An Endless Stream of Lies (8 page)

In psychology, this concept is known as an “avoidance-avoidance conflict.” Conflict is defined, “Any situation in which there are mutually antagonistic events, motives, purposes, behaviors, impulses, etc.” (
The Penguin Dictionary of Psychology
). An avoidance-avoidance conflict is defined, “A conflict resulting from being repelled by two undesirable goals when there are strong pressures to choose one or the other. It is a particularly unpleasant situation which prompts one to select the ‘lesser of the two evils’” (
The Penguin Dictionary of Psychology
).

Therefore, he undertook the steps toward the option which in his mind was the “lesser of the two evils.” He went to the FBI.

Now, whatever the term “everything” constituted in Alex’s mind, it was for him the worst case scenario. “Everything” was worse than going to the FBI. If the house of cards was going to fall, he did not want it all (everything) to “fall” on him. It would be preferable to have the house fall on more than just him. Maybe the majority of the house could fall on someone else. Better still, could there be a way to have the house not fall on him at all?

The pronoun “me” is the most intimate of all the pronouns. It tends to be the recipient of the action of the verb—“fall on me.” Once again Alex is operating out of the self-interest principle. But the depth of Alex’s self-interest went deeper than anyone but Alex expected. Continuing with Alex’s testimony regarding his initial meeting with the FBI, we learn:

Q. What was the date of that meeting?

A. The date of that meeting was June 30, 2006.

Q. What did you do during that meeting?

A. During that meeting I started to outline some of what had happened with him and give him the story about CEP.

Q. And when you say “him,” who are you referring to?

A. To Drew Grafton.

Q. When you said you began to outline a story on June 30th, 2006, did you outline the whole story?

A. No, I did not.

Q. Did you outline the true story?

A. No, I did not outline the true story.

Q. What do you mean by that?

A. There were portions of the story that I did not relay and there were portions of the story where I lied about the extent of the knowledge that Bryan Noel had.

Q. You lied to who?

A. I lied to Drew Grafton.

Q. Of the FBI?

A. Yes, I did.

Q. And you lied about Bryan Noel?

A. Yes, I did.

Q. In what way did you lie about Bryan Noel?

A. I lied by stating that he knew about the trading losses going back to 2003 and, also, that he had authorized the rates of return that would be produced on the client reports down to the specific percentage.

Q. And was that true?

A. That was not true.

Q. Well, why did you say it?

A. At that point Titan had taken so much money and Bryan had — Bryan knew of that loan, authorized that loan, and it became very easy to try to blame Titan for all the mess of everything that went on even though there were trading losses that happened going back to 2002 before Titan ever got involved. So as a result of that, I just blamed Bryan and lied about his knowledge of all that stuff going back to that time period.

Q. So aside from the Pinnacle loans, you tried to put the trading losses onto Mr. Noel.

A. Not that the trading losses happened but that he knew of the trading losses, which was not true.

Q. That wasn’t true, right?

A. That is correct; that was not true.

Q. Prior to October of 2005, did Mr. Noel know about the trading losses?

A. He did not.

Q. What was the result of that meeting?

A. At that meeting I had worked out a plan whereby I was going to submit my resignation to Bryan Noel. But Drew Grafton stated not to do that, that they may need me for something related to some type of investigation that needed to be done.

BETTER YOU THAN ME

At this point, we want to get out of the boat and put our feet in the water. In this manner, we can have a better sense of what Alex said. Once more, for clarity, we examine Alex’s words:

and it became very easy to try to blame Titan for all the mess of everything that went on even though there were trading losses that happened going back to 2002 before Titan ever got involved. So as a result of that, I just blamed Bryan and lied about his knowledge of all that stuff going back to that time period.

• “It
  became very easy
  to try and blame Titan for all the mess of everything that went on
  even though
  there were trading losses that happened going back to 2002
  before
  Titan ever got involved.” Noel became Alex’s Jonah. “It became very easy” to throw Noel out of the boat in order to try to calm the turbulent waters that had grown to be too treacherous to navigate. It was wasn’t just “easy”; it was “very easy.”
  
• “So as a result of that,
  I just blamed Bryan
  and
  lied
  about his knowledge of that stuff going back to that time period.”
  

As a result of Alex’s apparent, though deceptive, full disclosure, admission and cooperation, he was presented with a deal: he was allowed to plead to one count of conspiracy to commit mail and wire fraud. Alex faced a maximum penalty of five years’ imprisonment, a $250,000 fine, or both.

Noel was ultimately “indicted and arrested on one count alleging conspiracy to commit mail fraud, twenty-five separate counts alleging mail fraud, and two separate counts alleging making a false oath in connection with a bankruptcy proceeding.” Alex would provide testimony in Noel’s trial and, in the fullness of time, stand before a federal judge and be sentenced.

Noel was eventually convicted of twenty-three of the twenty-four federal charges. Those charges ranged from mail fraud and money laundering to conspiracy and bankruptcy fraud. The press release issued by the Western District of North Carolina on March 5, 2010, read as follows:

Bryan Noel Found Guilty by Federal Jury
Henderson County Man–Former Owner of CEP, Inc., Remains in Federal Custody Awaiting Sentencing

U.S. Attorney’s Office March 05, 2010

Western District of North Carolina (704) 344-6222

ASHEVILLE, NC—Former owner of Certified Estate Planners, Inc. (“CEP”), Bryan Noel, 40, of Hendersonville, was convicted today by a jury in U.S. District Court of criminal charges that include mail fraud, bank fraud, money laundering, money laundering conspiracy, making a false oath in connection with a bankruptcy proceeding, and making false statements to a bank. The criminal charges were filed in connection with Noel’s investment scheme that resulted in losses of millions of dollars of innocent investors’ monies. Noel’s trial took place in U.S. District Court in Asheville, beginning on Wednesday, February 17, 2010 and continuing through Thursday, March 4, 2010, before The Honorable Richard L. Voorhees, U.S. District Judge. Today’s announcement is made by U.S. Attorney Edward R. Ryan of the Western District of North Carolina.

Joining Ryan in making today’s announcement is Owen D. Harris, Special Agent in Charge of Federal Bureau of Investigation Operations in North Carolina.

The evidence at trial showed that Noel owned an estate planning firm in Hendersonville that targeted elderly retirees. Noel would hold seminars at local restaurants, offering a free lunch and pitching an investment program to the retirees that included a promise that their funds would be pooled and invested in the stock market. In fact, the evidence showed that, after collecting approximately $10 million for dozens of retirees, Noel diverted more than $4 million of the retirees’ funds to his risky start-up companies, including a mineral exploration venture in Peru and a composite lumber company, both of which failed. Investors were not told of these diversions.

The evidence at trial further showed that, as the scheme began to falter, Noel sought and obtained a $1.25 million loan from Carolina First Bank in January 2006 by representing that the funds would be used to purchase equipment. In fact, Noel intended to, and did, invest those funds in the stock market to generate sufficient funds to replace the diverted retiree funds. Ultimately, however, more than $300,000 of these funds were lost in the stock market.

The evidence showed that in August 2006, Noel then applied for a home mortgage and home equity loan on his house totaling more than $1 million. To get these loans, Noel misrepresented his monthly income and falsely deny that he was a defendant in any lawsuits (when he was at that time a defendant in three suits).

Finally, when these schemes all collapsed, the evidence showed that Noel filed for bankruptcy and failed to disclose his $73,000 BMW on his bankruptcy petition, instead reporting a 10-year-old pickup truck with 131,000 miles on it.

Bryan Noel is presently in local federal custody where he has remained since June of 2009. Noel will remain in local federal custody until he is sentenced by Judge Voorhees. A date for the sentencing hearing has not yet been determined.

It is important to note that any sentence received upon conviction will be influenced by the Federal Sentencing Guidelines, which the Court consults in order to determine the defendant’s actual sentence. Sentences are based upon a formula that takes into account the severity and characteristics of the offense and the defendant’s criminal history, if any.

Following an investigation conducted by the FBI, Noel was indicted federally in June 2009 on 27 criminal counts. In October 2009 six additional criminal counts were added to the charges, which included money laundering conspiracy, bank fraud, making false statements to a bank, and money laundering. Noel is currently facing a maximum sentence of 20 years in prison on each of the conspiracy and mail fraud counts, alone. Each count further carries a maximum fine of $250,000.

The case was investigated by the FBI, and the prosecution was handled for the government by Assistant U.S. Attorneys Melissa Rikard and Matthew Martens of the Charlotte U.S. Attorneys Office, Western District of North Carolina.

But as he testified, Alex’s machinations did not stop at the point he went to the FBI. While “cooperating” with the FBI, he continued with his deception. In his words:

A. There were portions of the story that I did not relay and there were portions of the story where I lied about the extent of the knowledge that Bryan Noel had.

Q. You lied to who?

A. I lied to Drew Grafton.

Q. Of the FBI?

A. Yes, I did.

There are two broad taxonomies of deception—concealment and falsification. The first form is relatively easy, because it is passive. The second form is much more difficult in that it is active. Alex utilized both forms in his dealings with the federal authorities: Concealment—“There were portions of the story I left out”—and falsification—“I lied about how much Bryan knew.” Additionally, Alex referred to his narrative to the FBI as a “story.” Alex told the FBI a story. It was a story comprised of concealment, falsification and some truth.

In Shakespeare’s
Macbeth
, Banquo advises most appropriately with:

“And oftentimes, to win us to our harm,
The instruments of darkness tell us truths,
Win us with honest trifles, to betray’s
In deepest consequence”

More to the point, the prime directive given to any newly appointed investigator is always “never trust an informant.” Once again, someone had placed their trust in Alex, and once more that trust was proven to be misplaced. As Assistant U.S. Attorney Martin acknowledged during Noel’s trial, “It isn’t a happy time when you learn your cooperating co-conspirator isn’t cooperating.” All cooperating co-conspirators tell the truth . . . until they don’t.

At this point, deception was not a new tactic for Alex. He had concealed the trading losses from his partner for the previous four years and he deceptively sent out false quarterly statements. But why deceive now? Now that Alex had ensured “everything” was not going to fall on him, why would he deceive those in the position to help him the most?
Once again, we must look to the self-interest principle.

Once Alex met with the agents of the FBI, his cooperation included wearing a hidden microphone while conversing with Noel and recording several of their subsequent phone conversations. His deceptive, manipulative tactics did not end with his initial meeting with the FBI, but rather flowed onward for years. Within the packaging of his agreement to cooperate, the determination to continue with his deception was concealed.

Q. Now, you testified earlier that you began making some recordings as part of your cooperation back in 2006. Is that correct?

A. That is correct.

Q. Mr. Klosek, what are you discussing with Mr. Noel at this point?

A. What rate of return to show the clients for that quarter.

Q. At this point, what had you been telling the government that — at this point, being in July of ‘06, what had you told the government about what Mr. Noel knew about the rate of return on the client reports?

A. That he was directing those rates of return.

Q. And was that true?

A. That was not true.

Q. And so what are you trying to do here with Mr. Noel?

A. I’m trying to get him to state a rate of return, which is why he is perplexed.

Q. Because he hadn’t done that before.