In federal suit, indicted bail bonds owner alleges conspiracy by top state officials
Posted August 13, 2020 2:14 p.m. EDT
Updated August 13, 2020 8:27 p.m. EDT
Raleigh, N.C. — A federal lawsuit accuses state Insurance Commissioner Mike Causey of crushing a company solely for political gain and under pressure from top Republican lawmakers.
Causey denies the allegation, which hinges on affidavits from two bail bond agents, both of whom say Causey acknowledged the conspiracy to them in a Greensboro Bojangles. A third bondsman disputes their version of the conversation, telling WRAL News that he was there, and he doesn't remember the alleged admission at all.
The lawsuit offers another glimpse into the tangled world of North Carolina bail bonding, an industry regulated by Causey's Department of Insurance. For years, competing factions have tried to outmaneuver each other, filing complaints on their competitors and, in one case, pushing through legislation that gave one side a monopoly on lucrative training classes until the law unraveled and a judge declared it unconstitutional.
This latest suit was filed in late July by Dallas McClain, who founded a bail bonding surety company that the state seized three years ago. He's been under indictment in Wake County since 2018, charged with obstruction of justice in a case tangentially related to this one.
The suit names Causey, many of Causey's deputies at the Department of Insurance, three deputies at the state Attorney General's Office and 20 "as-yet unidentified individuals" referred to only as John or Jane Doe.
The Department of Insurance raided and took control of McClain's business, Cannon Surety, in September 2017, alleging a slew of financial issues and saying bail agents wrote millions more in bonds than the operation could cover.
McClain has argued since the raid that Causey targeted his company, even though a competing one had more serious issues. His lawsuit, filed in the U.S. District Court for the Middle District of North Carolina, builds on that accusation for 100 pages.
"The department’s 'emergency' seizure was based entirely on a false narrative and was, in reality, simply a corrupt political favor to third-parties," the suit alleges.
Berger, Apodaca, Bojangles
In the aftermath of Cannon's takeover, longtime bail bonds agent Alwanda Beane reached out to Causey for a meeting.
Beane wrote bonds for Cannon, and she described herself in affidavits as a family friend of Causey's. Beane said she supported Causey over Wayne Goodwin in the 2016 insurance commissioner's election because she didn't like Goodwin's "close affiliation and allegiance" to Cannon's nemesis in the bail-bonding world: the North Carolina Bail Agents Association.
But now she alleges that Causey, too, brought pressure to bear on Cannon.
They met at a Greensboro Bojangles, and Beane said in two sworn affidavits – one dated this year, one from 2019 – that Causey told her and another bond agent that Senate President Pro Tem Phil Berger and former Sen. Tom Apodaca made him shut Cannon down.
"Mr. Causey told us under no uncertain terms that he was forced to shut down Cannon and told to shut down Cannon by Senator Phillip Berger and former Senator Tom Apodoca," Beane's April 2020 affidavit states. "Mr. Causey reiterated he did not want to because he knew Mr. McClain and liked Mr. McClain, but legislation he wanted and/or needed would be blocked if he did not do so."
Bondsman Todd Reavis, who was also at the meeting, gave much the same account, though his affidavit in the case is less detailed.
"Mr. Causey stated that he had found out that for anything to be accomplished he had to 'play ball' with Mr. Phil Berger and Tom Apodaca," Reavis said in his affidavit. "Also, Mr. Causey said he was forced, by Phil Berger and Tom Apodaca, to take action against and investigate Cannon Surety for their solvency."
Causey called the accusation "absolutely false."
"I’ve never said any such thing," he said, "never even came close to saying any such thing.”
The commissioner said he had "no conversations at all" about Cannon's takeover with Berger or Apodaca.
Through a spokesman, Berger denied the accusation as well. Apodaca is a former bondsman and used to own his own bail bonds insurance company. The N.C. Bail Agents Association's PAC used to donate to his political campaigns.
Apodaca said he couldn't pick McClain out of a lineup.
"I have never talked to Causey about this, neither has Berger," he said.
Apodaca was once Berger's right-hand man in the Senate, helping lead the chamber's Republican majority and chairing the powerful Senate Rules committee until he left the General Assembly in 2016 – more than a year before Causey's department seized Cannon Surety. The senator went into lobbying, and he represents the American Bail Coalition, along with more than a dozen other unrelated groups.
There were five people at the Bojangles meeting: Causey, Beane, Reavis, Causey's former campaign manager Mendy Greenwood and Duane Long, a bondsman in Yadkin County.
"I don’t even remember Cannon being discussed," Long told WRAL last week.
It was, though, according to Causey.
“I’m sure I got up to go to the bathroom," Long said. "Knowing Wanda Beane, if she talked about it, she didn’t cover it in the time I went to the bathroom. … She likes to go into detail."
Long said he wasn't familiar with the lawsuit when WRAL reached out. He wasn't asked to provide an affidavit, but McClain's attorney in the matter, Grady Richardson, said last week that he may eventually request one.
Richardson, whose office is in Wilmington, also confirmed that he hasn't referred allegations from the suit to criminal investigators.
"Not yet," he said in an email.
McClain, who lives in Rockingham County, referred all questions to Richardson. He and Cannon Surety used to be represented by Mark Bibbs, an attorney who was disbarred this year after a lengthy investigation into his unregistered lobbying work on Cannon's behalf.
Bibbs has been accusing Causey of a conspiracy against Cannon since at least 2018.
McClain himself was indicted in the Bibbs case, charged in 2018 with a quartet of obstruction of justice and conspiracy to commit obstruction felony charges. An associate of McClain's, who has gone by the names Lyne Thompson and Mina Mustian, faces similar charges in what the Wake County District Attorney's Office alleges was a cover up.
Both cases remain pending.
Neither Beane nor Reavis would discuss their affidavits in depth with WRAL. Reavis simply said he had no comment and hung up. Beane verified the affidavit but wouldn't answer questions about the meeting's details.
Greenwood, a Causey confidante who now works at the Department of Insurance, told WRAL that she didn't remember much about the meeting. She said she couldn't say whether Berger's or Apodaca's names came up and that the meeting got too deep into the nitty-gritty of the bail bonds industry and its complicated regulatory structure for her to follow.
"It kind of went all over my head," she said.
Causey said the thrust of the meeting was that Beane and Reavis wanted him to leave McClain alone because "in their opinion, he was trying to do the right thing." He said they told him that "there were other bondsmen in North Carolina that were doing things that we needed to be looking at."
“I do recall that Wanda Beane had mentioned that she had worked with Apodaca in the past," Causey said. "She did not have positive things to say about him. And I don’t remember Berger’s name coming up, unless it was the fact that Apodaca was working in politics."
'Dallas’ answers didn’t line up'
For years, Mark Cartret, who owns his own bonding company, pushed the Department of Insurance to take action against McClain and Cannon Surety, accusing them of a litany of transgressions, including bilking a former state lawmaker out of his fortune.
Former Rep. Robert Brawley was an early investor in Cannon Surety and says he lost close to $1 million because of it. He said he got to know McClain while researching a 2012 law the General Assembly passed that gave a competing faction – the North Carolina Bail Agents Association – a monopoly on bail agent training academies.
The law threatened to put McClain's partner, Thompson, out of business. She had recently started a training academy, and McClain's latest suit says she got death threats, that her cat was killed and hung with a sign saying "SHUT IT DOWN" and that she was forced off the road on two separate occasions.
It was Thompson who sued over the 2012 law and got it overturned.
Having met McClain and Thompson, Brawley invested in Cannon, borrowing against real estate holdings to raise the money. He began to worry, he said, when a pair of management companies walked away from Cannon Surety over shoddy recordkeeping.
"Dallas’ answers didn’t line up with what I could find in the books," the now retired legislator said this week. "There just was not a record of what was there. ... Before I knew it, Dallas was suing me.”
McClain accused Brawley of conspiring with Cartret, passing him sensitive company information. Brawley maintains his innocence. A judge sent Brawley to jail for 15 days for contempt of court in the case.
Cartret has owned a handful of bail bonding entities, and he's well known among Department of Insurance regulators. In his lawsuit, McClain says Cartret made at least 110 complaints to the department in a little over a year.
Ninety-nine of them were against McClain, his businesses or bond agents working with him, the lawsuit states. The suit alleges that deputies in Causey's department "plotted to shut down Mr. McClain’s company" just as he was about to write a big bond and secure the company's financial future.
The lawsuit accuses Causey and his department of doing this, at least in part, to weaken McClain's position against Cartret, who was himself negotiating away regulatory actions the department had pending against his own operation.
The suit points to Department of Insurance records, which appear to be comments from a DOI official named Jackie Obusek, who was negotiating a settlement of various regulatory problems with Cartret's company. Those comments note the potential impact an anticipated state takeover of Cannon would have on ongoing litigation between Cartret and McClain.
"Suspending Cannon's license and putting them in supervision may put an end to lawsuit since the source of funds may be interrupted," the typed comments appended to the agreement state.
After seizing Cannon under state laws that let the government "rehabilitate" failing companies, the department "quickly dismissed Cannon’s claims and involvement in the lawsuit against Mr. Cartret," McClain's lawsuit states.
The Department of Insurance's general counsel, John Hoomani, declined to comment on the allegations, citing the pending litigation. He said the department would respond through the courts.
Cartret told WRAL that it is, "shocking to read this latest complaint which has a disturbing distortion of facts."
"For the past several years, our courts have been used as a tool for weaponized litigation and as a vehicle to harass whistleblowers," he said in an email. "My thoughts are with the Brawleys – two elderly retired victims of a calculated scheme to obtain their life’s savings. Once this scheme was exposed, frivolous court actions began to fall like rain."