Free An Endless Stream of Lies by Don Rabon Page B
Authors: Don Rabon
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
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
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