An Endless Stream of Lies (2 page)

CHAPTER ONE

A RIP TIDE OF HUMAN ACTIONS

The writer, like a swimmer caught by an undertow, is borne in an unexpected direction. He is carried to a subject which has awaited him—a subject sometimes no part of his conscious plan. Reality, the reality of sensation, has accumulated where it was least sought. To write is to be captured—captured by some experience to which one may have given hardly a thought.

—ELIZABETH BOWEN (1899–1973),
Seven Winters

NAVIGATION POINT AND HEADING

In the flow of events, our lives intersect constantly with others. In some cases, we pause and pass on as before—nothing of significance has changed. In other circumstances, however, that intersecting results in a life-course shift that can be observed and articulated. The ripple effect of a life touching a life and each in turn touching other lives, and so on, is a driving force in the course of human proceedings. Nothing happens in a vacuum. That being the case, when Alex Klosek—the central figure of our examination—and I found ourselves at an intersection, it was not a starting point for either of us, but rather, a point along a continuum. My life had unfolded along its way. His life had transitioned along its course. Now our lives were about to intersect. Ultimately, that crossing would result in a most intriguing mystery and the writing of this book.

NOTE
: Fraud Defined:
“Intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right”
(www.merriam-webster.com).

THE INTERSECTION OF TWO LIVES

To put it directly, I have spent over thirty years working my way into and around the minds of people who deviated from the norms of society. I have investigated and interviewed murderers, kidnappers, pedophiles, fraudsters and most crimes in between. People, what they do and why they do it, have been and continue to be a continual source of intriguing study for me.

Having the ability to develop a rapport with people whose behaviors flow against the tide of acceptable behavior, and learning how “things” operate in their world, has allowed me to pass along insights, skills and understanding to thousands of investigative and other related personnel who must deal with aberrant behavior on a daily basis as a function of their profession.

The journey has carried me around the world providing interview and investigative training and assistance to a variety of organizations and individuals. I have published other books, all directed toward questioning, detecting deception, persuading, and understanding another’s cognition. That portion is the work side of my life, and it is a source of never-ending interest and challenge.

In my separate, though equally satisfying, personal life, the interviewing, investigative and discourse analysis related skills lie dormant. I enjoy my family and friends, never thinking of parsing their words, looking for subtle changes in behavior or evaluating their veracity. I like people, and I want them to feel comfortable being with me. My 2004 Road King Custom Harley Davidson motorcycle, scuba diving, classical literature, and writing provide ample opportunities to meet and interact with others all the while just being me.

But in 2006, a passageway connecting the two distinct dimensions of my life suddenly opened. Alex Klosek, an acquaintance and member of the Sunday Bible study class I teach, asked me to meet him at Kelsey’s Restaurant in Hendersonville, North Carolina, for lunch. At the time I was serving as Deputy Director for the Larry T. Justus Western Campus of the North Carolina Justice Academy, a division of the North Carolina Department of Justice, and was a year away from my thirty-year retirement. For twenty years prior to my promotion to Deputy Director, I had been privileged to be the manager of the Investigations Center for the Academy. That was the best job I ever had.

In the course of our lunch, Alex informed me he had recently met with representatives of the Federal Bureau of Investigation with an admission to his own, as well as his business partner, Bryan Noel’s, fraudulent activities. This fraud had taken place over a number of years through their operations—Certified Estate Planners, a local investment firm—as well as a multitude of other companies and financial entities they had formed as vehicles to divert monies.

Immediately, my “focus on behavior” antenna began to go up. Concurrently, the interviewer–investigator dial in my head started toward the “on” position like a compass arrow moving toward magnetic north. In the opening moments of a professional communication event, commonly referred to as an “interview,” I, like most interviewers, transition into “the zone.” At this point, the attention given to the interviewee’s verbal, vocal and nonverbal behaviors goes to the highest level. His words and mannerisms are evaluated in context. Each response is framed and leads to the next elicitation option. An interview-based outcome is identified or modified accordingly, and all of the interviewer’s stimuli are directed toward that goal. Once underway, it is like a large, ocean-going exploratory vessel—very difficult to stop on a dime.

“Wait a minute.” I reflected, “This is not your case. This is a member of the Sunday Bible study and he is talking to you as such.” Consequently, through no small effort on my part, the antenna retracted most of the way, the investigator dial was reset close to the “off” position, and my mental engine order telegraph was set at “slow ahead.” I would be less than honest if I intimated that all capabilities had been shut down. Even in the conversational mode, my investigator knowledge that there is no coincidence in life caused me to reflect. I wondered, “Was Alex in my Sunday Bible study because of who I was and the position I occupied with the North Carolina Department of Justice?” Later, when he asked for a letter of reference for the judge to consider during the sentencing phase (which I did not submit), the dots were connected—at least in my mind.

What he had to say then and other times we met over the course of five years, on an irregular basis, varied from personal issues to particulars about the case and the ongoing investigation. He did not ask for advice, and I offered none. When we met, I purposely avoided asking investigative-related questions. I did not need to. After the phatic phase of our communication transpired, off he went without any prompting on my part. I listened and responded as his Bible study teacher. I did note, however, that at no time in all of our meetings did Alex express remorse for the grief and loss he and his business partner had inflicted upon so many people. The conversation always flowed to him and the prevailing circumstances, acting upon him, as he perceived it.

Shortly after the initial meeting, the details of the case became public and served as the area media’s item of choice with each new revelation, accusation or new stage of the proceedings. Hendersonville is a small, mountain community in western North Carolina with a disproportional amount of wealthy retirees—local and transplanted. While the diverted funds’ range of seven to ten million dollars might not seem like a great deal of money in comparison to the billions Bernie Madoff had stolen, in Hendersonville, each meeting of the irate investors was good for front page, above-the-fold material, as well as the area’s electronic media’s “this just in” moments for those reading from the teleprompters.

Alex had seemingly revealed to the federal investigators the fraudulent activities that he and his co-conspirator had undertaken over the course of several years. Their scheming drained the resources from over one hundred people. Additionally, the harm to the government as a result of their activities in this case was valued at fifty-five million dollars. Alex appeared to assist the federal authorities by wearing a body mike during conversations with Noel in addition to recording some of their subsequent phone conversations.

For his cooperative efforts, Alex was given a deal. He would be allowed to plead to one count with a maximum sentence of five years and a fine of up to $250,000. The federal government’s press release regarding Alex’s plea agreement read as follows:

“DEPARTMENT OF JUSTICE

Acting United States Attorney Edward R. Ryan
Western District of North Carolina

FOR IMMEDIATE RELEASE
FRIDAY, JUNE 12, 2009

CONTACT: Terry Wilkinson
704.344.6222
Fax: 704.344.0629

ETOWAH, NORTH CAROLINA MAN SIGNS PLEA AGREEMENT IN FEDERAL CRIMINAL CASE INVOLVING CERTIFIED ESTATE PLANNERS, INC. ASHEVILLE, NC. — Alexander Klosek, 31, of Etowah, North Carolina, was charged today in a federal bill of information filed in U.S. District Court in Asheville, with one count alleging conspiracy to commit mail and wire fraud. Klosek has agreed to plead guilty to the charge pursuant to a plea agreement with the government, also filed today. Dates have not yet been set for the formal entry of Klosek’s guilty plea or for Klosek’s sentencing.

Acting U.S. Attorney Edward R. Ryan is joined by Owen Harris, Special Agent in Charge of the FBI in North Carolina, in making today’s announcement. The charge against Klosek arises out of an alleged conspiracy in which he participated and which took place from in or about January 2003 through about June 2006 in Henderson County, involving Certified Estate Planners, Inc. The bill of information filed against Alexander Klosek alleges that he, together with B.N. and others, solicited over 100 investors to invest large sums of their retirement savings with Certified Estate Planners, Inc. (“CEP”) by promising a conservative investment strategy. Today’s charging bill of information also states that Klosek and B.N., without CEP clients’ knowledge, diverted several million dollars of the clients’ assets to B.N.’s start-up lumber composite company, thereby significantly decreasing the value of the clients’ investments. The bill of information states that Klosek and B.N. then continually misrepresented the value of the clients’ assets on the quarterly statements mailed to clients so that they would not know the true diminished value of their assets. Based on this scheme, the CEP clients were defrauded of approximately $7 million.

The Federal Bureau of Investigation led the investigation that resulted in the filing of today’s bill of information and in the filing of a related bill of indictment, filed June 3, 2009, alleging that Bryan Noel also participated in the above-described conspiracy. The government has also been assisted in this investigation by the North Carolina Secretary of State’s Office.

The government is represented in this matter by Assistant U.S. Attorney Melissa Rikard of the U.S. Attorney’s Criminal Division in Charlotte. Also today in federal court in Asheville, Bryan Noel was afforded a detention hearing before U.S. Magistrate Judge Dennis L. Howell. Noel was ordered detained.

A copy of the bill of information charging Alexander Klosek is provided along with this press release. Klosek faces a maximum penalty of five years’ imprisonment, a $250,000 fine, or both.

ALEXANDER KLOSEK
Age: 31
Etowah, North Carolina”

Noel had been arrested, placed in jail with no opportunity for bail and scheduled for trial. The federal government’s press release regarding his charges and arrest read as follows:

“Department of Justice Press Release

United States Attorney’s Office
Western District of North Carolina
Contact: (704) 344-6222

For Immediate Release
June 4, 2009

Bryan Noel Indicted for Conspiracy and Mail Fraud

Former Owner of CEP, Inc. Charged in 28-Count Federal Indictment

ASHEVILLE, NC—Bryan Noel, 39, of Hendersonville, NC, has been indicted and arrested on one count alleging conspiracy to commit mail fraud, 25 separate counts alleging mail fraud, and two separate counts alleging making a false oath in connection with a bankruptcy proceeding, all in connection with an investment scheme which resulted in losses of approximately $7 million. Noel made his initial appearance before a U.S. Magistrate Judge today and was detained pending a hearing. That hearing is scheduled for Friday, June 5, 2009, at 12:00 p.m.

Today’s announcement is made by Edward R. Ryan, Acting United States Attorney for the Western District of North Carolina, and Owen Harris, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina.

“We know that numerous victims have waited a long time for this day,” said Acting U.S. Attorney Ryan. “We believe that the filing of these allegations is the first of many steps toward seeing justice served and recouping some of their losses,” he added.

According to the indictment, which was returned by a federal grand jury sitting in Asheville on June 3 and filed under seal, from around January 2003 until about July 2006, in Henderson County, Noel and others solicited over 100 clients to invest large sums of their retirement savings with Certified Estate Planners, Inc. (“CEP”) by promising a conservative investment strategy. The indictment alleges that in about 1999 Noel created CEP to solicit investors and to offer estate planning services geared toward retirees. The indictment alleges that shortly after the initial investments were collected, without the investors’ knowledge, several million dollars of the investors’ assets were diverted, thereby significantly decreasing the value of the investments. According to the allegations contained in the indictment, those funds were diverted to Noel’s start-up lumber composite company. The indictment alleges that thereafter the value of the assets was continually misrepresented on the quarterly statements mailed to investors so that they would not know the true diminished value of their assets. In summary, the indictment alleges that by July 2006, Noel and an unindicted co-conspirator had misrepresented to investors that their assets had grown to a total of approximately $16 million, when in reality, investors’ assets had shrunk to only approximately $1 million. According to the indictment, Noel filed for Chapter 7 bankruptcy protection in August of 2007.