RALEIGH — Two of the General Assembly’s most powerful Republican lawmakers and the Democratic state insurance commissioner are among those ensnared in a legal struggle between private and nonprofit bail bondsmen organizations providing instructional courses for bail agents.
The Rockford-Cohen Group, parent organization of the for-profit North Carolina Bail Academy, is competing with the nonprofit North Carolina Bail Agents Association to provide classes that bondsmen must pass to receive and maintain mandatory state certification.
Rockford-Cohen alleges Insurance Commissioner Wayne Goodwin assisted in the creation of an unlawful monopoly for the nonprofit N.C. Bail Agents Association. The association conducts state-required pre-licensure and continuing education courses for bondsmen.
Lynette Thompson, one of three Rockford-Cohen partners, believes state Rep. Tim Moore, R-Cleveland, and state Sen. Tom Apodaca, R-Henderson, worked behind the scenes to facilitate the legislation that granted exclusive instruction rights to the N.C. Bail Agents Association.
Moore and Apodaca are chairmen of the rules committees in their respective chambers. As such, they wield enormous power to steer bills through the committee assignment and hearing process.
Senate Bill 738, authorizing the monopoly, was rushed through General Assembly in the waning days of the 2012 legislative session. Letters of complaint seeking investigations into the involvement of Moore and Goodwin were sent to the state Attorney General’s Office, Thompson said. A decision has not been reached on whether to file a similar complaint against Apodaca.
Tim Mathis, a course instructor for the N.C. Bail Academy, said the attorney general’s office has refused to investigate Goodwin for what he and a group of bail bondsmen allege was unconstitutional help in creating a monopoly. The AG’s response letter said it represents Goodwin in an appeal of a civil suit filed by Rockford-Cohen, so it cannot open a criminal investigation.
Mathis said he may lodge a complaint against Goodwin with the U.S. attorney’s office.
Thompson said for a year Goodwin cast a blind eye to the bail agents association conducting classes without proper state authorization, and then refused to revoke its operations as required by the state administrative code even after she filed a complaint with him.
Moore, an attorney, performed legal work defending the bail agents association against the Rockford-Cohen complaint, which was a precursor to passing the legislation granting the bail agents association a monopoly.
In addition, Thompson said, she filed a complaint with the State Bar against the association’s attorney/lobbyist Mark Black, alleging he knowingly provided false testimony to the House Insurance Committee. He testified the association was the state’s sole provider of the course instruction.
Black said he simply misspoke at the committee hearing, at which Rose Williams, legislative counsel for the Insurance Department, spoke in favor of approving SB 738 without revealing Rockford-Cohen was offering competing classes.
“I think we should take another look at [S.B. 738],” said state Rep. Winkie Wilkins, D-Person. He filed an affidavit in state Superior Court saying the matter was not presented in the House Insurance Committee in a “forthright manner,” and he planned to take it up when the legislature returns in January.
Moore and Apodaca deny any wrongdoing. They said they recused themselves from voting on the bill to grant monopoly status to the bail agents association. Requests for an interview with Goodwin were denied.
The association has funneled campaign donations to all three over the years — $19,000 to Apodaca from 2004-10, and $2,100 to Goodwin and $2,000 to Moore from 2010-12.
Apodaca, who owns a bail bonding company run by his son, is a founder and past president of the N.C. Bail Agents Association. His 2012 statement of economic interest on file with the State Ethics Commission shows he owns stock valued at more than $10,000 in Accredited Surety and Casualty. Ten of the 17 members on the N.C. Bail Agents Association’s board of directors work for Accredited.
Thompson won the first round in the legal skirmish, in which both sides claim they are best suited to deliver the course instruction and accuse their competitors of questionable business practices.
Wake County Superior Court Judge Donald Stephens blocked the Oct. 1 implementation of S.B. 738, signed into law July 12 by then-Gov. Bev Perdue. In siding with Rockford-Cohen, Stephens wrote:
“This court cannot find any factual, logical or reasonable basis that [the law] serves any other purpose other than to eliminate all current and future competition for the benefit of a private corporation or association in violation of the North Carolina Constitution.”
“Obviously I was quite pleased” the judge ruled the legislation “was illegal and unconstitutional, and that’s what we thought from the start,” Thompson said.
“This is just a temporary injunction. That didn’t block it completely. [Stephens] just stopped it until he hears the rest of the evidence,” said Phil Burr, president of the N.C. Bail Agents Association.
“We’re going to aggressively push for it just like the Department of Insurance” to keep the law intact, Burr said.
Burr’s son, state Rep. Justin Burr, R-Stanly, a bail bondsman who has received $12,000 in campaign donations from the Bail Agents Association from 2006-10, also recused himself from a vote on the bill. Attempts to contact Justin Burr for comment were not successful.
Rushed process alleged
Thompson contends the rushed legislative process was fraught with oddities and deception to get favorable votes for her competition.
“When it came time for anything to happen at the legislature, I had to simply recuse myself from any of the hearings and any of the votes” because he had represented the bail agents association against Rockford-Cohen’s complaint to the Insurance Department, Moore said.
“It would have actually been improper for me to … get involved in the process and intervening, and taking any official action one way or the other,” Moore said.
“I recuse myself on any vote dealing with the bonding agency, bonding laws,” and did so on S.B. 738, Apodaca said. While he was aware of Rockford-Cohen’s competing organization, “The rules are very specific. When [a legislator] recuses himself from voting, he does not discuss any part” of the legislation.
“I don’t know how or where it came from,” he said of the bail bondsmen bill. “I honestly don’t remember having any conversation with [Insurance Department officials] about it,” Apodaca said repeatedly in an interview.
Yet a string of e-mails from the Insurance Department shows in the months leading up to the bill’s passage, Apodaca was subject of and party to high-level discussions with the department about the Rockford Cohen/Bail Agents Association dispute and whether legislation was advisable to settle it.
In an Oct. 27, 2011, email from Rose Williams, to Angela Ford, the Insurance Department’s senior deputy commissioner, Williams said she saw Apodaca at the General Assembly that morning and he told her “he is angry and upset” about “outsourcing” the bail bondsmen continuing education courses to a vendor other than the N.C. Bail Agents Association.
On Oct. 31, 2011, Apodaca sent Williams an email asking, “Is this true?”, and attached to it an email sent to him by Julie Henderson, a board member of the bail agents association. Henderson complained to Apodaca that Goodwin told association lobbyist Reggie Holley that Rockford-Cohen’s complaint file “has been marked confidential.”
Quick email response
Three minutes after receiving that email, Williams forwarded it to Goodwin, asking him what it was about. “Angela and I spoke to Sen. Apodaca on the phone about this last week,” she wrote.
On Nov. 1, 2011, Goodwin sent an email marked “high importance” to Williams and other Insurance Department managers seeking “the status of Sen. Apodaca on this matter? (I know you’ve had conversations following up on his inquiries.) Will we see legislation from the Senator or Rep. Burr on this subject … ?”
Williams replied: “I did not get a sense from Sen. Apodaca that he is going to file legislation. He did say he wished he had known this sooner and he would have filed legislation. Have not spoken with Burr.”
In a Dec. 12, 2011, email to Etta Maynard, deputy commissioner of the Insurance Department’s Agent Services Division, Ford wrote that bail agents association officials “want to be the sole provider and nothing else. This will probably end up being fixed by them through a statutory fix to name NCBAA as the only provider … this has been brewing for some time.”
Despite those emails, Insurance Department spokeswoman Kerry Hall insisted, “Neither Commissioner Goodwin nor NCDOI legislative staff communicated with Sen. Apodaca or Rep. Burr” about steering legislation through the process that would block competition to the bail agents association.
“While the Department of Insurance expressed support of the bill due to having limited resources to oversee multiple providers of continuing education, neither the commissioner nor his staff aggressively promoted the bill,” department spokeswoman Kerry Hall said.
Thompson is troubled that Rockford-Cohen had no advance notice that S.B. 738, which would put her out of business, was to be introduced.
State Rep. Jerry Dockham, R-Davidson, chairman of the House Insurance Committee, said notice of the hearing was posted two hours beforehand. He faulted Rockford-Cohen’s lack of awareness about the bill on it having an ineffective lobbyist. As a small business, Rockford-Cohen does not have a lobbyist, Thompson said.
Jane Pinsky, director of the N.C. Coalition for Lobbying & Government Reform at Common Cause, said this situation is a poster child for legislative reform.
“We’ve proposed for a long time that a bill has to be available to the public for 24 hours before it gets committee consideration, and that the public should have a copy of the bill before it goes forward,” she said.
S.B. 738, sponsored by Sen. Thom Goolsby, R-New Hanover, passed the Senate in 2011 and was sent to the House, which held it over until 2012. It was styled “Liability Insurance Required for ABC Permits” until the House Insurance Committee held a hearing on the bill June 27. The original language was gutted and replaced with the bail bondsmen training language.
The Senate approved the bill June 28 by concurrence, which means it skipped the normal committee hearing process in that chamber and went directly to a floor vote.
Apodaca said it is not unusual to gut bills and insert substitute language.
“We probably gutted 50 different bills, 20 to 50,” in the last session, Apodaca said. And pushing the bill through to approval by concurrence in the Senate without a committee hearing is “standard procedure” late in the session, he said.
Even so, none of the principals can say what lawmaker was behind the last-minute change in bill language.
Neither Goolsby nor members of his staff returned multiple phone calls seeking comment. Despite their duties as rules chairmen, Apodaca and Moore said they did not know which lawmaker pushed the bill.
Dockham said, “I don’t remember exactly” which member of the legislature was behind the push to gut and reword the bill.
“I don’t feel like there were any shenanigans going on,” he said.
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.