Conspiracy theories, criminal investigations plentiful in NC bail bonds world

The State Bureau of Investigation is investigating a local attorney with ties to the state's bail bond industry, signaling there may be more to a two-year investigation by the Secretary of State's Office into violations of the state's lobbying registration laws.

Mark L. Bibbs and a pair of clients in the bail industry were indicted earlier this month by a Wake County grand jury. They're accused not only of lobbying the state legislature without filing the proper paperwork, but of covering it up when investigators came calling.

The alleged conspiracy added multiple felony counts to misdemeanor lobbying charges. The Secretary of State's Office, and now the Wake County District Attorney's Office, say Bibbs falsified records to make lobbying payments look like legal fees and that clients Mina Mustian and Dallas McClain cooperated in the ruse.

Why they would do this, and why the investigation lasted so long, remain unclear.

Over the last year, investigators have raided Bibbs' law office in Raleigh, searched his car and done a forensic analysis of his computer. They got search warrants for various bank and email accounts used by the trio.

Last week, an SBI spokeswoman confirmed that the agency also has an active investigation into Bibbs. She would not comment beyond that. Wake County District Attorney Lorrin Freeman said there are "other matters" under investigation beyond the indictments but wouldn't elaborate.

Joe Cheshire, one of the best known criminal defense attorneys in North Carolina, represents Bibbs, who is a lawyer, a lobbyist and twice ran for political office.

For months, Bibbs and McClain had the attention not just of the Secretary of State's Office, which handles lobbyist oversight, but also of the state Department of Insurance, which regulates the bail bonds industry. Last fall, the insurance department seized a bail bonds firm McClain owns in Greensboro called Cannon Surety, saying there were problems with the firm's accounting and that company agents had written millions more in bonds than the firm could cover.

Cannon has ties to a bail bondsman training school Mustian owns, ties so close that investigators have said they often appear to be combined.

Bibbs and Mustian declined to comment after their indictments Feb. 6, citing advice of counsel. McClain didn't return a phone message. But all three spoke at length with WRAL News before the indictments came down, weaving a tale of a long-simmering war in the bail bonds industry and a conspiracy to shut them down.

It is the sort of story easily dismissed – except for what happened in 2012.

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In March 2012, Mustian, under the name Lyne Thompson, formed the Rockford-Cohen Group, which would become the parent company of a school called the North Carolina Bail Academy.

The academy offered pre-licensing training and continuing education required by the state for bail bondsmen operating in North Carolina. The new school would compete directly with the North Carolina Bail Agents Association, which offered the same training.

Three months later, in the final days of that year's legislative session, the General Assembly passed a bill granting the Bail Agents Association the exclusive right to offer training. The measure passed almost unanimously, with some legislators saying they were told the association was the only group offering it.

The bill would have put Mustian out of business, and she sued. Wake County Superior Court Judge Donald Stephens declared the law unconstitutional. Ironically, Stephens would later sign some of the search warrants that led to Mustian's indictment.

In her suit, she accused the Bail Agents Association of trying to run her out of business. State Rep. Justin Burr's father, Phil Burr, was once president of the group, and Mustian pointed fingers at the Burrs as well as at then-Sen. Tom Apodaca, who also worked in the bail bonds industry.

Both men recused themselves from votes on the bill and denied any wrongdoing, but emails Mustian unearthed via a public records request indicated that state Department of Insurance officials at least consulted with Apodaca before the legislation came up.

Mustian also accused then-Insurance Commissioner Wayne Goodwin of conspiring with the Bail Agents Association. She said the department "consistently" sent people to monitor training classes put on by her Bail Academy, where McClain has been an instructor, until it became clear legislation would shut the academy down. Her records requests turned up no evidence of similar monitoring at Bail Agents Association classes, she said in court filings.

Goodwin, now chairman of the North Carolina Democratic Party, has repeatedly declined WRAL News interview requests, citing a separate and ongoing lawsuit making some of the same accusations against him.

Mustian told WRAL News that she has gone, for years, by the name Lyne Thompson. She filed her lawsuit to overturn the training monopoly law under that name. But when a Secretary of State's Office investigator approached her last year, he discovered that her driver's license has, since 1978, listed her as Mina Lynette Mustian, according to warrant affidavits unsealed last year.

Mustian told the investigator that she married a David Thompson 33 years ago but never legally changed her name. The warrant states that she was unable to recall where she got married beyond identifying it as an island "somewhere off the coast of Florida" and that she failed to follow through when investigators asked her to document any of this.

She told WRAL News the marriage was "an off-the-wall, spur-of-the-moment decision" that took place on a private island owned by the people who would become her in-laws. She has since updated her driver's license and showed it to WRAL several months ago. It identifies her as Mina Lynette Mustian Thompson.

She sees parallels between the law that almost shut her down in 2012 and the multi-agency investigation that she, McClain and Bibbs face now.

"These are state agencies that have been duped by a guy who can't shut up," she said.

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That "guy" is Mark Cartret.

Cartret alerted the Secretary of State's Office that Bibbs was lobbying in 2016 without having registered. He also pushed the Department of Insurance to move against Cannon Surety, McClain's company.

What Bibbs, McClain and Mustian see as a competitor trying to run them out of business Cartret sees as a crusade to clean up corruption in his industry. He's a former president of the Bail Agents Association but said Friday he's not part of the group now.

In emails he provided to WRAL News, Cartret repeatedly slams insurance department officials over their lack of action. In a recent one, he bemoans the fact that it took another agency – the Secretary of State's Office – "to property investigate and charge them."

"A few at the Department (like you) refusing to do your job and enforce North Carolina laws has caused a huge level of corruption to flourish," Cartret wrote to one Department of Insurance official. "Respectfully you should resign or be replaced."

In July 2017, Cartret gave a lengthy presentation to the department, much of which focused on Carl Valentine, a one-time business partner of McClain's at Cannon Surety. Freeman, the Wake County district attorney, said last week that she is familiar with Valentine's name but that he isn't a focus of the ongoing investigation.

"One of my attorneys stated the Department thinks I am crazy and called my reporting childish and akin to street fighting," Cartret said during his presentation, according to text he provided. "Do crazy people not deserve access to the regulatory process?"

Cartret told WRAL News that he has amassed 36,000 documents in his investigation.

"At the end of the day, I guess we'll see who's standing and who's indicted," he said.

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The investigation by the Lobbying Compliance Division of the Secretary of State's Office dates to 2015, but it heated up in the summer of 2016.

That's when Cartret and former state Rep. Robert Brawley tipped the office that Bibbs was lobbying without being registered. Brawley had pushed back against House Republican leadership in 2013 over fallout from the bail-training monopoly law. He was also McClain's partner at Cannon Surety and said he felt he'd been cheated out of hundreds of thousands of dollars.

Brawley would eventually serve 15 days in jail for violating a judge's order in a lawsuit tied to him leaving that company. Bibbs and McClain accuse him of sharing sensitive information with a competitor. Brawley said Friday he never even possessed the document in question. He accused Cannon Surety of falsifying tax and other documents, including reports to the Department of Insurance.

"I think they're a bunch of crooks," Brawley said. "It's a team that's spread throughout the state. [Bibbs, McClain and Mustian] are just the tip of the iceberg."

After Department of Insurance agents raided Cannon Surety last fall, they changed the locks and took control of the business, according to a court documents. A department report this year indicates that the company withheld payroll taxes but didn't send the money to the IRS, at least in 2017 and possibly in other years as well.

Bibbs and McClain have been trying to get the company back ever since the raid. Bibbs deposed Insurance Commissioner Mike Causey in the case last year and pointed to $10,000 in donations Causey's 2016 political campaign took from people tied to the Bail Agents Association, a political action committee connected to them and a law firm Bibbs said represents Cartret.

Bibbs suggested a pay-to-play scam not unlike the ones that sunk former House Speaker Jim Black and former Agriculture Commissioner Meg Scott Phipps a decade ago. Both served time in federal prison.

During Bibbs' questioning in the deposition, a clearly exasperated attorney for the Department of Insurance named Daniel Johnson repeatedly lodged objections for the record, which was taken down by a court reporter.

"Well, Mr. Johnson, when the FBI asks him these questions, I'm just getting him ready for it," Bibbs said at one point. "Because it appears, Mr. Commissioner, that you have committed a federal offense, and your lawyer needs to inform you of that."

Johnson's reply: "Object to your ridiculous testimony."

"Well, you can call it ridiculous if you want to," Bibbs said. "You let him explain that to a federal grand jury."

"Object to your ridiculous testimony," Johnson replied again.

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Charles T. Mathis once taught at Mustian's bondsman training school. He's now doing time at Tabor Correctional Institution over violations of state bail bonding laws.

The former bondsman is also pushing to depose Goodwin and pull thousands of records from the Department of Insurance in an effort to prove a conspiracy. The department pulled Mathis' license in November 2016 – weeks before Goodwin left office – after Mathis admitted writing bonds over the state's statutory limit. Mathis begged for a lighter punishment that would allow him to stay in business.

Last March, Union County Superior Court Judge C.W. Bragg said Mathis should get those records, finding "credible evidence" that could establish "a close and even incestuous relationship" between Goodwin and the Bail Agents Association, Mustian's rival.

Goodwin has declined to discuss the case with WRAL News, and the state is fighting Bragg's order before the North Carolina Court of Appeals.

The Insurance Department's case against Mathis was heard by then-Administrative Law Judge Phil Berger Jr., son of the one of the state's most powerful politicians, Senate President Pro Tem Phil Berger. Berger Jr., who has since been elected to the Court of Appeals, limited the evidence Mathis could subpoena and the questions he could ask Goodwin in a deposition.

Berger Jr. had served as a course instructor for the Bail Agents Association, and he declined Mathis' demand that he recuse himself from the licensing case. Berger Jr.'s order covering his decision states that his only connection to the Bail Agents Association was as an instructor and that he hadn't taught for the group in about two years when he handled Mathis' case.

Berger Jr. did not respond to WRAL News' interview requests. He sided with the Department of Insurance in Mathis' case and recommended that the department revoke Mathis' license.

Mathis has served as his own attorney through much of this case, but more recent filings indicate Bibbs represents him. According to investigators with the Secretary of State's Office, one of the bills that Bibbs worked as an unregistered lobbyist at the legislature would have lessened the punishment for Mathis' violations of the state's bail bonding rules.

Mathis appealed his license revocation to Superior Court, where Bragg vacated the decision and said Mathis should be allowed deeper discovery. Berger Jr.'s limits on discovery prevented Mathis from "attempting to establish the arbitrary and capricious manner in which NCDOI has handled this case," Bragg wrote in his order.

"The official agency record in this case is replete with evidentiary issues and questions with which petitioner should have been able to explore," Bragg wrote.

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Bibbs said he got into the bail bonds business through District Judge Milton F. "Toby" Fitch Jr. The two once practiced law together, and Fitch's father was a bail bondsman.

Bibbs also interned, in the early 1990s, with then-House Speaker Dan Blue, now the Senate minority leader. A Democrat, Bibbs has run twice for the state House, losing to Rep. Susan Martin, R-Wilson, in the 2012 general election and failing to beat Rep. Jean Farmer-Butterfield, D-Wilson, in the 2014 Democratic primary.

Bibbs also grew up with Republican House Speaker Tim Moore, and the two roomed together at the University of North Carolina at Chapel Hill. Moore was listed as the "special guest" at a post-election fundraiser Cannon Surety planned for Causey in December 2016, shortly after Causey won his election over Goodwin.

The event raised questions over Cannon's involvement, given a state law forbidding corporate political donations. The State Board of Elections investigated and concluded that McClain spoke to Causey about a meet-and-greet with other bondsmen but didn't get into details. McClain acknowledged organizing the gathering and said Moore never approved or saw the invitation.

The event was canceled because of the questions, and the company paid about $500 into the state forfeiture fund, equal to the cost of invitations.

Some Democrats have quietly suggested that Moore tried to interfere in the Secretary of State Office's investigation of Bibbs.The House Rules Committee voted to begin impeachment investigations against Secretary of State Elaine Marshall on a party-line vote last June, in the midst of the Bibbs investigation. The effort dissipated after the primary state legislator pushing it resigned, citing personal reasons.

Republicans also passed legislation this year to move lobbying enforcement out of Marshall's office as part of broader reforms caught up now in a lawsuit with the governor. Earlier this month, the Secretary of State's Office sent Republican leadership a letter, pointing to the indictments as a reason to leave lobbying enforcement with the office instead of shifting it to the state's new Board of Elections & Ethics Enforcement as planned.

Moore's fiancée, Jennifer Gray, joined the Department of Insurance as an attorney last March. She's a former Wake County assistant district attorney, and after joining the insurance department, she sat in on a meeting about Bibbs' case. Freeman, the Wake County prosecutor, said she understands the Secretary of State's Office has concerns but said she's felt zero political pressure in the case.

"None," she said.

Shane Guyant, who headed the Department of Insurance's criminal investigations unit until last month, said the same thing. In fact, he said Moore avoided the case "like the plague."

Moore, through a spokesman, declined to discuss Bibbs with WRAL News. Gray said Guyant asked her to attend the meeting because she was a new criminal attorney for the department and that Moore didn't talk to her about it or ask her to do anything.

"I basically just listened. I didn't say anything," Gray said Friday. "I've had no involvement with it since. ... No ulterior motives on my part."

Guyant, now a detective with the Halifax County Sheriff's Office, said much the same thing.

"No political people ... are in bed with [Bibbs] whatsoever," he said. "He's just a lone wolf. He's just a pain in the ass."