by Rabon, Don
A close examination of Alex’s choice of words proves most revealing. Each of Alex’s words is a subjective choice. Subjective word choice is a form of behavior, and that behavior is a function of the premeditated goal of the speaker (or writer in the case of a written narrative or account). By our examination of Alex’s word choice, we gain insight into Alex’s cognitions and consequently, his ultimate goal:
A. I had — in about May of 2006, it was getting to the point where the funds had dwindled, there were so many lies that were going on with CEP and Pinnacle and Titan and everything else, and I could not keep up the show game, so I realized that something had to be done.
First, what was it about the “dwindled” funds specifically at this point? As far back as June of 2002, Alex’s stock trading endeavors were resulting in a loss (dwindling) of funds. By his own admission, Alex testified that he deceived Noel and the CEP clients, and was falsifying quarterly reports. He had continued to deceive Noel, up to a point, and send out falsified quarterly reports.
So, according to Alex, his motivation for going to the FBI was that he could not “keep up the show game.” We always pay attention to the terms that someone uses to frame a circumstance or a situation. What might Alex’s utilization of the term “show game” imply?
There were additional pressure/motives acting upon Alex to take action as shown by his testimony:
Q. Okay. We’re using two — “loan” twice here. Who is getting the bridge loan?
A. IME would be getting the bridge loan.
Q. And what was IME supposed to do with the funds that it got from the bridge loan?
A. The funds would be used to repay the loan from Pinnacle to IME.
Q. The $2 million?
A. The $2 million.
Q. At this point, in February of 2004, is there any documentation for this $2 million loan to IME?
A. There was not.
Q. Was that $2 million transfer of funds to IME from Pinnacle investor funds the last time that Pinnacle Investor funds were transferred to IME?
A. No, it was not.
Q. Were the other transfers supported by and authorized By debentures?
A. No, not all of them were.
Q. Approximately how much additional money was Transferred to IME that was not authorized by specific debentures?
A. Approximately another $2 million.
Q. Another $2 million in addition to the 2 million in December of 2003?
A. Yes.
As noted above, Alex testified that Noel had borrowed at least four million dollars from Certified Estate Planners. The funds were for Noel’s startup companies. In addition to the stock losses and the borrowed money—as cited in the September 2007 “Complaint For Permanent Injunction And For Other Relief”—Alex and Noel were both withdrawing unmerited, large, account management fees. How much were those fees? Alex provided the amount in his testimony:
Q. During your time at CEP and Pinnacle, were you getting paid?
A. Yes, I was.
Q. How much were you being paid?
A. I don’t remember the exact figure, but I would approximate about 75,000 per year.
Q. 75,000 a year?
A. Yes.
In short, the liquidity was drying up.
Once the fund level sank to this level, in Alex’s mind, matters had to be taken in hand. According to Alex’s testimony:
Q. Now, in this month of October of 2005, did you have a conversation with Mr. Noel?
A. Yes, I did.
Q. And what was that conversation about in October of 2005?
A. That conversation was about revealing to him some of the extent of the trading losses that were suffered.
Q. Up to this point in October of 2005, had Pinnacle been having trading gains or trading losses on a quarterly basis?
A. For most quarters, it would have been trading losses.
Q. Had you been telling Mr. Noel about the trading losses up through October of 2005?
A. I had not been.
Q. You had not been?
A. I had not been.
Q. Had you been telling clients about the trading losses up to October of 2005?
A. No, I had not.
Q. Did something change in October of 2005?
A. Yes, it did.
Q. What’s that?
A. There were some serious losses that were generated during the course of that summer, and I felt that I needed to let Bryan know the extent of the situation.
Q. Was this a problem?
A. Yes.
Q. Why was it a problem?
A. Because of the losses that had been generated because the Titan funds were no longer — the funds that had been lent to Titan were no longer there. This represented a substantial portion of the assets that remained.
Q. So by this point, about how much money had been sent off to IME and Titan?
A. Well, I don’t recall the exact figures. It would have been at least 2 and a half to $3 million.
Q. Now, when you — you told Mr. Noel at that point what had occurred?
A. I had told him that there had been significant losses that occurred.
Q. Did you tell him the full story about the losses?
A. I did not.
Q. What do you mean by that?
A. I made it sound like more recent market events that caused this as opposed to something that was ongoing back to 2002.
Q. So you didn’t tell him you’d been losing money since 2002?
A. No, I did not.
Q. But you told him you’d lost money.
A. Yes.
Q. Did you tell him how much you had lost?
A. I do not recall if I told him the exact figures.
MOTIVATIONS PROMOTE ACTIONS
To Alex, there were two activating criteria in play at this point in time:
First, Alex testified, “I felt that I needed to let Bryan know . . .” Alex did not say, “Bryan needed to know,” but rather, “. . . I needed to let Bryan know . . .” Informing Bryan was an action designed to fulfill a need within Alex, not to resolve a need that was within Bryan. Letting Bryan know that the funds were dwindling met an “Alex need.” What was that need?
Secondly, some of the clients wanted to withdraw their money. Alex knew for a certainty that Certified Estate Planners did not have sufficient funds to cover a significant “run” on the funds, and that he had been falsifying quarterly reports and submitting them time and time again.
Bryan’s borrowing funds notwithstanding, Alex was the one who had been sending out the falsified reports. Alex was the one losing money over a period of years. At this point, with regard to the continual losses and the falsified quarterly reports, Noel had plausible deniability. Alex obviously knew three things that his partner did not:
He had been losing money for years
The quarterly reports were false
The clients were, literally and figuratively, “at the door”
In October of 2005, Alex made the first move he needed to make. He made Bryan (partially) aware of the fact there were losses. Now, there was a shared, dark knowledge between him and Bryan. In May, of the following year, he would make another move.
For Alex, the realization that informing Bryan was in and of itself not enough became the tipping point at which an additional move must be undertaken. Alex’s term, “something,” indicates a range of actions for consideration. Whatever that range or action constituted in his mind, the most viable option was to seek out an attorney. However, not just any attorney would suffice. It would need to be an attorney that “had contacts.”
To Alex, this was something that “had to be done.” Herein, the operative word is “had.” With this word, we see the criticality of the need for more action in Alex’s mind. Inaction now was
not an option—“Something had to be done.”
Alex acted in the self-interest principle. His resulting actions—going to the FBI—were the result of his deliberations on the range of “something” and his motivation, brought on by the multiplying effect of “had.”
Acting on the self-interest principle is not in and of itself a negative action. Only if the consequences of those actions are detrimental to others do we see self-interest in a disapproving light. As noted previously, people buy the car they believe is best for them; we do not seek out someone who will make us miserable for the rest of our lives as a marriage partner; when grocery shopping we pick out the best fruit or vegetable in the bin. In like manner, we invest our money in a method and with those we believe will provide us the safest, as well as the greatest, return on our investment.
His words continue with, “I would need to do something . . .” In his mind there was no choice. His use of the word “need” makes clear that the circumstances required action on his part and his best choice was to obtain an attorney with contacts. So now our examination is not of the “what” to do, but rather the “why.” Alex addresses the “why” most succinctly, “. . . or everything was going to fall on me.” Obviously neither of the options—going to the FBI with the revelations or having everything fall on him—would result in a positive outcome. But having everything fall on him was, in his mind, the most negative outcome of the two.
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.