Raleigh couple fights seizure of bank accounts
Tom and Marla Bednar will get back about $115,000 that the federal government took from them suddenly last year. They doubt they’ll ever be able to reclaim their reputation in the precious-metals business that has been their livelihood for 30 years.
The Bednars ran Marla Enterprises/Triangle Gold in Raleigh until they got caught up in a law that lets the U.S. Justice Department seize the assets of individuals and businesses that it thinks might be connected to something criminal.
The federal government snatched the Bednars’ bank account after Raleigh police charged them last Aug. 14 with violating state licensing requirements for dealing in precious metals and for not having a city permit to do business in their home.
The charges were dropped in Wake County District Court in November, records show. But bigger problems had begun.
After their arrest, the U.S. Secret Service looked at their Capital Bank business bank account and saw several withdrawals “just under” the $10,000 limit at which banks must report transactions to the government.
Assistant U.S. Attorney Steven A. West used the agency’s report to ask for a federal warrant to take everything in their business accounts, and he got it.
Just business or a crime?
Making a string of transactions under $10,000 instead of a big one that would be reported is called structuring and is illegal.
Structuring was one of the charges that federal prosecutors recently brought against former U.S. House Speaker Dennis Hastert of Illinois. They accused him of breaking up a $3.5 million payment to keep someone quiet about something from his past.
Transactions that looked like structuring were what led the Internal Revenue Service to seize $107,702.66 from Lyndon McLellan of Fairmont, in Robeson County last summer.
The process used against the Bednars and McLellan is called civil forfeiture because the government does not have to prove a crime happened or even accuse anyone.
Owners have to fight in court to get their property back.
According to the Secret Service report, the Bednars’ account showed “twenty-eight (28) suspicious cash withdrawals” between Jan. 6 and May 29, 2014, that ranged from $3,000 to $9,850.
The Bednars’ attorneys said in court papers that the report did not give a fair picture of activity in the bank account.
“The declaration failed to note that, during the same period, the Bednars engaged in multiple cash transactions that exceeded $10,000,” the lawyers wrote.
For their business, the Bednars bought precious metals from pawn brokers, auction houses, second-hand shops and the like, melted down the metal and then resold it to refiners. Tom Bednar said those transactions were often in cash.
The business grew out of a childhood hobby of coin collecting, Bednar said. Gradually, he and his wife began dealing in other metals and grew their network.
They had lived in New York’s Hudson Valley area, caring for Marla Bednar’s parents. In 2008, after her parents died, the Bednars and their sons – one starting high school and the other a sixth grader – moved to Raleigh.
The Triangle, Bednar said, offered a better climate than upstate New York, excellent care for medical conditions he has and – until last year – “a little more gentler life” with less stress.
Trusting too much, twice
Two business transactions last year triggered the Bednars’ troubles.
John Malone, one of the couple’s attorneys, said their problems began when Tom Bednar bought jewelry from a man named Payton Matthews. Bednar said Matthews told him he worked at his mother’s store in South Carolina, showed Bednar his driver’s license and told a detailed story of having done business before with a Raleigh rare-coin dealer with whom the Bednars also had done business.
But Matthews real name was Steven Earl Taylor and he was being investigated by the Moore County police for multiple burglaries and thefts. He’s currently facing 91 grand jury indictments in that county. The Bednars were drawn into the investigation when Moore County officers found the couple’s business cards in Taylor’s wallet.
Moore County officers alerted the Raleigh police, who charged the Bednars with the license violations. Bednar had not recorded detailed information from Matthews’ driver’s license as licensed retail businesses are supposed to do when making such transactions. In the arrest warrants, Raleigh detectives also said they believed the Bednars had bought stolen jewelry from Matthews/Taylor, but they did not charge the couple with that.
On the day the Bednars were arrested, Moore County investigators searched their home.
The searchers left a mess, Bednar and his lawyer said, but found no stolen goods. They took computers, cell phones and notebooks with business records that the Bednars say they still do not have back.
“They kept trying to connect dots that don’t exist,” Tom Bednar said in a recent interview.
“Why,” Bednar asked, “would I engage with an individual like [Taylor]” after a 30-year-career?
“We were contacted by law enforcement authorities from Moore County,” police spokesman Jim Sughrue said. “We followed up on their information in conjunction with them.”
Raleigh’s involvement, however, was limited to discovering what appeared to be license violations and pursuing those, Sughrue said.
In November, the Bednars won dismissal of the local charges, partly on the grounds that they were not going to be doing business with individuals in the future and did not need the license they were charged with not having.
The precious-metals businesses requires a “squeaky clean” reputation, so the arrest and the government’s seizing of their bank account “caused irreparable damage,” Tom Bednar said.
“They have basically lost their business,” added Malone, their attorney.
Now, as they await the return of their money, the couple is selling off valuables they had put aside for their retirement to pay for their sons’ private-school and college tuition.
The couple want their money back, but Tom Bednar’s passion at this point is battling the forfeiture law, which he called “policing for profit.”
The law gives local and state law enforcement agencies 80 percent of seized assets if they bring a federal agency into their case.
It was written to give law enforcement a tool to disrupt illegal drug operations, human trafficking, organized crime or other activities by attacking the money that kept such operations running, even when they could not convict people of crimes. Critics of the law, including the libertarian Cato Institute and the liberal American Civil Liberties Union, argue that it is unfair and has been too widely used to penalize people who are not accused of a crime. Legislation was filed in Congress early this year to reform the law, but it has not reached a vote.
“Every American should be alarmed by this” law, Bednar said. “They seize first and ask questions later. ... They’re going to do it over and over and over again” until the law is changed.
The Bednars’ had hoped to learn how their case came to the Secret Service’s attention and their lawyers had tried to obtain from the U.S. Attorney’s office records of the contacts among local, state and federal law enforcement involved in the case.
But on May 1, the U.S. Attorney’s Office for the Eastern District of North Carolina, which covers from Wake County to the coast, filed a motion in U.S. District Court to drop the Bednars’ case.
West, the assistant U.S. attorney, told a judge that his office had decided to apply a March 31 Justice Department policy that limits civil forfeiture actions.
He wrote that the policy set by then-Attorney General Eric Holder said there should be no seizures in cases “like this, where there is no probable cause that the funds structured were generated from unlawful activity.”
In a 55-page reply to West’s dismissal action, the Bednars’ lawyers noted that the government filed papers to drop the case a few minutes before 5 p.m. on the day it was supposed to turn over all its information. Now they are asking the court to make the government return all the Bednars’ money, interest on the money and $23,216.23 in legal costs and “a release by the United States of all claims against the Bednars or their property.”
The U.S. attorney’s office said through a spokesman that it considered the Bednar case to be an open investigation and would not comment on it or on the use of civil forfeitures generally.
A spokesman for the Secret Service in Raleigh also declined to comment on the case.
But Tom Bednar is talking and he wants to talk to Congress. He wants a chance to testify about what happened to him and his wife.