An Endless Stream of Lies
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Authors: Don Rabon
An Endless Stream of Lies
Copyright © 2015 by Don Rabon
All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means without written permission of the author.
ISBN 978-0-9903367-0-9
Published by:
Highly Motivated, Inc.
Hendersonville, NC
CONTENTS
- A Rip Tide of Human Actions
- The Search for the Source of Fraudster
- Alex and the Fraud Triangle
Three Atoms to Form Water –
Three Requirements to Form Fraud - Alex Met the Investors at the Well
He Took Their Water and the Well Ran Dry - The River Turns and Turns Once Again
Alex Leaks to the FBI
Alex’s Double Knavery - He Looked into a Pool
He Fell in Love
He Wasted Away - Oil and Water
Differing Testimonies - No Longer at Life’s Helm
Into the City of Woes - Uncharted Waters
PREFACE
The stage is the federal courthouse in Asheville, North Carolina. The date is February 24, 2011. The scene is a sentencing hearing before the Honorable Richard L. Vorhees, United States District Court Judge. Before Judge Vorhees stands a well-educated, highly intelligent young man (thirty-three) named Alex Klosek. Alex is slated to be sentenced for his part in the illegal diversion of over seven million dollars from over one hundred people.
In Alex’s fraudulent wake are ruined lives, dreams that will never be realized and the evaporation of lifetimes of savings made possible by extraordinary personal sacrifices. People who had scrimped, saved and done without in order to be able to pass onto their children and grandchildren the opportunities for better lives, now had little or nothing left. Victims were present in the courtroom that day for Alex’s sentencing. Some would speak, and others would remain silent. All were waiting for some remnant of justice as it remained for them. Many victims, those there, those choosing to stay away and those whose lives limited them to a nursing home, would be disappointed.
At his sentencing, Alex asserted:
I’m truly sorry for everything that has happened here, for the losses the clients have experienced, the life change, and everything that has happened. I know there have been serious negative repercussions. And it was never my intent to lose anyone’s money or divert anyone’s money or scheme anyone out of anything.
Is that really the case? Does Alex indeed find himself facing a federal judge ready to impose sentencing for nothing more than a series of unintentional actions on his part? Why would Alex plead guilty if he had never intended to “lose anyone’s money, divert anyone’s money or scheme anyone out of anything”?
Approximately four months later on June 30, 2011, Alex reported to federal prison in Memphis, Tennessee. June 30, 2011, is significant in that it was five years ago to the day that Alex had deceptively relayed his initial account to federal authorities of his own and his partner’s (Bryan Noel) fraudulent diversion.
On that last day of June, 2011, Alex walked through a life portal. With a single step he crossed a threshold. The door on that threshold would lock behind him and would not unlock for seven years. While admittedly at a country club of the federal prison system, Alex’s confined life would not be his own. For seven years he will be told when to get up, go to sleep, eat and work. At the end of that seven-year period, when they return his clothing and personal belongings to him, they will hand him one more item to carry with him—a ten million dollar restitution.
An email Alex had sent to a friend was read into the transcript during Alex’s cross examination. Alex was quoted as follows:
The idea of starting our own hedge fund sounds like a great idea. Talk about looking forward to getting up in the morning, to know that millions of dollars rests in our hands. The decisions we make could move markets. In addition, we’ll have a team of people under us who do the b---s--t work, feed us the information, and then we make the decisions about where to put the money.
How enthusiastically would Alex be “looking forward to getting up in the morning
”
for the next seven years? Who would be making “the decisions” in Alex’s life? Who is it that would be doing “the b---s--t work”? Where was the “team of people” destined to be under Alex?
How did this all come about? A young man with no intention of doing wrong is faced with seven years’ imprisonment and ten million dollars of restitution. Is this a gross miscarriage of justice? Perhaps, but not in the way you might expect. Want to find out what happened to bring this all about? Pick up a paddle, get in the boat, and let’s go.
INTRODUCTION
“In mighty torrents foams the ocean
Against the rocks with roaring song—
In ever-speeding spheric motion
Both rock and sea are swept along”
—
GOETHE
(TRANSLATED BY WALTER KAUFMANN), FAUST
A DEAL WITH THE DEVIL
Fraud is inherently a matter of incentives. In Goethe’s “Faust,” a deal is made with the devil—Mephistopheles—who offered an incentive, a soul traded for an opportunity. A short term, temporal gain is exchanged for an eternal loss. Faust exchanges his eternal soul for the brief period of a life, yet a life lived just the way he wanted it. He opted for the prelude in lieu of the symphony.
Fraud is inherently a deal with the devil—an illegal asset transfer having inexorably high penalties for such a shift. In “Faust,” the moment wherein the deal was agreed upon is easily identifiable. The devil proposed to Faust:
“Still, if through life you’ll go with me,
In that case I’ll agree
With pleasure to accommodate
You, on the spot belong to you.
I’ll be your comrade true
And if to your liking I behave,
I’ll be your servant, be your slave!”
Faust, in seeking the additional information he needed to make his decision, asks,
“And what in turn am I to do for you?”
The devil replies,
“Here to your service I will bind me;
Beck when you will, I will not pause or rest;
But in return when yonder you will find me,
Then likewise shall you be at my behest.”
Once their negotiations reached agreement, the devil seals the deal with simply,
“Done!”
It was a
fait accompli
—a done deal. The devil’s incentive brought about his desired goal—Faust’s very soul.
But in life, it is not quite so easy to delineate the exact point wherein a person—not a literary character—makes a deal with the devil. In Reality 101, perhaps the devil does not so much appear in our private study, as in the case of Faust, but rather sits patiently at a table found within an anteroom of a human heart. He sits and waits for circumstances to draw someone into the room. The individual just happens to idly wander in as if looking for some misplaced item. He sees the devil and now must make a choice: leave the room or sit down, just to have a little talk, you see, and explore some options—check out the incentives, kick a couple of moral tires. Where’s the harm in that?
An Endless Stream of Lies
is not about a person that turned on their heels and immediately walked out of the room. Rather, this narrative is about someone who walked over to the table, pulled out the chair, sat down, examined the incentives, looked the devil in the eye and asked, as did Faust, “And in return, what do you want out of this?” For this person, whatever the cost, it was worth the deal—financial fraud by a modern day Faustian fraudster. In this exploration we will come to know both the fraud and the fraudster.
WATER UNDER THE BRIDGE
Finances are habitually linked to
water
related terminologies. For example, we may say or hear:
- “His resources
dried up.
” - “He had a good deal of
liquid assets.” - “She wanted to
float a loan.
” - “The revenue
flowed
in on a regular basis.” - “The vehicle manufacturer received a
bailout.
”
Parenthetically, our examination of this reality-based, Faustian character and this set of circumstances will orientate toward
water
-related terminologies. That metaphorical conceptualization is just the manner in which I process circumstances and events. I see the representational frame of a situation, in a specific circumstance, and that is how I conceptualize it from then on. Bear with me. Consequently, in our assessment, we will seek to follow this
stream
as it relates to Alex’s deal with the devil, in order to find its source, adjoining
tributaries
and journey’s end.
One other note I continually recommend to those whose profession necessitates investigation and interviewing: read and study classic literature. Shakespeare, Dickens, Poe and the like provide great insight into human motivations and cognitions. To me, the classics are psychology books sans the footnotes and more illustrative. Toward that end, throughout this study, we will often compare the
cascading
circumstances we encounter to relevant examples within literature. Once more, bear with me.
My goal, for this book, is broad based in the extreme. For those responsible for investigating and apprehending fraudsters, my wish is for this case study to serve as a resource, providing insight into the
flow
of precipitating events with the words, thought processes and subsequent actions of a fraudster. As a result, hopefully, it will assist in their future investigations and success in bringing other fraudsters to justice.
Additionally, for those having an interest in the human psyche, the dual nature of man, a person’s actions and the consequences that follow, my hope is this will serve as opportunity to look deeply within the humanity of a specific fraud case and a unique fraudster.
As you journey along you will find:
At the top of each chapter: “
NAVIGATION POINT AND HEADING
”. This element is designed to summarize our location at this point on our journey. We are venturing into a complex set of circumstances that, at times,
flows
back upon itself. In like manner, there will be times in which we will have to trek back a bit in order to gain a more knowledgeable perspective of the situation. Knowing where we are helps a great deal in making the determination as to where we are going as we push off once again.
At the end of each chapter there will be a section titled “
THOUGHTS, COMMENTS AND ANALYSIS
.” This template is designed to allow the explorer to process their assessment of the current status of the voyage, formalize their thoughts by
writing them down
and identify options for moving the inquiry forward. I encourage those wishing to maximize their experience to concentrate on this portion, in order to utilize their own abilities to conceptualize, evaluate and transition the inquiry forward.
Following that exercise, there will be a section titled “
POINTS TO PONDER
.” This segment is comprised of a series of (hopefully) thought provoking questions that I provide, related to the chapter. This alternate set of questions is designed to simulate the advantages of having someone else to toss around information, thoughts, questions and action steps. Two heads really are better than one, even if one of them is mine.
Lastly, there is a “
CONTENT – CONTEXT APPLICATION
” exercise. This device is designed to provide the explorer with an opportunity to examine an additional fraud-related circumstance. The examination serves to guide the explorer towards thinking through the information provided into a more expansive application.
Those explorers, not responsible for fraud investigations, may choose to drift on past the end-of-chapter exercises; however, anyone who appreciates a cognitive challenge may find the exercises most informative.
While providing investigative assistance to a law enforcement agency, I conducted an analysis of a homicide-related, hand written narrative that began with “Once upon a time.” The homicide was related to the theft of weapons. Our current inquiry involves the theft of over seven million dollars of assets from over one hundred people. Accordingly, let us begin in likewise manner: Once upon a time . . .