Court Opinion

ID: 1013090
Source: CourtListenerOpinion
Date Created: 2013-07-04 20:55:24.61426+00
Date Added: 2024-06-11T09:39:30.036825
License: Public Domain

Vacated by Supreme Court, January 24, 2005

                                             UNPUBLISHED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                Affirmed by unpublished per curiam opinion.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.
2                       UNITED STATES v. STERN
Unpublished opinions are not binding precedent in this circuit.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 discre-
tion by denying his (Stern’s) motion for recusal. Finally, Stern chal-
lenges 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."
                        UNITED STATES v. STERN                         3
   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 approxi-
mately $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 lia-
bility.

   Shortly thereafter, Stern sent correspondence to the agents, threat-
ening them with criminal investigations and possible arrest if they did
not cease their collection activities. Some of Stern’s threatening corre-
spondence was purportedly issued by "Our One Supreme Court,"
which was a common law court located in Macon County, North Car-
olina. Stern greatly participated in creating Our One Supreme Court
around the same time that he had attempted to negotiate the Comp-
4                       UNITED STATES v. STERN
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 gener-
ated numerous documents threatening IRS employees with multimil-
lion dollar judgments and the filing of liens.

   Beginning on December 13, 1996, the IRS issued four or five lev-
ies 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 cal-
led 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 viola-
tions 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) (unpub-
lished).

   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.
                       UNITED STATES v. STERN                        5
  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 kid-
nap 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, intimi-
date, 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 evi-
dence to sustain his conviction on Count Two, for obstructing the
work of IRS agents, in violation of 26 U.S.C. § 7212(a). His chal-
lenge 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
6                       UNITED STATES v. STERN
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 quota-
tion 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 rea-
sonable 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 evi-
dence to sustain his conviction on Count Three for bank fraud, in vio-
lation 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
                        UNITED STATES v. STERN                          7
charged in Count Three (i.e., December 16, 1995) via a certificate
issued by the Federal Deposit Insurance Corporation (FDIC) on Feb-
ruary 26, 1998. The certificate certified that "the deposits of each
depositor in" First Union "are insured to the maximum amount pro-
vided by the Federal Deposit Insurance Act." (J.A. 1025-H). The gov-
ernment introduced this FDIC certificate through the testimony of
First Union district manager Victor Cordone (Cordone). The govern-
ment 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 sta-
tus of First Union as of December 1995. For example, the government
could have submitted an FDIC certificate for First Union contempora-
neous 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 evi-
dence was insufficient to establish that the deposits of the bank were
insured by the [FDIC]." Id. at 605. At trial, a bank employee had testi-
fied 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 testi-
mony could have referred to the time of the robbery. Id. On appeal,
8                       UNITED STATES v. STERN
we held that the testimony, when viewed in the context of all the evi-
dence, 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 certifi-
cate and Cordone’s testimony), the jury could have drawn the reason-
able 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 sentenc-
ing calculations with respect to Stern, we will address two of Stern’s
numerous challenges to his sentence under the United States Sentenc-
ing 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
    1
   While 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 treat-
ment of Count Two as a separate group, for a total of four sentencing
groups as opposed to three, pursuant to USSG § 3D1.1.
                        UNITED STATES v. STERN                         9
combined adjusted offense level of 32. When this number was com-
bined with Stern’s Criminal History Category of I, Stern had a sen-
tencing 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 Mul-
len and Voorhees. His challenge is without merit.

   USSG § 2A6.1(b)(1) provides for a six level increase in a defen-
dant’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; how-
    ever, conduct that occurred prior to the offense must be sub-
    stantially 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) (review-
ing 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 pro-
viding 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
10                       UNITED STATES v. STERN
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 individu-
als met the court’s demand to release John Anthony Norris, the con-
clusion 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 enhance-
ments pursuant to USSG § 2A6.1(b)(1).

                                    B.

   We next address Stern’s challenge to the district court’s enhance-
ment 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 reli-
      gious/political court entitled the "Our One Supreme Court"
      to facilitate/legitimize the submission of the fictitious comp-
      troller 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 comptrol-
ler warrants qualifies as a misrepresentation that he was acting on
behalf of a government agency, because Government Exhibit 12-1,
  2
   Effective November 1, 2001, USSG § 2F1.1 was deleted by consoli-
dation with USSG § 2B1.1. See USSG App. C, amendment 617.
                        UNITED STATES v. STERN                        11
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 "of-
fice 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 misrepre-
sentation that he was acting on behalf of a charitable, education, reli-
gious, or political organization, or a government agency. Critically, in
attempting to negotiate the comptroller warrants, Stern only repre-
sented 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. Accord-
ingly, the district court’s error in applying the § 2F1.1(b)(4)(A)
enhancement is harmless and a remand for resentencing is unneces-
sary.

                                   V.

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

                                                            AFFIRMED
  3
   We have reviewed Stern’s remaining assignments of error and find
them to be without merit.