Terry of any wrongdoing.
On cross-examination Terry established that there were other trust providers working with Banyan furnishing trust documents to Banyan clients.
IRS agent Michael Boone was the next witness. Because Terry had not prevailed in his motion regarding the search of the property, Boone’s testimony was very similar to that given during the hearing the evening before. Jeni said he had a ‘creative addition’ to his testimony. He stated that the marriage certificate, children’s birth certificates, etc. were taken because we were being investigated and he was trying to establish a tax liability. It didn’t seem to matter that previous tax returns had been filed jointly or that none of their children were of dependent age.
Boone introduced evidence that had no relationship to the indictment. Terry objected, but Thornburg overruled the objection.
On cross-examination Terry was able to bring up the seizure of the cash and coins from his home and the fact that they weren’t on the warrant and Terry wasn’t given a receipt. Boone then stated that he thought the cash and coins were covered under the North Carolina warrant, so Terry questioned him as to what procedure of law allowed for items listed on a warrant in one state to be seized during a search in another state. Jeni stated that Boone was very adept in not answering questions by giving details about things that didn’t pertain to the question, but that Terry felt he had been able to make the point that Boone’s testimony was not forthright.
FBI agent Mark Fedders was also called upon by the government to testify Wednesday afternoon. Fedders testified that he became involved in the Stewart case on March 30, 2000, when he obtained a “seizure warrant for gold and silver coins that were seized from Mr. Stewart’s house by an authorized Search Warrant.” (Please note that the seizure warrant was issued two days after the money was taken from the Stewart’s residence and that Boone had previously admitted under oath that the cash and coins were not included on the warrant.) Fedders went on to testify that the coins were appraised and valued at $53,544.
The value of the coins surprised Terry and he focused on that aspect of Fedders’ testimony during cross-examination. During previous testimony, the government entered into evidence documents that were taken from the Stewart’s home showing the purchase of gold and silver coins totaling in excess of $67,000. Terry identified that there was a $13,000 discrepancy in the amount of documented purchases and the amount that made it into Fedders’ possession. Government prosecutor Bender objected to Terry’s argument, which Thornburg overruled. Terry followed by again stating that a discrepancy existed. Thornburg asked Terry if that was his position, and when Terry answered that it was and that he didn’t have any more questions for Fedders, the witness was dismissed.
Jeni later stated that the true discrepancy was between $20,000 and $25,000.
After court ended, Terry had an opportunity to meet with Vaughan, who had been transported from Charlotte to the Buncombe County Jail. The purpose of the meeting was to review the testimony Vaughan would be giving as Terry’s only defense witness.
Vaughan had communicated before the meeting with Terry that because of Vaughan’s plea agreement he could testify only if Terry subpoenaed him. Then he could testify on Terry’s behalf and not jeopardize the plea bargain that he had signed.
When Terry met with Vaughan, Vaughan told Terry that his attorney, Charles Viser from Charlotte, had contacted him as a result of a phone call Viser had received from Assistant US Attorney Tompkins. This was the same Tompkins who had agreed three times in court the day before to let Vaughan contact his attorney if he wanted to do so.
Vaughan went on to say he was told that if he took the witness stand on Terry’s behalf, it would effect his plea agreement as well as cause other legal problems for him and members of his family. He told Terry that due to the ramifications of giving testimony on Terry’s behalf, he would be unable to take the stand and that he would plead the “Fifth” if he was forced to testify.
On the Thursday morning before the jury was brought in, Terry addressed the court, reporting “a possible incident of witness tampering, witness intimidation, and obstruction of justice…”. He told Thornburg of his meeting with Vaughan and what transpired. Terry also reminded Thornburg that he (Thornburg) had told Tompkins that if Vaughan wanted to let his attorney know he was being moved to Asheville, it was up to Vaughan to tell him. Thornburg’s response was, “I ordered that he be brought up here and asked that the clerk or someone notify his attorney…so let’s clarfiy that. I did not say do not notify his attorney…” Jeni said Terry knew that Thornburg had not told anyone to notify Vaughan’s attorney, but didn’t pursue the matter.
Thornburg then asked Tompkins if she had called Vaughan’s attorney. Jeni reports that she replied in a stammering voice, “I did call Casey Viser who represents Mark Vaughan just to let him know that he was being transported to Asheville. I didn’t make any representations about whether he would or wouldn’t testify. Just simply asked Mr. Viser to inform me if he knew if – after he talked to his client, if he had a sense of which way – if he was going to testify or if he was not going to testify and that was it.”
Thornburg covered the law regarding Vaughan’s testimony affecting his plea agreement, stating that he would consider it a violation, an abuse of discretion, that Vaughan’s plea agreement could be effected if he testified on Terry’s behalf. He went on to say that the information Terry presented was hearsay, but that Tompkins was an officer of the court, and she said that she made no such representation. He also stated that Vaughan would be available to Terry for questioning regarding any threats that had been made to him. On six other occasions during the trial, Thornburg told Terry that he would have an opportunity to question Vaughan.
During the day Thursday, the government presented more witnesses. By the end of court that day, the government rested its case and court was adjourned for the day.
Thursday evening, after court was adjourned for the day, a special hearing was held on an oral motion to quash a warrant [subpoena] issued at Terry’s request for Vaughan to testify as the defense’s only witness.
Vaughan’s attorney, Charles Viser stated that he was “informed that a subpoena has been issued for my client to appear and testify in this proceeding”. He went on to request that the subpoena “be quashed based on my client’s desire to invoke the Fifth Amendment and his privilege not to incriminate himself”. Viser proceeded to produce an affidavit signed by Vaughan stating the same. Viser also stated, “I received information about this situation late yesterday afternoon…”.
Viser then identified that Vaughan had signed a plea agreement with the government where he pled guilty to only five of the 37 charges, and Vaughan would invoke his Fifth Amendment privilege against self-incrimination if called to testify. He further stated that since Vaughan had not been sentenced he could possibly be held liable under other counts and other charges.
Judge Thornburg’s response: “…I’ll have him here tomorrow morning at 9:00am…and if he chooses to exercise the fifth amendment, I first have to hear what the questions are, and then if he exercises his rights, I’ll rule on it”.
Terry voiced his concerns that Vaughan would not be aware of the fact that Terry reported the possibility of witness tampering and that Vaughan was still fearful of retaliation when he signed the affidavit.
Thornburg again stated that Vaughan would be in court the next morning at 9:00am and told Terry that he could ask Vaughan questions, which he could refuse to answer. Thornburg said that he would determine if Vaughan had a valid basis for refusing, depending upon the content of Terry’s questions. Thornburg further stated, “if you’re suggesting to the court that the government has in some way intimidated him, then…I may personally ask him some questions about that…That’s a rather serious charge, and if he told you that, then we may want to hear from you on that, too”.
After Thornburg again stated to Terry that Vaughan would be brought before the Court the next morning, he made arrangements to meet with Vaughan that evening to discuss Vaughan’s testimony. Vaughan’s attorney made it clear that he was to be present during that meeting. Court was adjourned for the day.
The next morning before the jury was brought in, Thornburg opened court with an address to Viser. “All right. You are present, and having filed an answer to the brief, thank you, sir” to which Viser responded in the affirmative.
Terry told Jeni that it felt like they had walked into the middle of a court proceeding without having a clue about what transpired before they arrived.
Thornburg then told Viser that he hadn’t excused Viser’s client (Vaughan), that he wanted Vaughan to tell him if he planned to exercise his Fifth Amendment rights. Viser stated that his client fully intended to assert his Fifth Amendment privilege against self-incrimination because “he has the very real and legitimate fear of further criminal liability, and other adverse consequences as a result of anything that he might say [emphasis added] on the stand if compelled to testify”.
Thornburg then asked Vaughan if his signature was on the affidavit and if he had also submitted a handwritten statement to which Vaughan responded in the affirmative. Thornburg asked Vaughan if it was his intention to exercise his Fifth Amendment rights and not answer any questions posed by Terry. Vaughan replied in the affirmative.
Thornburg asked Terry if he had anything to add. Terry stated that his meeting with Vaughan the night before was delayed until Viser arrived. Terry proceeded, “And when I was brought into the room with Mr. Vaughan, who I have known for a while and I have had a friendship with, he literally didn’t speak to me. Didn’t say anything to me. He looks very, very depressed, scared and physically ill, like he was scared so badly he couldn’t even talk to me. During the whole five, ten minutes that I was in there, Mr. Vaughan didn’t speak to me. His attorney did. It’s very obvious that he was undergoing a great deal of stress.
“And I believe in light of what I reported to you the morning before that there’s plenty of evidence here that something is amiss. And I feel that it needs to be looked into because I’m being deprived of a vital witness…”.
Thornburg then declined to investigate the matter further, granted the motion to quash the subpoena and ordered Vaughan to be returned to the Charlotte custodial facility.
Terry’s only defense witness had been silenced by what Terry believes was government intimidation. Jeni said as Vaughan was led from the courtroom, she heard a noise that came from the prosecutor’s table and looked over just in time to see Tompkins slouch back in her chair and look up, emitting an audible sigh.
Terry was numb. Right up until the Friday morning proceedings, he was told by Thornburg that he would have an opportunity to question Vaughan. Now, Thornburg had determined Vaughan had a right to take the Fifth on each question without even knowing the questions and that Terry’s defense was gone.
The jury was then brought into the courtroom, fully anticipating that Terry would be presenting his defense. Instead, the jury was informed that there would be no more witnesses, closing remarks were made, instructions were given to the jury, and they withdrew to make their decision. When they returned, they brought with them a verdict finding Terry guilty of 24 of the 37 counts.
Terry discovered after the trial was over that one of the items in Vaughan’s signed plea agreement stated, “The defendant understands and agrees that by pleading guilty, he is expressly waiving the following rights”. Four rights were listed as being waved, one of which was his Fifth Amendment privilege.
Vaughan was the only one that could provide information proving Terry’s innocence, because Vaughan ran Banyan. Vaughan’s testimony would have identified to the jury that he didn’t meet Terry until the fall of 1996. Vaughan would have stated that Terry was not an officer or an employee of Banyan, that Terry was never paid by Banyan or given a referral fee of any kind for telling people about what Banyan offered.
In fact, Jeni says Vaughan would have said that on two occasions he offered Terry 2% of all money that came to Banyan from Terry just telling people about Banyan, but Terry refused it.
One other item of importance is that during the entire time from April 21, 2001, when Terry was arrested to the day the trial began, November 5, 2001, Terry was not interviewed by one government agent from any of the various agencies involved in the case. After The Trial
Immediately following Terry Stewart’s trial, on November 16, 2001, he filed a motion for acquittal due to the prosecutorial misconduct by Assistant U.S. Attorney Anne Tompkins, who contacted the defense witness and co-defendant Vaughan’s attorney after Judge Thornburg told her Vaughan could contact his own attorney. The motion also stated, among other things, that Terry was denied trial by an impartial judge.
Four days later Thornburg denied Terry’s motion stating that Terry hadn’t presented any new evidence other than the hearsay evidence that was raised at trial.
On December 4, 2001, Terry submitted a motion to reconsider the Nov. 16th motion and included, as new evidence, a copy of an unsigned, undated letter Vaughan sent to Terry just days before the trial. Because prisoners aren’t allowed to write to each other, Vaughan sent the letter to Terry by first mailing it to Vaughan’s best friend, who then forwarded it on to Terry. In addition to Vaughan’s letter, the motion included a notarized affidavit from the friend stating he had forwarded a letter from Vaughan to Terry on October 26, 2001.
In the letter Vaughan stated, “You don’t have to worry about me not telling the truth. I will not lie about you or anyone else…I lied (signed a plea) about the money laundering charge to protect Linda [Vaughan’s wife], Jeannie [Vaughan’s step-mother], and my brother. The feds were threatening to indict Linda and Bert, so I signed the plea to protect them.”
Vaughan continued, stating, “I can imagine the frustration on your part. There is no reason for you to be locked up…The feds want me to also say things about you, but all I can tell them is what went on in your seminars, and their own agent was sitting in on these meetings so there is little I can elaborate on.
“I can’t really “appear” to be helping you because of my plea, but I will not twist things to assist them in any way. I will tell the truth but keep things as correctly implied as possible…I’m sorry I can’t sign an affidavit for you but depose me or put me on the stand, and I think you will get what you want! Once again I must be 100% cooperative with the Feds…If I could sign an affidavit for you I would, but under my agreement with the feds I cannot give any indication of being anything but 100% on their side and cooperating with them.
“…I have repeatedly told them [feds] that you were completely independent of Banyan. They are grasping at any straw they can. They will have enormous egg on their face if you beat them.”
Two days later Thornburg denied the motion to reconsider stating that in the affidavit from Vaughan’s friend, he “does not attest that the letter he received is in fact the unsigned letter attached to Defendant’s [Terry] motion”. Thornburg continued by stating that Terry’s motion “is not supported by any new, credible evidence and must be denied.”
Jeni said that Terry was still not ready to give up, “He’s a Marine and he never will.”
On May 3, 2002, he filed the first of several Mandatory Judicial Notices. The purpose of these motions is to bring to the Court’s attention matters in the case that were previously overlooked or intentionally ignored.
The first Mandatory Judicial Notice was in two parts, one pertaining to all of the circumstances relating to Vaughan’s not testifying on Terry’s behalf and the other to IRS agent Michael Boone’s testimony about the raid on Terry’s home.
Seven days later Thornburg denied the motion, stating that the practice of filing mandatory judicial notices has become popular with pro se litigants (individuals representing themselves before the court). Thornburg further stated, “such demands of “mandatory judicial notice” are particularly popular with litigants who are dissatisfied with the federal government and use such devices as a method of harassing the judicial system”. Thornburg then cited unpublished case law to support his statement. However, unpublished case law is not supposed to be used to support statements made.
Following the denial of the judicial notice, which contained multiple issues, Terry decided to file notices addressing only one issue, so over a couple of months, Terry filed judicial notices addressing several different issues:
First, the issue regarding Assistant U.S. Attorney Anne Tompkins having contacted Vaughan’s attorney after Thornburg had told her that it was up to Vaughan to contact his attorney,
Second, Thornburg’s having stated that he had not said it was up to Vaughan to contact his attorney, but instead saying he had told the clerk or someone to notify Vaughan’s attorney. However, transcripts of the trial prove otherwise.
And third, the fact that Terry W. Stewart does not own any property in Lewis County Tennessee, that the blue storage building was located on property with a different address than that contained on the search warrant, and that IRS agent Boone violated the warrant by seizing documents and other items from that building.
All of these mandatory judicial notices were denied within a few days of being filed.
Jeni stated that in his last denial, Thornburg didn’t address the fact that the blue building was not on the property identified in the search warrant. She said this type of denial had become typical, that Thornburg denied motions by very selectively addressing a minor issue he felt was debatable in the motion and completely ignoring the issues that were proven by the exhibits attached to the motion.
“It has been ruled by the Supreme Court and other federal courts that motions by individuals representing themselves are to be construed liberally and held to a less stringent standard than formal pleadings drafted by lawyers,” Jeni told the [ITALIC] Tribune [ITALIC END]. “If the court can reasonably read pleadings to state a valid claim on which litigant could prevail, it should do so despite litigant’s failure to cite proper legal authority, confusion of legal theories, poor syntax and sentence construction, or litigant’s unfamiliarity with pleading requirements.”
Toward the end of May 2002, Jeni wrote Vaughan, asking him to do the honorable thing by coming forward with the truth. Unlike the letter Vaughan wrote to Terry, his reply letter was dated and signed. In it Vaughan addressed the fact that Terry had used a copy of Vaughan’s letter to Terry in a motion, stating that Terry’s action “probably increased my sentence by at least 5 if not 10 years”. Jeni said Terry saw this letter as the evidence needed to prove the earlier letter was from Vaughan.
Terry filed another motion on July 11, 2002, including a notarized true copy of the envelope and Vaughan’s letter to Jeni. In the motion Terry stated, “If Mark Vaughan was threatened and intimidated with an increased sentence of five (5) to ten (10) years for a letter he wrote to his friend Terry W. Stewart, how much stronger would those threats and intimidation be when he indicated he was willing to give truthful testimony that Assistant U.S. Attorney Anne Tompkins knew would be of benefit to Defendant Stewart?”
Terry’s motion further stated, “Evidence contained in the letter to defendant [Terry] states that Mark Vaughan signed the plea agreement to protect his wife and brother because ‘the feds were threatening to indict Linda and Bert, so I signed the plea to protect them’. Such actions as Mark Vaughan describes in his letter to defendant, along with the increased sentence threat he identifies in his signed Letter [to Jeni], need to be investigated for witness intimidation, witness tampering, obstruction of justice and/or prosecutorial misconduct.”
Five days later Thornburg again denied the motion, totally ignoring Vaughan’s statement that by writing a letter to Terry he had increased his sentence by five to 10 years or that he had signed his plea agreement because the feds had threatened to indict his wife and brother.
At the end of July, Terry submitted yet another mandatory judicial notice. This time it contained a notarized, signed affidavit from the Lewis County, Tennessee tax assessor, who stated that he had been to the property that housed the blue storage building and it was not on 765 Grinder Creek Road, which is the address that was on the Search Warrant. A sworn statement from a government official is to be considered “self authenticating evidence” according to the federal rules of evidence. The tax assessor’s statement should have put to rest the question regarding the property location of the blue building as well as the issue that IRS agent Boone was on the wrong piece of property when he took the contents from the building.
However, even though submitted over six months ago, Thornburg has not ruled on this motion.
What reason could Thornburg have for not ruling on this motion? The Stewarts believe the reason is related to the explicit detail given by Boone during his testimony about the in-depth research he did prior to the raid to identify the property to be searched, which is nullified by the tax assessor’s statement.
Other judicial notices filed by Terry include one addressing Boone’s initial sworn testimony that everything he took during the raid was covered by the search warrant. That proved to be untrue, and Thornburg stated that Boone had no business taking things outside the scope of the warrant.
Another one addressed Boone’s sworn testimony that the cash and coins he took the day of the raid were identified in the search warrant, when in fact under Terry’s cross examination Boone finally admitted that they were not. Those statements made by Boone showed that his testimony was “less than forthright”.
Yet another judicial notice was filed addressing Boone’s sworn testimony during another hearing when he stated that federal agents had interviewed Vaughan. However, Terry has never seen any of the transcripts of those interviews, which he is entitled to see. Vaughan informed Terry that during the interviews, he told the agents that Terry was in no way part of Banyan. Statements made by Vaughan containing that kind of information would be “exculpatory”, which means that it would clear Terry of alleged fault or guilt.
The last judicial notice that was filed addressed US Postal Inspector Robert Ridgeway’s sworn testimony to the grand jury about Terry’s involvement in fraudulently obtaining mortgage loan proceeds. Ridgeway’s testimony is what caused the indictment to issue. Terry and Jeni had not applied for a mortgage since they purchased their South Carolina home in the spring of 1991, and Terry did not receive copies of any evidence supporting Ridgeway’s testimony. This last judicial notice was filed on November 4, 2002.
As of the date of this publication, Jeni states that Thornburg has failed to issue any orders regarding the judicial notices.
Terry Stewart continues his fight from a cell in McDowell County Jail, where he has been since his Conviction in November of 2001. He has yet to be sentenced by Judge Thornburg and cannot appeal his conviction until he has been sentenced.
Reporter’s note: This series on Terry Stewart has generated numerous inquires from readers. In fact, the most inquires this reporter has received on any one story.
The inquiries have ranged from outrage at the federal court system, to offers of legal assistance, to one lawyer, who practices in the federal courts here in Asheville, referring to Judge Lacy Thornburg as being “the worst federal judge in the system.” That lawyer, of course, spoke on the condition of anonymity.
The Tribune contacted Judge Thornburg’s offices to try to ask Thornburg why Phillip Mark Vaughan was allowed to take the “Fifth” when in fact had signed that right away in his plea bargain. The Tribune is also interested in learning why the judge has waited more than a year to sentence Stewart. His secretary told us that Judge Thornburg does not talk with reporters.
Whether you agree with Terry Stewart’s view of federal taxes should not be the issue; that was not what he was convicted of in court. The context of and reason for the series of articles that have been published by the Tribune was to point out his ordeal with the federal court system.
While the series of articles was published from the Stewarts point-of-view, this reporter has numerous copies and transcripts from this case. The facts about the trial, letters, judge’s conduct and the conduct of the federal prosecutors used in these articles are a matter of record.