The Tribune Papers
Independent Weekly News Magazines for WNC
Asheville Tribune ~ Hendersonville Tribune ~ Weaverville Tribune

Visit The
Trib
Mall

Report's note: This is the third in a series of reports about one man's trip through the Federal Justice System here in Asheville, North Carolina.

What kind of Federal Justice System do we have? Many people ponder just that question and reflect as to whether " there is any justice left in the Federal Justice System?"

Terry Stewart, a resident of Lewis County Tennessee, is about to mark his second-year anniversary in jail. He was convicted a little over a year ago in federal court here in Asheville, NC. He has yet to be sentenced for the crimes he was convicted of and of which he claims he is innocent. Until he is sentenced, Stewart cannot appeal his conviction, and presiding Judge Lacy Thornburg seems 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 an Asheville lawyer that had ever won in federal court.

In fact, according to Jeni, when they were looking for a lawyer to defend Terry's case, they called 22 attorneys to check on their record of wins at the federal court level. Jeni said that not one of the 22 had ever won a case. Furthermore, Jeni said the lawyers they spoke with considered a plea agreement a win. Terry refused to plea bargain crimes he says he never committed.

So, can a citizen get justice in Asheville Federal Court? Here's the third part of a multiple part story in which you can decide.

Recap Terry Stewart's story

Terry Stewart, a 26-year veteran of the Marines, had retired from the Corp and started a business with his wife, Jeni. The business sold non-taxable trusts to private citizens.

During the course of conducting business seminars related to trusts, the Stewarts met Phillip Mark Vaughan, owner of an investment company call Banyan, an offshore corporation. Banyan specialized in high rate-of-return investments for trusts. However, the Stewarts say that Banyan did not use offshore banks like Vaughan claimed.

Vaughan soon had several federal agencies who were taking a closer look at his company.

Jeni said the only financial dealing she and Terry ever had with Banyan was on approximately six occasions when Banyan bought lunch for attendees of Terry's seminars. Banyan was given a $200 referral fee for people who had been referred to Terry for a trust and had in fact bought one, which is a Commonwealth Trust Company requirement for all referrals.

However, on March 28, 2000, federal agents raided the property in Tennessee that the trust owns and that the Stewarts manage and is also where the Stewarts live. The Stewarts had, in cash and precious coins, their entire life savings at the home, which Jeni said amounted to $130,000. Those funds were also taken in the raid, but the Stewarts say that money was never named in the search warrant, and a receipt was not given for the specific amount of money that was taken.

Because of what the Stewarts say were improprieties by federal agents that occurred during the raid, they, along with the Vaughans and Banyan, they filed a civil RICO suit in August of 2000.

After the RICO suit was filed, things were quiet on both sides until a Case Management Conference (CMC) was held on January 5, 2001. 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. Terry was arrested at his home on April 21, 2001. He arrived in Asheville on or about June 9, 2001.

Leading up to trail

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.

The trial - Part 1

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.

 

Stewart related articles: Stewart Case Index of Tribune Articles