by Rabon, Don
A. Those loan funds would eventually be used for purposes of equipment, operating expenses necessary for the business, but they would be traded in the interim.
Q. They would be traded. When you say “traded,” what do you mean?
A. Traded in the stock market.
Q. And that was discussed when?
A. That was discussed as early as October, November of 2005.
Q. Did you take some steps to get ready for the receipt of those funds in the trading account?
A. Yes, I did.
Q. What steps did you take?
A. I opened brokerage accounts with two different brokers, AmeriTrade and Fidelity Investments.
Q. Was that your decision?
A. That was a decision that was made in conjunction with Bryan Noel.
Q. Let me show you Exhibit 45L and ask if you recognize it.
A. Yes, I do.
Q. What is that?
A. That is an account setup statement for Fidelity Investments. Well, for Titan Composites. I believe that’s for Fidelity Investments.
Q. And who prepared that document?
A. That was prepared by me.
Q. Whose handwriting is on that?
A. That is my handwriting.
Q. Now, again, do you see up at the top right-hand corner what financial institution this is with?
A. That is with Fidelity.
Q. And in whose name, or what entity’s name, is going to be on the account?
A. Titan Composites.
Q. Now, scrolling down to the second page, whose handwriting is on this page?
A. That is my handwriting.
Q. Is there a signature on there?
A. Yes, there is.
Q. What does the signature say?
A. It says Bryan Noel.
Q. Did Mr. Noel sign that?
A. He did not sign that document.
Q. Who signed that?
A. I signed that document.
Q. Did you have authorization to sign his name?
A. As far back as Digital Planet days there would be times when Bryan Noel would say that we could sign for him in certain instances, but on this instance I do not recall if there was specific authorization.
Q. Were you opening the account on your own initiative?
A. No, I was not.
Q. What do you mean?
A. This was done in conjunction with Bryan Noel.
Q. This Fidelity account in the name of Titan, were funds ever put in there to trade?
A. Yes, they were.
Q. Where did those funds come from?
A. Those funds came from loan proceeds from Carolina First.
Q. And were those funds traded in the stock market?
A. Yes, they were.
Q. Let me show you Government Exhibit 45M. Was the Fidelity account the only account opened for Carolina First loan funds to be received in?
A. No, it was not.
Q. Where else was an account opened?
A. AmeriTrade.
Q. Let me show you 45N and ask you if you recognize it.
A. Yes, I do.
Q. What is that?
A. That is the Titan account application for AmeriTrade.
Q. And whose handwriting is on that?
A. That is my handwriting.
Q. Now, do you see a name of an entity in the name of which this account is being opened?
A. Yes, I do.
Q. And what is that?
A. That is Titan Composites.
Q. And whose name is listed as the contact?
A. My name is listed as the contact.
Q. And on the second page, is there the name — is there a name there?
A. Yes, there is.
Q. And whose name is listed there?
A. That is my name.
Q. And does it list a title for you?
A. Yes, it does.
Q. What’s the listed title?
A. Treasurer and president.
Q. Of what entity?
A. Of Titan Composites.
Q. Were you the treasurer or president of Titan?
A. I was not the president, and at that point I was not the treasurer either.
Q. Why did you write that down?
A. I thought this would facilitate the process of opening the accounts.
Q. Who was going to manage the funds in the AmeriTrade account?
A. That would be managed by me.
Q. And for whom were you going to manage the funds?
A. They would be managed for Titan Composites.
Q. Did funds actually go into the AmeriTrade account?
A. Yes, they did.
Q. And where did those funds come from?
A. They came from loan proceeds from Carolina First.
Q. Did you trade those funds?
A. Yes, I did.
Q. How did that go?
A. That did not go very well either. There were trading losses that were generated with those funds in 2006 as well.
A SOCIETAL PHENOMENA
Is Alex’s manipulation of people and things nothing more than an aberration from the norm of society? More ominously, is Alex representative of the default setting on the societal ethical compass, displaying the go-ahead for:
Situational ethics,
Abdication of responsibility, and
Moral ambiguity?
For example, many people purchase radar detectors to help them break the traffic laws and avoid the consequences of their violations. They mount the devices on their dashboards for their children to see and contemplate the unspoken message, “Do whatever, just don’t get caught.”
How narcissistic is it to believe, “I am entitled to break the traffic laws that are there for the safety of all”? How narcissistic is it to have no feelings of remorse regarding the dangers which speeding places on others traveling on the road?
Alex’s device, capable of committing and hiding the fraud, was mounted in his head. The belief that he was entitled to do so was located in his heart.
Politicians lie to the public with reckless abandon. They lie about their military combat experience, as an example, and when discovered, they dismiss their falsification with, “I misspoke.” Sadly enough, their electorate dismisses it right along with them by voting for their re-election. Perhaps, it is the collective mindset of “better the liar we know than the liar we don’t know.”
Professional athletes lie about or conceal their use of performance enhancing drugs. Statistically, one in four resumes or job applications contain falsifications or significant omissions.
Alex lied publically and privately. He was very much a part of an endless stream of lies. It may be that he was able to dismiss his own deceptive actions as readily as a politician or other notable deceivers. However, the public and the judiciary, in his case, were not so amenable to forget about it.
We will ascertain where the compass heading ultimately led in Alex’s personal voyage. If we as a society are following that same heading, what will be our final destination? Only time will tell.
THOUGHTS, COMMENTS AND ANALYSIS
What are your impressions, to this point, with regard to this circumstance?
Exactly what do you know?
What is it that you know that you don’t know?
What questions would you ask in order to know?
What steps would you take in order to know?
POINTS TO PONDER
What follows is a portion of Alex’s early testimony during the trial:
Q. Mr. Klosek, when we left off, I think we were talking about the third and fourth quarter of 2002. You remember that?
A. Yes, I do.
Q. An
d we were talking about the client account statements that were sent out during that time period.
A. Yes.
Q. And I think you testified that during that time period you were lying to clients on their account statements.
A. Yes, I was.
Q. And you were lying to Mr. Noel about suffering trading gains — excuse me — experiencing trading gains when you were, in fact, experiencing losses; is that correct?
A. Yes.
Q. And I think you said that one of the reasons you lied was because you were fearful of losing your job.
A. Yes.
Q. At that point, is it fair to say that your work experience was one year at a CPA firm?
A. Yes, it was.
Q. And then one year at the company that went bankrupt.
A. Yes.
Q. And now one year at CEP, when you’ve been losing money for part of that year.
A. Yes.
Q. Did you think you had particularly good employment prospects at that point?
A. Not at that point.
Q. At that point were you committing this scheme by yourself?
A. Yes, I was.
What were the motives, as presented in this brief testimony portion, for Alex to commit the scheme by himself?
If this were “one of the reasons” that Alex lied, what could have possibly been other reasons?
What perspective might a person have that is willing to lie to one hundred clients and one partner for his or her own self-interest?
What questions would you pose to Alex at this point?
CONTENT – CONTEXT APPLICATION
A former public works director was charged with four counts of larceny by employee. The defendant was accused of keeping the money from the sale of discarded appliances. The appliances were part of the municipality’s recycling program. The items were sold at a salvage yard as scrap metal. The proceeds from the sale were supposed to have been deposited into the appropriate governmental account.
When investigating a crime of this nature, consider the following:
How long did the individual work for the department of public works before becoming the director?
How long had the individual served as director before being discovered?
What ways might the individual have converted resources to himself, prior to becoming the director?
As director, what other ways might the individual have converted resources to himself?
What questions would you pose to this individual?
CHAPTER SEVEN
OIL AND WATER
DIFFERING TESTIMONIES
“Truth will rise above falsehood as oil above water.”
—MIGUEL DE CERVANTES SAAVEDRA (1547–1616), SPANISH NOVELIST AND POET
NAVIGATION POINT AND HEADING As a result of the efforts of Bryan Noel’s defense team, the prosecution had learned of Alex’s deception and continued withholding of CEP investors’ assets. In open court, an incongruence between the testimonies of Alex and his father further served to muddy the waters.
FAMILIAL CONFLICTS
During the trial of Bryan Noel, a most telling drama arose—Alex and his father, Joseph Klosek, provided testimonies that were incompatible. Alex asserted as to what “did happen” and his father countered as to what “did not happen.” Their two declarations were oil and water—they could not be mixed. And the reason they—oil and water, as well as the two Klosek testimonies—cannot be mixed, is an issue of “polarity.” “Polarity” is defined as “the presence or manifestation of two opposite or contrasting principles or tendencies” (Dictionary.com). In the realm of linguistics, polarity is defined as “(words, phrases, or sentences) positive or negative character” (Dictionary.com). Both of their assertions could not be true.
In conditional logic, if Alex’s testimony was true, then his father’s words were false. Conversely, if his father’s testimony was true, then Alex’s words were false. Their statements were polar opposites—conflicting affirmations, sworn to in open court. And conflict is always at the heart of any chronicle.
Within literature, father–son conflict is a classic theme. For example, in Franz Kafka’s, “The Metamorphosis,” Gregor Samsa, a traveling salesman who was suddenly transformed into an insect, experienced such an ongoing dispute with his father. In Oedipus’ case, the father–son conflict was most assuredly problematic for the whole family. Reading closely in Charles Dickens’ A Christmas Carol, we find a brief and subtle intimation regarding a negative father–son relationship when Fan speaks to her brother—young Ebenezer Scrooge—in a dark, cold, wintery, deserted school house, saying,
“Father is so much kinder than he used to be, that home’s like Heaven! He spoke so gently to me one dear night when I was going to bed, that I was not afraid to ask him once more if you might come home; and he said Yes, you should; and sent me in a coach to bring you. And you’re to be a man!” said the child, opening her eyes, “and are never to come back here; but first, we’re to be together all the Christmas long, and have the merriest time in all the world.”
But, for Alex and his father, evidence of a father–son conflict did not appear in the quiet and privacy of an empty school house. Rather, this conflict was made manifest in an open federal court with a court recorder taking down every word, the media reporting, the public most interested and the investors watching and waiting.
Was the pre-conversion Scrooge a product of a father that had not always been so “kind” and had not spoken so “gently”? Did the fact that home had not always been “heaven” produce a Scrooge that was, as Dickens wrote, “. . . a squeezing, wrenching, grasping, scraping, clutching, covetous old sinner”? If Fan had somehow lost her “fear” and had asked her father “once more,” then we wonder, “Why and for how long had she been fearful, and how many times had she previously asked?” If now Scrooge’s rank was to be a “man,” had he previously been relegated by his father to that of a perpetual “child”? What role does the father–son relationship play in the making of the man? While Scrooge did not epitomize the “milk of human kindness” in his interactions with others, there was never an indication that he had ever stolen.
THE ASSERTION
In the trial of Bryan Noel, Alex testified that between 2006 (the year he went to the FBI) and 2009, he met with his father, Joseph Klosek, in order to obtain his help with the fabrication of the story he related to the FBI.
Q. After signing that plea agreement, in December of 2009, did you meet with the government again?
A. Yes, I did.
Q. Where did that meeting occur?
A. That happened in Charlotte.
Q. Where?
A. In the FBI office.
Q. Who was there?
A. You, Mr. Jenkins, and Ms. Rikard were there.
Q. And at that meeting, did I specifically ask you whether or not Mr. Noel knew about the trading losses from the beginning?
A. Yes, you did.
Q. And what did you tell me?
A. I said that he did.
Q. And was that true?
A. That was not true.
Q. Did you violate the plea agreement?
A. Yes, I did.
Q. In December of 2009, did the government know you violated your plea agreement?
A. No, the government did not.
Q. In anticipation of that meeting in December of 2009, did you do anything?
A. Yes, I did.
Q. What did you do?
A. I had discussions with my dad about how to answer some of the questions that may be coming.
Q. Before your meeting with the government in December of 2009, you did what?
A. I met with my dad to discuss how to fashion some of the elements of the story.
Q. To lie?
A. To lie.<
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Q. You met with your dad to do this?
A. Yes, I did.
Q. Where did that meeting happen?
A. It happened at his house, as I recall.
Q. His house where?
A. His house in Horse Shoe, North Carolina.
Q. To lie about what?
A. To lie about the extent of the knowledge that Bryan Noel had as well as anything that may be potentially harmful to my dad.
Q. Well, what could be potentially harmful to your dad that you had to lie about?
A. The fact that we had discussed some of the story; the fact that he had access to Titan trading accounts; the fact that there were some things that were put into his home.
Q. So you mean you had met with your dad to discuss the story prior to December of 2009?
A. As I recall, there were some meetings prior to that time.
Q. When?
A. There were some meetings in 2006, but most of the meetings that happened were in late 2009 and early 2010.
Q. Mr. Klosek, are you telling this jury that you met with your father over the course of three years to provide false information about Mr. Noel to the government?
A. Yes, I am.
Q. Multiple meetings with your dad?
A. Multiple meetings with him.
Q. What in the world were you thinking?
At another point in the trial, the same topic emerged with the following exchange in Alex’s testimony:
Q. Did you meet with anybody before coming to the U.S. Attorney’s Office on February 4th?
A. Yes, I did.
Q. Who did you meet?
A. I had met with my father on the days before that meeting.
Q. For what purpose?
A. For purposes of trying to make sure that no information came out that was unfavorable to him.
Q. To lie?
A. To lie.
Q. To lie when?
A. To lie at any meetings I would have with the U.S. Attorney
THE OPPOSING ASSERTION
In a Henderson Times-News article on March 4, 2010, titled “CEP Fraud Case Takes a Twist,” it was reported that, later in the trial, Alex’s father, Mr. Joseph Klosek, was called to testify. In his testimony, he disclosed that he had been trading stocks since 1970 and had traded stocks for Certified Estate Planners. He testified that “he didn’t know about all of his son’s lies.” He stated that it was not until after the FBI had searched Certified Estate Planners, in late summer of 2006, that he became aware of his son’s troubles. He further testified that he had never held any money for Alex, he did not meet with him in December of 2009 in order to fabricate a story, and he never purchased any property to hold for Alex. When he was asked if he had assisted his son in “fashioning a story for the FBI,” he answered, “Never.”