Tax militant found guilty

Peter Stern, holding a copy of the Asheville Citizen-Times, presides over a session of his common law court in Macon County in 1996.

Asheville NC Citizen-Times/Jul 21, 2000
By Julie Ball

ASHEVILLE - The Macon County man described by federal authorities as a "tax protester" was convicted Thursday of seven charges ranging from bank fraud to threatening judges.

Peter Stern, 57, was found guilty of conspiring to defraud the government, obstructing the Internal Revenue Service laws, bank fraud, threatening to kidnap two federal judges and mailing threats. Together the charges carry a maximum sentence of more than 60 years in prison.

It took the jury of 10 men and two women about two hours and 45 minutes to reach a verdict. Stern shook his head in disbelief as jurors were polled. He looked back at his wife and mouthed the words "I love you."

Stern's wife collapsed after he was was led from the courtroom.

The grandfather with a background in engineering became known after he and others in Macon County created their own common law court. Stern served as chief justice. The court sent out official-looking documents ordering those "convicted" in absentia to pay millions in fines.

Some of those common law court documents were the basis of some of the federal charges, including the threats to two U.S. District Court judges.

Assistant U.S. Attorney David Brown said prosecutors could not comment on the case until after Stern is sentenced. That could take another two or three months.

Stern's attorney, Gerald Aurillo, said prior to the verdict he would have no comment.

The bank fraud and conspiracy charges resulted from fraudulent documents known as "comptroller warrants" which Stern obtained from the anti-government Freemen in Montana in 1995. Members of the Montana group were involved in an 81-day standoff with federal officials in 1996.

"He (Stern) came back (from Montana) with a whole idea of how to stick it to the government," Brown said in his closing arguments to jurors.

Stern's brother, Michael, and a longtime friend both testified Stern gave them the fake comptroller warrants to pay off their back taxes. Stern also tried to use the documents to pay his own debts.

Even when bank officials and others told Stern the documents were fake, he persisted. "He did not want to know they were bogus," Brown said.

Brown said Stern flooded the IRS with paperwork. A couple of IRS agents received documents from the common law court that threatened arrest and fines. The agents were trying to collect back taxes from Stern, who hadn't filed a return since 1981.

But Aurillo, in his closing arguments, depicted Stern as a "a plain old guy looking for answers" against "a big government that won't give him answers."

Aurillo accused the government of trying to make Stern look like "a radical, crazy, right-wing nut."

"They're trying to shut him up," Aurillo said. "He's getting a little too close."

Stern testified he spent countless hours researching federal codes, regulations and case law regarding federal income tax. During his testimony, Stern went over numerous problems he has with tax forms relating to his refusal to pay.

But Brown pointed out in his closing arguments that Stern went for years without ever filing a return or making inquiries about the proper forms to the IRS.

Instead, Stern waited until after the IRS contacted him and tried to collect more than $90,000 Stern owed before he began "flooding" the agency with documents and questions.