UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellee,

v.  No. 02-4091

PETER KAY STERN, a/k/a Peter K.

Stern,

Defendant-Appellant. 

Appeal from the United States District Court

for the Western District of North Carolina, at Bryson City.

Lacy H. Thornburg, District Judge.

(CR-99-81)

Argued: February 27, 2004

Decided: April 23, 2004

Before NIEMEYER and SHEDD, Circuit Judges,

and HAMILTON, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion. 

COUNSEL

ARGUED: John Kenneth Zwerling, ZWERLING & KEMLER,

Alexandria, Virginia, for Appellant. David Alan Brown, Assistant

United States Attorney, Charlotte, North Carolina, for Appellee. ON

BRIEF: Robert J. Conrad, Jr., United States Attorney, Brian Lee

Whisler, Assistant United States Attorney, Charlotte, North Carolina,

for Appellee. 

Vacated by Supreme Court, January 24, 2005
Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

On December 7, 1999, a federal grand jury sitting in the Western

District of North Carolina indicted Peter Kay Stern (Stern) on one

count of conspiracy to submit false and fraudulent refund claims to

the United States Internal Revenue Service (IRS), 18 U.S.C. § 286,

one count of obstructing the work of IRS agents, 26 U.S.C. § 7212(a),

one count of bank fraud, 18 U.S.C. § 1344, two counts of threatening

a federal judge, 18 U.S.C. § 115, and two counts of using the United

States Postal Service mail system to communicate threats to a federal

judge, 18 U.S.C. § 876. Following a jury trial, Stern was convicted on

all counts. The district court sentenced him to a term of 151 months’

imprisonment. Stern noted a timely appeal. 

On appeal, Stern challenges the sufficiency of the evidence with

respect to his convictions on the obstruction of IRS agents, Count

Two, and the bank fraud, Count Three. He also challenges all of his

convictions on the basis that the district court judge abused his discretion by denying his (Stern’s) motion for recusal. Finally, Stern challenges his sentence on various grounds. We affirm Stern’s convictions

and his sentence. 

I.

A. The Comptroller Warrants. 

Beginning in or about November 1995, Stern traveled to Bozeman,

Montana, where he attended anti-government seminars presented by

Leroy Schweitzer (Schweitzer). Schweitzer and his followers, who

were known as "Freeman," operated a compound in Montana, and

while he was there, Stern attended a Freeman class, conducted by

Schweitzer, during which Stern obtained at least seven documents,

each titled "Comptroller Warrant." 

2 UNITED STATES v. STERN
Stern subsequently delivered one of these comptroller warrants, in

the amount of $77,581.98 and numbered 1809, to the First Union

National Bank (First Union) as complete satisfaction of his approximately $40,000 worth of outstanding loans with the bank. Stern

requested that First Union refund him the difference in a cashier’s

check. First Union rejected the comptroller warrant on the ground that

it was not a legitimate collectible document. 

Stern transmitted some of his other comptroller warrants to other

financial institutions and government entities. He also provided some

of the comptroller warrants to friends and family members for their

use in satisfying debt with financial institutions and the IRS, and for

obtaining false and fraudulent refunds. In a letter dated January 3,

1996, the Comptroller of the Currency, Administrator of National

Banks for the United States Treasury Department, notified Stern that

the comptroller warrants were worthless financial instruments. Stern’s

conduct with respect to these comptroller warrants is the subject of

Counts One and Three of the indictment. Count One charged Stern

with conspiracy to submit false claims for payment to the IRS in order

to receive false and fraudulent refunds, 18 U.S.C. § 286, and Count

Three charged Stern with bank fraud, 18 U.S.C. § 1344. 

B. Obstruction of IRS Agents. 

In June 1996, in response to IRS efforts to collect overdue federal

income taxes from him for tax years 1991 through 1994, Stern began

sending letters to the IRS in which he denied his tax obligations and

threatened to penalize IRS Officer William Sizer in the amount of one

million dollars, as well as report him to the criminal authorities.

Thereafter, accompanied by IRS criminal investigator Frank Houle,

IRS revenue agents met with Stern in an effort to explain his tax liability. 

Shortly thereafter, Stern sent correspondence to the agents, threatening them with criminal investigations and possible arrest if they did

not cease their collection activities. Some of Stern’s threatening correspondence was purportedly issued by "Our One Supreme Court,"

which was a common law court located in Macon County, North Carolina. Stern greatly participated in creating Our One Supreme Court

around the same time that he had attempted to negotiate the CompUNITED STATES v. STERN 3
troller Warrants. In response to Stern’s threatening correspondence,

some IRS agents began taking precautionary measures to ensure their

own safety and the safety of their families. 

In conducting a threat assessment of Stern, Agent Houle inquired

of Stern about his association with Our One Supreme Court. Stern

informed Agent Houle that he was the Chief Justice of Our One

Supreme Court, and provided Agent Houle a copy of the court’s rules.

Such rules provided for marshals to serve process and a militia to

enforce the dictates of the court with force in arms. Agent Houle’s

investigation also revealed that Our One Supreme Court had generated numerous documents threatening IRS employees with multimillion dollar judgments and the filing of liens. 

Beginning on December 13, 1996, the IRS issued four or five levies on known income sources for Stern. Stern responded by sending

"affidavit[s] of probable cause for the prosecution of criminal acts" to

the IRS agents involved in his case, which documents specifically called for the arrest of such agents. (J.A. 226). Concerns for the safety

of these IRS agents raised by these documents generally impeded

such agents’ ability to perform their official duties. In addition, Stern

impeded IRS efforts to assess the value of his home by posting a "no

trespassing" sign at the entrance to his property. Notably, the sign was

specifically directed to federal law enforcement officers and federal

civil servants, and warned of consequences to the trespasser. 

Stern next filed a petition with the United States Court of Appeals

for the Fourth Circuit, seeking injunctive relief to restrain the IRS

from collecting unpaid taxes, penalties, and interest from him. In

addition, the petition sought compensatory damages for the IRS’s

actions in attempting to collect his unpaid taxes and for alleged violations of the Freedom of Information Act, 5 U.S.C. § 522. This court

denied Stern’s petition as "devoid of merit." In re: Peter Kay Stern,

114 F.3d 1177, 1997 WL 325437 (4th Cir. June 16, 1997) (unpublished). 

As the direct result of Stern’s threatening and harassing conduct,

the IRS ceased its collection activities with respect to Stern’s federal

income tax liabilities. At the time of Stern’s criminal trial, his federal

income tax liabilities remained outstanding. 

4 UNITED STATES v. STERN
Stern’s conduct in response to the IRS’s collection activities is the

subject of Count Two of the indictment, which charged him with

obstructing the work of IRS agents. 26 U.S.C. § 7212(a). 

C. Threatened Kidnappings of Two Federal Judges. 

On January 30, 1996, Stern, in his capacity as Chief Justice of Our

One Supreme Court, sent a package through the United States Postal

Service to the federal courthouse in Charlotte, North Carolina. The

package included documents issued by Our One Supreme Court and

signed by Stern as Chief Justice, which documents threatened to kidnap United States District Judges Graham C. Mullen and Richard L.

Voorhees, if federal prisoner John Anthony Norris was not released

from federal custody. The threats led to heightened security measures

for the federal judges involved and the district court in general. 

Stern’s conduct in this regard is the subject of Counts Four, Five,

Six, and Seven of the indictment. Count Four charged Stern with

threatening to kidnap Judge Mullen, "with intent to impede, intimidate, interfere with, and retaliate against Judge Mullen while he was

engaged in or on account of the performance of his official duties,"

(J.A. 87). 18 U.S.C. § 115. Count Five charged the same crime as

Count Four, with the exception that Judge Voorhees was the subject

of the kidnapping threat. Count Six charged Stern with sending a

threatening communication (i.e., the threat to kidnap Judge Mullen)

through the United States Postal Service. 18 U.S.C. § 876. Count

Seven charged the same crime as Count Six, with the exception that

Judge Voorhees was the subject of the kidnapping threat. 

II.

We first address Stern’s challenge to the sufficiency of the evidence to sustain his conviction on Count Two, for obstructing the

work of IRS agents, in violation of 26 U.S.C. § 7212(a). His challenge is without merit. 

In reviewing the sufficiency of the evidence to support a criminal

conviction, we view the evidence and the reasonable inferences to be

drawn therefrom in the light most favorable to the government, and

UNITED STATES v. STERN 5
we must sustain the verdict "if any rational trier of fact could have

found the essential elements of the crime beyond a reasonable doubt."

United States v. Lomax, 293 F.3d 701, 705 (4th Cir.) (internal quotation marks omitted), cert. denied, 537 U.S. 1031 (2002). 

Section 7212(a) states that "[w]hoever corruptly or by force or

threat of force (including any threatening letter or communication)

endeavors to intimidate or impede any officer or employee of the

United States acting in an official capacity under this title . . ." shall

be guilty of a crime. 26 U.S.C. § 7212(a). We have interpreted the

term "corruptly," as found in this statute, to mean acting "with the

intent to secure an unlawful benefit either for oneself or for another."

United States v. Wilson, 118 F.3d 228, 234 (4th Cir. 1997). 

Count Two charged Stern with violating 26 U.S.C. § 7212(a) by

corruptly endeavoring "to obstruct or impede the due administration

of the internal revenue laws . . . ." (J.A. 84). Viewing the evidence

in this case, and the reasonable inferences to be drawn therefrom, in

the light most favorable to the government, leads to the inescapable

conclusion that a rational trier of fact could have found beyond a reasonable doubt the essential elements of the crime charged in Count

Two. We hold that Stern’s actions in mailing physically and legally

threatening communications to the IRS agents involved in his case in

order to halt their collection activities, as well as his action in posting

the threatening "no trespassing" sign at the entrance to his property

directed to federal law enforcement officers and federal civil servants,

are sufficient to sustain his conviction on Count Two. 

III.

We next address Stern’s challenge to the sufficiency of the evidence to sustain his conviction on Count Three for bank fraud, in violation of 18 U.S.C. § 1344. With respect to this count, Stern only

challenges the sufficiency of the evidence to establish that First Union

was federally insured at the time of his offense conduct; an essential

element of his federal bank fraud offense. 18 U.S.C. §§ 20, 1344; see,

e.g., United States v. Brandon, 17 F.3d 409, 424 (1st Cir. 1994).

Stern’s challenge is without merit.

At Stern’s trial in July 2000, the government sought to prove First

Union’s federally insured status at the time of Stern’s conduct as

6 UNITED STATES v. STERN
charged in Count Three (i.e., December 16, 1995) via a certificate

issued by the Federal Deposit Insurance Corporation (FDIC) on February 26, 1998. The certificate certified that "the deposits of each

depositor in" First Union "are insured to the maximum amount provided by the Federal Deposit Insurance Act." (J.A. 1025-H). The government introduced this FDIC certificate through the testimony of

First Union district manager Victor Cordone (Cordone). The government showed Cordone the 1998 FDIC certificate and asked him to

identify it. In response, Cordone testified: "This is our certificate from

the FDIC." (J.A. 402). The government then asked: "What does that

mean?" Id. Cordone responded: "This is just a notice that we publish

out in the office that we are in fact insured for all depositors up to

$100,000." (J.A. 402). 

Stern argues the February 1998 FDIC certificate offered by the

government and Cordone’s testimony does not collectively prove the

federally insured status of First Union on December 16, 1995. Rather,

he claims, such evidence only proves First Union’s federally insured

status a little over two years after the criminal conduct charged in

Count Three. 

We, ourselves, are puzzled as to why the government did not take

a more straightforward approach in proving the federally insured status of First Union as of December 1995. For example, the government

could have submitted an FDIC certificate for First Union contemporaneous with that time. Nevertheless, we hold a rational trier of fact,

viewing the 1998 FDIC certificate and Cordone’s testimony in the

light most favorable to the government, could have found that First

Union was federally insured at the time of Stern’s conduct as charged

in Count Two. 

Our holding is supported by our decision in United States v. Safley,

408 F.2d 603 (4th Cir. 1969). In Safley, the defendants challenged

their federal bank robbery convictions on the ground that "the evidence was insufficient to establish that the deposits of the bank were

insured by the [FDIC]." Id. at 605. At trial, a bank employee had testified that the deposits "‘are’ insured by the [FDIC]." Id. We observed

that this testimony, taken literally, could have referred to the time of

trial. Id. We also observed that, when considered in context, the testimony could have referred to the time of the robbery. Id. On appeal,

UNITED STATES v. STERN 7
we held that the testimony, when viewed in the context of all the evidence, was sufficient to prove the federally insured status element,

since the "jury could draw the reasonable inference that the bank was

insured at the time of the robbery." Id.

The logic of Safley applies equally in the present case. From the

evidence of insurance in the present case (i.e., the 1998 FDIC certificate and Cordone’s testimony), the jury could have drawn the reasonable inference that First Union was federally insured in December

1995. Critical to our conclusion is the fact that Cordone, similar to the

bank employee in Safley, testified, in referring generically to the

FDIC certificate in front of him, that "we are in fact insured for all

depositors up to $100,000." (J.A. 402) (emphasis added). In sum, we

affirm Stern’s bank fraud conviction. 

IV.

Following an overview explanation of the district court’s sentencing calculations with respect to Stern, we will address two of Stern’s

numerous challenges to his sentence under the United States Sentencing Guidelines (Sentencing Guidelines or USSG). 

The district court determined Stern’s Criminal History Category

under the Sentencing Guidelines to be Category I. In determining

Stern’s offense level under the Sentencing Guidelines, the district

court used the grouping rules, USSG Ch.3, Pt.D, to group the seven

counts on which Stern was convicted into four groups. The first group

consisted of Counts One (18 U.S.C. § 286) and Three (18 U.S.C.

§ 1344). The second group consisted only of Count Two (26 U.S.C.

§ 7212(a)), and produced the highest sentencing range of all the

groups at 87 to 108 months’ imprisonment.1 The third group consisted

of Counts Four (§ 115) and Six (§ 876); while the fourth and last

group consisted of Counts Five (§ 115) and Seven (§ 876). With the

addition of offense levels as provided in USSG § 3D1.4, Stern had a

1While the revised Presentence Report recommended that Count Two

be grouped with Counts One and Three, for a total of three sentencing

groups as opposed to four, we find no error in the district court’s treatment of Count Two as a separate group, for a total of four sentencing

groups as opposed to three, pursuant to USSG § 3D1.1. 

8 UNITED STATES v. STERN
combined adjusted offense level of 32. When this number was combined with Stern’s Criminal History Category of I, Stern had a sentencing range of 121 to 151 months’ imprisonment. The district court

sentenced Stern to the highest sentence in this range. 

A.

We first address Stern’s challenge to the district court’s application

of a six level enhancement to his base offense level for Counts Four

and Six (Group Three), and Counts Five and Seven (Group Four),

respectively, pursuant to USSG § 2A6.1(b)(1), for conduct evidencing

Stern’s intent to carry out his kidnapping threats against Judges Mullen and Voorhees. His challenge is without merit. 

USSG § 2A6.1(b)(1) provides for a six level increase in a defendant’s base offense level for violation of 18 U.S.C. § 115 and § 876

"[i]f the offense involved any conduct evidencing an intent to carry

out such a threat." Commentary to this Guideline provides that:

In determining whether subsection[ ] (b)(1) . . . appl[ies], the

court shall consider both conduct that occurred prior to the

offense and conduct that occurred during the offense; however, conduct that occurred prior to the offense must be substantially and directly connected to the offense, under the

facts of the case taken as a whole. 

USSG § 2A6.1, comment. (n.2). "We review de novo a district court’s

application of the Sentencing Guidelines to a given factual scenario."

United States v. Worrell, 313 F.3d 867, 878 (4th Cir. 2002) (reviewing challenge to USSG § 2A6.1(b)(1) enhancement). 

The record supports the district court’s determination that Stern

exhibited conduct evidencing his intent to carry out his kidnapping

threats against Judges Mullen and Voorhees. Critical, in our view, is

the evidence that Stern was the Chief Justice of Our One Supreme

Court, a court largely created by him and which had a court rule providing that its dictates would be enforced by armed militia. Stern also

kept many firearms at his home within easy reach, some of which he

kept loaded. When all of this evidence is considered, as a whole, with

UNITED STATES v. STERN 9
Stern’s threats in the kidnapping documents to use Our One Supreme

Court’s "lawful special appointed constables [to] make appropriate

apprehension of" Judges Mullen and Voorhees unless such individuals met the court’s demand to release John Anthony Norris, the conclusion is inescapable that Stern engaged in conduct substantially and

directly connected to the offense, which evidenced his intent to carry

out the threats. Accordingly, we uphold the district court’s enhancements pursuant to USSG § 2A6.1(b)(1). 

B.

We next address Stern’s challenge to the district court’s enhancement of his base offense level for grouped Counts One and Three

(Group One) by two levels, pursuant to USSG § 2F1.1(b)(4)(A).2

Enhancement under this Guideline section is appropriate if the

offense or offenses at issue involved "a misrepresentation that the

defendant was acting on behalf of a charitable, educational, religious,

or political organization, or a government agency . . . ." Id.

The revised Presentence Report for Stern recommended that the

enhancement apply on the basis that:

The evidence reflects Stern created and used an illegal religious/political court entitled the "Our One Supreme Court"

to facilitate/legitimize the submission of the fictitious comptroller warrants. This common law court was created to

oppose the laws, rules and regulations established by the

United States of America. 

(J.A. 1130). Stern objected to the enhancement, but the district court

overruled the objection on the reasoning of the revised Presentence

Report. 

On appeal, the government asserts that Stern’s use of the comptroller warrants qualifies as a misrepresentation that he was acting on

behalf of a government agency, because Government Exhibit 12-1,

2Effective November 1, 2001, USSG § 2F1.1 was deleted by consolidation with USSG § 2B1.1. See USSG App. C, amendment 617. 

10 UNITED STATES v. STERN
which is representative of the numerous comptroller warrants that

Stern and others attempted to submit to First Union National Bank

and other financial institutions, shows that it is redeemable at the "office of the PostMaster," (J.A. 1025-A), and would be drawn on an

account with the "Treasurer United States of America." Id.

We agree with Stern that the district court erred in applying the

enhancement. The record is devoid of evidence that, in attempting to

negotiate the so-called comptroller warrants, Stern made a misrepresentation that he was acting on behalf of a charitable, education, religious, or political organization, or a government agency. Critically, in

attempting to negotiate the comptroller warrants, Stern only represented himself as the drawee on such warrants. There is no evidence

in the record to even suggest that he represented that he was acting

on behalf of the United States Treasury or the Postal Service in

attempting to negotiate the comptroller warrants. In sum, the district

court erred in applying a two level enhancement pursuant to USSG

§ 2F1.1(b)(4)(A).

Unfortunately for Stern, however, even without the

§ 2F1.1(b)(4)(A) enhancement, pursuant to the correct application of

the Sentencing Guidelines for "Determining the Combined Offense

Level," USSG § 3D1.4, his sentencing range is the same. Accordingly, the district court’s error in applying the § 2F1.1(b)(4)(A)

enhancement is harmless and a remand for resentencing is unnecessary. 

V.

In conclusion, we affirm all of Stern’s convictions and his sentence.3

AFFIRMED

3We have reviewed Stern’s remaining assignments of error and find

them to be without merit. 

UNITED STATES v. STERN 11