Well imagine that a North Carolina State Department that does not do the job that they were set up to do. Can you imagine that ? The North Carolina Department of Insurance refuses to do their job in policing the insurance laws of this State. I present to you a hearing that was presented yesterday in Raleigh at a so called informal hearing. Before we begin I want to point out that the Department of Insurance has NOT placed any of these people under arrest. It was the Secretary of State. If the Secretary of State has to do the job of the Department of Insurance, why again do we need the Department of Insurance if they collectively are not going to do their jobs. HELLO MIKE CAUSEY. REMEMBER ME? Do your damn job that you were elected to do. If you don’t know how to do it, vacate !!!!!
Here we go !
Report on Findings of the Operations of Dallas McClain, Carl Bayless Valentine, Lynette Thompson a/k/a Mina Mustian, et.al.
Transcript… Presented by Mark Cartret to Agent services Division, Albemarle Building, 2 PM 15 June 2017:
Ladies and Gentlemen,
Thank you for initiating this informal conference. What follows is the culmination of many hours of research I have undertaken for the past two years. You should accept this as privileged and confidential.
I would like to begin by thanking Commissioner Causey for implementing the NCDOI Bail Bond Regulatory Division. Since the exit of Special Services, I have continually asked that the Department create a division to address what my team has been witnessing-increasing fraud due to an atmosphere of deregulation of the Bail Industry in North Carolina. In other words, a matter of public concern which is turning into a matter of public safety.
It has been more than two years since I filed my complaint to Agent Services and the Criminal Investigations Division. A lot has transpired since the time of that filing. Except for a single third-party statement, I have with me exhibits for each allegation I make here today. If at the end of my statement, you desire a copy of an exhibit I have referenced, or if you feel you do not recall something, please feel free to ask for the documents I have presented.
I begin this report with an update. I only learned yesterday that a complaint filed nearly a year ago, involving the collection of a $ 1 million premium that appears to have been directed to a disqualified individual, was either stopped or was never initiated. It appears that after I began to raise concerns about the issue, and lack of statutory compliance, the agent allowed her license to lapse. The Department wrote me on June 13, 2017, “Please be advised that Melissa Jones has not been a surety bondsman since her licensed lapsed on 07/01/2015. The file on her closed at the time.” It should be noted that the licensee was licensed through 09/01/2016, according to the Departments online system. She was licensed when she received the $ 1 million premium on December 17, 2015. The insurer she accepted the premium on behalf of, continues to be licensed. These are the types of inconsistences I have been witnessing from the North Carolina Department of Insurance.
“Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, of which is likely to cause foreseeable grave injury or harm to persons, property, or both. It is conduct that is extreme when compared with ordinary Negligence, which is mere failure to exercise reasonable care.”
What does the records show? At a minimum, someone is responsible for gross negligence. Perhaps there is more involved. That may very well be determined by others not here today. It is not mu intention to go in any other direction that is unless we have reached an impasse. I am simply here to ask for a solution to address a growing criminal element that has become a parasite on an industry you regulate. Members of the Department have ignored complaints against Carl Valentine’s enterprises for years.
Department staff have allowed Valentine and his companies to prey upon consumers, licensees, and the State of North Carolina. This has occurred despite complaints, some from law enforcement, and one from another insurance department. As resent as yesterday I spoke with Mr. Lenwood Bennet, who is retiring in the next month. He indicated he has a theory as to what is going on but unfortunately, he does not wish to explore hypotheticals. He and I share the same philosophy. Rest assured I intend to call him to testify if necessary, in front of whichever venue we all ultimately end up in. Make no mistake about it, the train is pulling away from the station. We must all work together as friend of disagree as foe and agree that we each are part of a solution or part of the problem.
Your records show that Steve Bryant informed attorney James Portman and the Commonwealth of Virginia that the Department was not a collection agency. Both were attempting to alert the Department of the Valentine operation when it was comprised of a few dozen.
Angela Hatchell informed Carol Crooks that dealing with Carl Valentine was a civil issue and closed Mrs. Crooks’ complaint.
I feel there is evidence to support a belief that the Department gave Valentine’s partner’s an insurance company as a settlement to a lawsuit in 2014. That company, and others hiding behind it, appear to be filing a series of frivolous lawsuits that are churning thousands of dollars in fees, while operating illegally and outside of statutory compliance, on multiple levels. That company appears to have been used in attempts to create an illegal PAC immediately after Commissioner Causey took office. Dallas McClain’s PAC appears to have attempted to connect Cannon Surety to both Speaker of the House and our Commissioner. Thankfully neither the Speaker or the Commissioner swallowed the hook.
You cannot make these things up. The gang of infamous characters refers to their attorney, previously suspended by the Bar, as “consiglieri”. McClain, the President of the insurance company has termed himself, “The Kingfish”. My paper trail clearly shows that The Kingfish reports to The Godfather, Carl Valentine. Mrs. Standford, I saw your response to Mark L. Bibbs’ requests for sanctions against you. Mrs. Hatchell should relate to you. Bibbs in yet another email, accused her of lying under oath and committing felony perjury in a deposition. He went on to trash her in a series of emails and while slandering her to others outside of the hearing and away from the Department. Wayne Goodwin lost and is no longer your boss nor is he your client Mrs. Stanford. How much longer will you guys put up with this.
Valentine has hidden behind the scene. He has flagrantly managing his operations, with the Department’s apparent blessing. Key members of his staff, many facing felony indictments, have harmed the State of North Carolina. they have lobbied the General Assembly of the State of North Carolina, illegally, and while roaming the halls of Jones Street and after attending committees, without proper reports being filed. They have harmed the school children of this State. They have harmed the taxpayers. They have harmed the consumers. they have harmed legitimate licensees who follow the rules and laws, administrative code, and tax laws.
they have harmed an industry which, when regulated properly, saves the taxpayers of North Carolina $ 2 BILLION annually.
The Department has allowed Valentine and his operatives to work with PLE and CE instructors approved by the Department while recruiting members to a bail insurance company which they formed unlawfully in 2014. An overwhelming amount of Valentine’s agents are level-3 or newer agents, a very scary thought if you consider the nature of their work environment.
Never mind the renewals by the agents which are required to be submitted under oath, and penalty of perjury while stating whether or not the agent is in business with a disqualified individual. There can be no doubt. If the agent was appointed by Cannon Surety, the agent has been in a relationship with a disqualified individual. The disqualified individual was a founder and twenty five percent member of Cannon and its parent company, as shown in a loan and in an operating agreement, Whether or not the agent knew of the disqualification is another issue. My information supports the fact that specific agents knew of the disqualification and took extraordinary actions to hide Valentine and while covering up his bail-related activities.
Neither McClain or Thompson can claim ignorance or a lack of knowledge. Look at their own emails, business plan, the loan, and operating agreement. Valentines top agent was involved in harming the Indian Nation, loan sharking, and even molesting children.
Rick Burrows told the Department about the fake death certificates years ago, and when Valentines operation had fewer than 30 agents. With the insurance company, courtesy of the department, he now controls well over 200 agents, and gives direction to a bail school that has become an unlawful recruiting vehicle for his companies. Just ask James Richards, who got sued for reporting this activity to the department, while there ia a multitude of documentation that supports James’ statement.
In a letter to the department on May 14, 2007, Loretta Cole, with Cole’s Surety, alerted the department to Valentine committing fraud by filing an application with the department and lying under oath and penalty of perjury. Valentine claimed he resided in North Carolina, while being a resident of Virginia and while telling the Commonwealth that he resided in the jurisdiction. In an informal conference, which was held on May 11, 2008, it was discovered that Valentine, a NC and Virginia licensed bail agent, held appointments with Allegheny and International Fidelity and while claiming he was an MGA.
Valentine was first disqualified in 2007 and not 2012 as shown on the department’s website. Notwithstanding the aforementioned, the department continued to receive complaints against Valentine, Michael Kirk Schon, and other agents Valentine continued to supervise, despite Valentines disqualifications and his and Shon’s lack of North Carolina residency.
On February 17, 2009, Angela Hatchell wrote Donald Caldwell while addressing Caldwell’s complaint against Mr. Shon that also mentioned Valentine. In fact, Mrs. Hatchell copied Valentine. SHE WROTE “The Agent Services received a complaint stating that you had employed a “bounty Hunter” who made threats about repossessing property in this forfeiture case. As you know Mr. Schon is not licensed and is not permitted to deal with any citizen other than normal office duties. Furthermore, North Carolina does not license bounty hunters. Please be advised that our investigations Division does not investigate matters relating to unlicensed activity and should a person involved in your bail bonding business be convicted of unlicensed activity, administrative action may be taken against your license under NCGS 58-71-80 (5) (14). Ironically it appears she threatened the complainant or gave him a strong incentive not to complain further on a matter which may have involved extortion, at worst, and unlicensed activity at best.
In 2012, Phil Bradshaw warned the Department of Valentines activities, which included acting as an MGA over two bail insurance comp[anise and while supervising licensed North Carolina agents in violation of NCGS 58-34-2. The Department refuses to regulate bail operations that claim the title “MGA” while my attorney’s have found no exemptions in the statutes for them. Yet these entities, often large and comprised of disqualified individuals, operate daily while acting as insurance intermediaries and collecting millions of dollars in North Carolina premiums which are sent to other States.
Lakeysha Jenkins in 2014, complaining to the Department against Carl Valentine and Michael Schon under ASD File # 33243, was also redirected away once she began mentioning an involvement with Valentine. The actual wording and nature of her complaint, non-withstanding, It alerted ASD that Valentine was, at a minimum, in a bail-related operation in 2014, after being disqualified.
On September 3, 2014, Jerry Roventini wrote her: “Nor does NCDOI have regulatory authority over Carl Valentine, who does not hold a NC bail bond license.” Really? Does anyone see a pattern?
On January 27, 2010, former deputy Commissioner John Brimm complained to the department in the “Brimm and Reeves Report.” In the report, which highlighted the Department’s deregulation of the bail industry, he attached information, provided to him by the Department. The report from two of your well-respected colleagues shows a scathing breakdown in a huge bureaucracy, a breakdown which is clearly conflicted with public safety and continues unresolved to this day.
Are you really comfortable with allowing Valentine’s gang to supervise and manage agents in a profession that has badges, often carries weapons, uses handcuffs, and has the authority to suspend a person’s civil liberties?
In the worse case scenario, these agents have the authority to break down doors. On 1/21/1999, James E. Dawson entered into a Voluntary Settlement Agreement with the Department for aiding and abetting unlicensed bail bondsmen. On 2/15/1999 James Powell was convicted of unlicensed bonding. On Sept 2000 Daniel Zutler was convicted of operating without a bail bonding license.
The Department has charged and fined many other bondsmen, collection agencies and premium finance companies with operating without licenses or operating with expired licenses. Carl Valentine has multiple disqualification in North Carolina and Virginia. Despite numerous complaints, he has never been charged. No licensed agent, working with, conspiring with, or operating with him has ever been charged.
The Department, despite documentation showing Valentine executing contracts, quoting premiums, collecting premiums, working on forfeitures and offering rewards for defendants failing to appear in court, has continually refused to enforce the law as far as valentine is concerned.
Look at Valentine’s jailhouse attorney running around serving subpoenas, deposing you guys, and making a mockery of the process. He owes the IRS over $1.4 million and yet is appointed to teach and train bail agents. Tim Mathis has multiple indictments for bail related fraud. Yet he continues to write bonds. He would have never been looked at by the Department if not for a local bail agent and the Sheriff of Union County, who continuously asked the Department to enforce the law.
Look at other issues this enterprise has contributed to society. Recent criminal charges against agents appointed by them include: Miguel Angel Nieto, trafficking 100 pounds or $300,000.00 of marijuana.
Perla Lopez 12 felony counts of fraud, Gudieo Toledo, McClain’s and Valentines Office Manager, and Perla Lopez’s brother, charged with notary fraud. Michael Schon, multiple counts of felony fraud whereby he conspired with others while instructing them to create false court documentation. Mr. Schon is not even from North Carolina and while we do not have a nonresident provision in our State, he continues to operate daily in a supervisory capacity over other licensees.
Philip Armachain, federal indictments for multiple counts of loansharking, wire fraud, preying on children and others. I was told that “The Department does not have authority on the reservation” after pointing out his dealings. Mr. Armachain does not operate solely on the reservation but in several counties, off the reservation. He holds a license issued by the Department, not the reservation.
Rosa Ferguson has yet to be charged. Last month she attempted to defraud the Roan County school children out of $45,000.00. She is carrying contracts around to other agents and while working as a key Valentine employee, and while asking for cash from agents to aid and abet Valentines enterprise.
Dallas McClain has not been charged. How many times has he lied to the Department on his renewals ? Such was done under oath and under penalty of perjury. We are talking multiple felony’s. What about his response to Mrs. Hatchell in 2016 ? What of Lyne Thompson ? You approved her company to be a sponsor of PLE and CE while she had an outstanding warrant in Wake County. Do you even know her real name ? She appears to have many names. Accordingly, she and the NC Bail Academy appear exempt 11 N.C.A.C. 13.0541 (b) (3). Under “Bail Bond Pre-licensing Education Courses”, it reads: (3) Pre-licensing courses shall be for instructional purposes only and not for promoting the interests of or recruiting employees for any particular bail bond agency or surety insurance company.”
McClain’s, Thompson’s and Valentine’s Cannon Plan and many of their company emails will attest to many counts of this violation. In contracts Valentine has executed with licensed agents, in 2015, the NC Bail Academy is clearly being introduced by the disqualified Valentine. On July 30, 2015. The Kingfish informing his partners of Cannon’s second quarter financials, and while offering “Carl and Lyne” access writes: “I know that some of the expenses are miss-categorized”. Could be talking about a $165,000 accounting adjustment? You approved Thompson’s and McClain’s company as a sponsor of PLE and CE and while it was allowed to violate the administrative code by recruiting licensees into one single insurance company. If I am to believe Thomson’s own testimony in Rockford Cohen v. James Richards, the approved companies she manages have no financials.
On July 30, 2015, McClain emailed Thompson, copying Valentine, “Lyne: keep the promising newbies coming. Carl: Let’s have another regular forfeiture meeting with you(r) crew whenever you are ready next week.” In her interrogatory response, Ms. Thompson stated: 8. RCG’s financial statements for the years 2013 to present. “NONE” 9. NC Bail Academy’s financial statements for the years 2013 to present. “NONE”. But again, this is nothing new. The Corporate secretary for McClain’s, Thompson’s, and Valentine’s bail insurance company, Mr. Brawley, stated that McClain gave him a K-1 that read “no activity”. This was after a $58 million in bail bond liability had been written. Another agent, according to Cannon’s corporate secretary was told by McClain not to worry about 1099’s and that “Cannon will take care of that.”
On Febuary 20,2015, Valentine executed two contracts as “Company Representative of All American Bail Bonds LLC AABB or Cannon Surety in a business relationship with North Carolina licensed bail agents, William Hillman and Kimberly Mc Swain, and while Cannon Surety LLC was a North Carolina licensed bail insurance company. The notary is these transactions, Perla Lopez, Mr. Valentine earlier claimed had assumed an ownership interest of AABB. AABB IS NOT LICENSED as a Bail insurance company, and yet the contract places the entity on the same level as a licensed entity. AABB openly engaged in a business relationship with bail agents and openly disclosed his relationship with Cannon. These agents, as Dallas McClain did, failed to disclose the relationship with Cannon. These agents as Dallas McClain did, failed to disclose the relationship, at license renewal, with the disqualified Valentine.
Mr. Brawley has stated that Leon Rives, the CPA responsible for Cannon’s 2015 annual audit put so many disclaimers on the required report that it should have been invalidated. The North Carolina Insurance Company Annual Report for Cannon Surety LLC, fiscal year ending December 31, 2016, signed by McClain while “NA” is shown in the place of Robert Brawley, shows that Cannon had access to $2,368,239.00 more in premiums that in 2015. However, McClain on March 8, 2017, in his “Affidavit of Dallas McClain in Response to Defendants Motion for Relief from a Show Cause & Motion for Relief from injunction under oath, states: “It is obvious Cannon has been significantly damaged and revenues are still affected by Defendant’s behavior”. McClain attaches a graph showing damage he claims has been done to Cannon. The attached “Cannon Surety LLC Bond Sales and Company Revenue” graph appears to show the company insolvent. Was it because there had to be a $165,000.00 adjustment to their financials?
I followed up with Mr. Rives regarding the conversation ha had with Mr. Brawley. He told me the financials were “VERY, VERY, BAD” and claimed he was running from these folks. I hear they finally paid him and he is trying to make chicken soup or lemonade. Rives claimed a SENIOR Deputy Commissioner attempted to persuade him to rethink the disclaimers he put into Cannon’s 2015 annual audit. On July 30, 2015, The Kingfish, informing his partners of Cannon’s second quarter financials, and while offering “Carl and Lyne” access writes “I know that some of the expenses are miss-categorized.”
Yet a Senior deputy Commissioner qualified the audit and the 3rd quarter financials. And it appears that he allowed the insurance company to continue on without a statement of actuarial opinion, required under NCGS 58-10-415.
That same Senior Deputy Commissioner, no longer with the Department, according to Mr. Brawley, appeared seeking a job at the bail insurance company, managed by McClain, Valentine, and Thompson while promoting the Senior Deputy’s connections and stating they (Cannon) HAD A CASH COW. This same Senior Deputy came after my company once I had begun alerting him to the criminal activity of this seedy operation. I would later learn that I had unknowingly approached a fox hidden in the henhouse. That fox went on to utilize the full weight of the Department, the Attorney General’s Office, and taxpayer resources in effort’s to destroy me and my company and while using nonexistent policies supported by arbitrary and capricious actions. He lied about a so called special deposit which I believe the Department has used to keep other legitimate insurers out of the State. This same deposit, pulled out of thin air, has been used in efforts to silence me. And has allowed the Department a tool by which to force my company into a settlement with a person I believe was well connected politically.
It goes without saying, Thompson, McClain, and Valentine appear to have defrauded a 73 year old former Representative and Veteran Clyde Robert Brawley. Do not forget, they approached Mr. Brawley once he uncovered their illegal activity, shady book keeping, rerouting insurance premiums to a disqualified individual ect., they filed a lawsuit for defamation and obtained a preliminary injunction to keep him from outing their operation.
With the Department’s blessing, took his entire life savings, called him senile, and embarked on a mission to assassinate his character. The Department hid Valentines disqualification and produced well bound financial documentation in order to entice Mr. Brawley into approaching lending institutions in order to get cash.
They already enticed me into putting up $ 325,000.00, a small number compared to the $850,000.00 Mr. Brawley’s family is out of.
And despite Atlas Management, a Department approved insurance manager, warned the Department in December 2015 that there were deficient records and statutory compliance issues not being met, the gang went on to victimize more people, while growing much larger. In fact, McClain, Thompson, and Valentine operated for nine months without a statutory-required insurance manager. Agreed to in email by the Department. I have an email from Debbie Walker, copying her Senior Deputy Commissioner, which asks Mr. Brawley for the statute that requires an insurance manager. While my focus has been directed at one specific enterprise in the bail industry, a review of other regulatory practices by the Department, involving other lines, and licenses, may well be worth looking into. Mr. Brawley had requested Walker, the Senior Deputy and Commissioner Goodwin to implement an audit of Cannon, which we now know was a sham.
Is anyone surprised to learn that the current insurance manager, AIG, has also given notice to leave, nearly ninety days ago? Tomorrow should be their last day. Let’s see how long the insurer operates this time absent an insurance manager. I have continually heard this isn’t your job. I also heard: “Stay away from Robert Brawley”. Your colleagues told Mr. Brawley “TO STAY AWAY FROM ME” The Department of justice will handle this”. The Department of Justice IS handling this. We are going to make 30 arrests. These folks should have never been licensed. “This is too complicated”. “The Commissioner wants you guys to get along”. Some well respected longtime friends called me telling me to back down. Some of you colleagues told the Commissioner and his staff I had issues, was a constant complainer and to avoid me.
I kept hearing Brawley is crazy. One of my attorney’s stated the Department thinks I am crazy and called my reporting childish and akin to street fighting. Most recently I was informed that the special purpose captive program as it pertains to my company’s license is not working. In the United States, even crazy people deserve access to the regulatory process, equal protection, and the right to a redress of grievances.
Lastly and of further concern is the involvement of the Office of the Attorney General. I have conflicting opinions involving disqualified individuals, the general statutes, and advice given to Rebecca Shigley. The Department, at least two attorney’s, a Criminal Investigations Supervisor, and a former Deputy Commissioner have been told that disqualifies individuals can own a bail insurance company.
Mrs. Standford will recall that my office met with her and her supervisor David Boone over a year ago about many of the aforementioned activities. However I have recently reviewed transcripts from lawsuits filed by McClain, Thompson, Valentine, the NC Bail Academy, Premier Judicial Consultants, and Cannon Surety. The questionable funding of these perpetual lawsuits notwithstanding, members of the Department and assigned counsel appear to be moving to quash subpoenas of information that only assists in the masking of criminal activity. I have been informed by counsel, as well as legislators, that general statutes were never intended to allow for the concealment of illegal, unethical, or immoral activity.
In conclusion I wanted the taxpayers of North Carolina to see that their regulatory process become severely flawed and had failed on its face. I did my best to warn the public of what I believed was a huge public safety issue. I first began with the chain of command, verbally raising my concerns to the Department. Only after communicating my complaints to the regulatory authority who refused to act did I go to the court of public opinion. Some of your former colleagues, Deputy Commissioner and Criminal Investigators have foretold as much warning that the things we are witnessing will eventually come to pass. I have not reinvented the wheel only put together pieces of an ugly, old worn puzzle. Put that puzzle away. Throw it in the trash. Let’s move on.
It became my belief that the 1st Amendment would be the only option at calling Cannon’s problems to the attention of victims such a Mr. and Mrs. Brawley, the school children, the Indian Nation, legitimate licensees, a disadvantaged foreign minority of Hispanics, and many others. The fact that the North Carolina Department of Insurance had allowed a market of unfair competition to form while allowing the insurer to bypass mandatory and specific North Carolina Statutes caused me to become extremely vexed. When I became aware that a high level official was attempting to get a job with the insurer. I knew that I had been complaining to the fox guarding the henhouse. At every point in the chain, it appeared that lobbyists and attorney’s were in collusion with officials, and attempting to withhold key evidence from the public and by obstructing any investigation into the flawed and corrupt process.
Here I am in front of you today for nothing else but for doing what is right. Whistleblowing on this huge enterprise has cost me, my family, and my business, hundreds of thousands of dollars. I have heard that my wife was going to get deported. I was told that I had better buy a gun. A member of this Department made what I believe to have been a racist comment, directly to me at a captive insurance conference, the harassing anonymous phone calls have stopped however. All I can ask is that you also do what is right. Please do your job.
I personally do not get that blank look on my face anymore about the corruption and outright manipulation of the laws by the North Carolina Department of Insurance. People you need to pay attention here. These are people bending you over everyday and telling you that you need to like it or the Department of Insurance will bring false charges against you just like they have done to me.