Southern California attorney Gary Lane had spent the previous hour pitching me, and a half-dozen older folks, on the advisability of purchasing "living trusts," legal constructs that can, in theory, allow elderly people to protect their assets from probate lawyers and tax collectors. I was investigating a type of firm popularly known as a "trust mill"; these mills generate money by advertising living-trust seminars widely in newspapers, using attorneys to sell the service of writing a living trust, and then employing hard-charging salesmen of financial services to aggressively pursue elderly attendees. In this case, Estate Planning of California, or EPoC, had advertised a dozen or so seminars in different cities around the Bay Area, and I was curious to see what was being offered.
According to the State Bar of California, attorneys who help market financial products must explain "the full extent of the lawyer's business and financial relationship with the marketer." The reason for this regulation is fairly obvious: Trust mills make most of their money by sending financial-product salesmen to customers' homes, where the salesmen hand-deliver completed legal documents. These documents can involve the control of large amounts of money, and correspondingly large sales commissions. If an attorney has a stake in those commissions, his legal advice to customers could, at least theoretically, be compromised.
Toward the end of Lane's pitch, I raised my hand.
"Could you please explain your relationship to Estate Planning of California?" I asked.
Lane said he'd answer my question later. I said it was a simple question and asked if he could briefly respond. He again said he'd answer later. I asked again. He ordered me to leave the room.
"It's a simple question," I said. "Couldn't you just briefly explain your relationship to the company?"
"I'm telling you to leave right now," said Lane, temporarily abandoning his salesman's smile. "You're trespassing."
"And I'm telling you I'd like you to answer the question," I said.
"You're trespassing," he said. "If you don't leave, I'll call the police."
Later, I discovered that in inquiring about the specifics of business relationships involving EPoC, I had broached more than a touchy subject. I'd apparently stumbled onto a link between some West Coast trust mills and the operations of one of America's more notorious crime families, a family whose leaders were recently found guilty of wire-fraud charges related to a multimillion-dollar Florida-based financial fraud scheme.
I'd encountered an operation that connected millions -- perhaps even billions -- of dollars of elderly Californians' assets to a firm called Great American Trust Co., which, a Securities and Exchange Commission complaint says, exists as a front for an investment program that was "wholly fictitious and designed solely to defraud investors of their money."
I'd nudged open a door that fed into a maze that, when followed to its end, led to men known as Super Swindlers.
Living trusts have good and proper uses, and there is no evidence I know of that EPoC or Lane has touted or sold anything but legitimate estate planning tools and financial products. Still, trust mills are notorious for high-pressure sales tactics and client complaints. So I expected Lane might be chary about answering questions.
But really: trespassing?
When I got back to my office the next day, I did a little poking into EPoC, a firm that, according to documents in the California Secretary of State's Office, has existed for just a few months. I also looked into a company called EPI-Estate Planning Inc., which Lane told us during his seminar was EPoC's "predecessor company." He said the name had been changed for business reasons, and didn't elaborate further.
EPI-Estate Planning was "an established, 4-year-old company," he assured us. "It's the same people in both companies."
Sure enough, Lane was listed as a seminar presenter in a July 2002 full-page Los Angeles Times ad for EPI-Estate Planning Inc. And the 2002-2003 alumni magazine of the University of San Diego Law School, where Lane graduated in 1969, says he had been a vice president and general counsel for EPI-Estate Planning Inc.
When I looked up EPI-Estate Planning Inc. at the California Department of Insurance, I got a whiff -- merely a whiff -- of the reasons that questions about this cluster of companies might be unwelcome. EPI-Estate Planning -- which California records say is part of a group of firms with the names EPI, EPICO, the American Association of Independent Paralegals, and AAIP, all of which pitch living trusts at seminars -- has been subject to a Department of Insurance investigation.
So far, the investigation has produced written "accusations" -- the Insurance Department's version of a regulatory complaint -- contending that, among other things, the company has sent an employee, who happened to have been a felon, into an elderly client's home, where he bullied the client into signing a release form granting access to the client's assets. The employee then used the assets to buy annuity insurance contracts without permission, paying himself thousands of dollars of commissions, the Insurance Department contends.
In another accusation, the Department of Insurance says an EPI-Estate Planning Inc. employee falsified customers' dates of birth on numerous insurance policies the customers were, actually, too old to take out.
But the disturbing linkages do not stop there.
The president of EPI-Estate Planning Inc., according to Nevada public records, is a man named Paul Noe. The California Department of Insurance accusation says that Paul Howe Noe II described himself to customers as vice president of EPI.
And Paul Howe Noe II is the son of Paul Howe Noe Sr., an international con man who is a subject of the 1973 book The Fountain Pen Conspiracy, subsequently reissued as The Super Swindlers.
According to the book, Paul Noe Sr. and his younger brother, Clifford, crafted a series of high-dollar cons during the 1960s and 1970s. Among other scams, they bought a Texas bank with money borrowed against worthless companies and then looted the bank, and used forged financial documents in an attempt to take over a British bank. British regulators foiled that takeover attempt, but not before the Noes printed phony CDs in the British bank's name and used them to defraud victims worldwide.
For their various villainies, both men have long been known to FBI agents, federal and state prosecutors, banking regulators, and flimflam victims as "Dr. Noe." FBI sources have described them as being among the most notorious con men in U.S. history.
Recent events suggest the elderly Noe brothers did not dedicate themselves wholly to good works in recent years.
Last week a North Carolina judge convicted Paul Howe Noe Sr. on charges of conspiracy and wire fraud in connection with a Boca Raton, Fla.based scheme in which the elder Noe bilked more than $1.1 million from businesses seeking venture capital financing; Clifford Noe pleaded guilty on similar charges earlier this year.
The Noe brothers, both in ailing health, await sentencing. They may spend the last of their days in prison. But their legacy apparently lives on.
Court testimony, documents introduced at trial, an array of other public records, and interviews with law enforcement officials and investigators in Florida, California, and South Carolina show an ominous connection between the East Coast scammery of the Drs. Noe and the West Coast trust-mill and annuity-sales operations linked to Paul Noe Jr.
If assertions made during the trial of Paul Noe Sr. are correct, the dubious financial empire of the Super Swindlers is directly linked to West Coast trust mills that have at least potential control over the assets of thousands of California families.
The value of those assets could run into the billions of dollars.
To understand why the Super Swindler connection could be ominous here, you need to understand some details about the types of investment fraud Paul Noe Sr., Clifford Noe, and Paul Noe Jr. have perpetrated on the East Coast.
The fraud at issue centers on a firm called Great American Trust Co., which Paul Noe Jr. registered in South Carolina in 1984. Two years later, Paul Jr. and his Uncle Clifford cooked up a scheme in Philadelphia by which they would buy an insurance company, using $100 million in forged certificates of deposit. Unfortunately, they happened to buy some of the fake CDs from an undercover FBI agent.
Clifford Noe fled to Costa Rica, but the FBI managed to lure him to New Orleans, where he was arrested and later tried on charges of conspiring to commit fraud. Paul Jr. was convicted in 1989 on five counts of aiding and abetting wire fraud.
It's unclear what happened to Great American Trust during the subsequent decade, but in the mid-1990s, Paul Sr. and Clifford, going by the names Paul Randall and Clifford Goldstein, began soliciting business on behalf of the firm from entrepreneurs unable to get standard bank financing for large-scale projects. According to a Securities and Exchange Commission complaint filed in February 2002, the brothers and four accomplices accepted fees from businesses seeking entree into a program that would provide them with venture capital.
That same month the federal government charged Noe Sr. and Clifford Noe with wire fraud. The government contended the venture capital program did not exist, and Great American Trust had almost no assets with which to back it.
In fighting the charges against Paul Noe Sr., defense attorneys argued that Great American Trust was indeed a legitimate company that handled valuable assets. In doing so, the defense revealed the link between the elder Noe's Florida-based investment fraud scheme and Paul Noe Jr.'s living-trust mill on the West Coast.
Among other things, the defense submitted as evidence a letter printed on letterhead from the American Association of Independent Paralegals showing an address in Aliso Viejo, Calif., as company headquarters. The address had also been used by Paul Noe Jr. and by EPICO, a trust mill registered under the name of Noe Jr.'s former wife, Robin Noe.
The letter said that AAIP -- which, according to public records, had links to EPI-Estate Planning Inc. -- "was in the business of preparing Revocable Living Trusts in the states of California, Arizona and Nevada." The letter went on to state that AAIP had "protected over 30,000 families with a Revocable Living Trust."
"As a service to its clients," the letter said, "AAIP offered a referral for Great American Trust to act as a Successor Trustee."
If what the letter says is true -- if Paul Noe Jr.'s associates and employees have indeed been successful in naming Great American Trust Co. as successor trustee on the living trusts his associated companies sell -- Great American Trust's potential reach is indeed staggering. Under such an arrangement, Great American Trust apparently could take control of the assets of an AAIP customer if the person became incapacitated, or died.
Advocates for the elderly contend the firms connected to Paul Noe -- including EPI-Estate Planning Inc., EPI, EPICO, and AAIP -- comprise one of the biggest trust-mill operations in California. These firms routinely take out half- and full-page advertisements -- touting two-a-day seminars week after week, year after year -- in major newspapers. Though the seminar I attended was small, Prescott Cole, attorney for California Advocates for Nursing Home Reform, told me that seminars in Southern California by EPI-Estate Planning and its related companies have sometimes drawn hundreds of elderly people who fear for their assets, and perceive a bargain in the advertised rate for creation of a living trust: $399.
Considering the scale of the second Noe generation's West Coast operation, it's possible that a Great American Trust brochure boasting that the company controlled 40,000 trusts may have contained a shade of truth. And if the letter introduced at trial linking AAIP and Great American Trust is correct, it's possible that as some elderly customers die, their assets will slip under the spell of a shell company controlled by convicted swindlers, a company whose major notable activity appears to have been complex financial fraud.
The arrangement's so elegant, it seems almost magical.
Louis St. Laurent is a man who's proud of his French Canadian heritage; he's part owner of a Florida French-language newspaper, and he has a Web site detailing his family lineage. A former Florida state prosecutor, he's now in private practice in Coral Gables, specializing in mobile-home law; he's made the papers several times in recent years, advocating on behalf of people who reside in this form of inexpensive housing. St. Laurent has also served as a nearly permanent bugaboo for the Noe brothers and their schemes.
Thirty years ago, as a Florida prosecutor, St. Laurent put Paul Noe away on charges related to the banking and securities fraud schemes profiled in Super Swindlers.
In 1963, the Noe brothers bought a Texas bank with $1.6 million they'd borrowed against shares in worthless companies with fictitious balance sheets. The Noes then looted the bank. The brothers each received five-year suspended sentences for that crime, and were placed on three years' probation.
In 1970, the brothers attempted to buy control of the London merchant bank E.H. Marley & Partners Ltd., this time using bogus certificates of deposit as collateral. The Bank of England ultimately blocked that transaction after having difficulty verifying the strength of the Noes' companies in Belize -- but not before Clifford Noe had printed millions of dollars of phony E.H. Marley certificates of deposit and opened bogus branch offices of the Marley firm all over the United States.
The illicit certificates were then used by the Noes and their associates to attempt to defraud a mining firm in Ontario, to take over and loot an Alaskan insurance company, and to establish a bogus Florida loan brokerage office, through which they stole hundreds of thousands of dollars in advance fees, among myriad other schemes.
Not long after the Noes printed the bogus British CDs, Paul Noe Sr. went to Fort Myers, Fla., to effect a similar scam: He would print $50 million in phony negotiable bonds at a local printer, then use them along with the fake CDs to convince potential victims that the Noes' businesses controlled significant assets. Paul Noe Sr. had also taken out a telephone credit card and passed the card number among his international swindler confederates, who then charged $60,000 worth of calls on the card before Noe skipped out on his phone account.
"The printer saw that there was something fishy, and came to us and showed us these negotiable bonds," St. Laurent says.
The telephone company, meanwhile, approached state law enforcement regarding the unpaid phone bill. The list of callers who'd used the phone card, St. Laurent says, eventually became a sort of Rosetta stone for a Senate committee investigating international financial fraud. "It was a master list of who's who in swindling worldwide," St. Laurent says.
Paul Noe ultimately served 10 years on charges related to wire and securities fraud, St. Laurent says.
Three decades later, in 2001, St. Laurent accompanied a French Canadian client to meet with a director of a firm calling itself Great American Trust Co. in a tawdry office conference room in Boca Raton. Laurent's client had paid $10,000 in consulting fees to a broker, hoping to obtain $11 million of venture capital financing for a housing development he had planned for a suburb of Ottawa, Canada. The capital wasn't forthcoming, and St. Laurent was accompanying his client in hopes of getting the $10,000 back.
St. Laurent stepped into the conference room, and staring him in the face was the man he'd sent to prison 30 years before, now 74 and calling himself Paul Noe Randall.
"I recognized him, he didn't recognize me," St. Laurent says of his initial encounter with Paul Noe Sr. "He called my house and asked to meet with me the next day. He wanted to assure me that my client was getting his money back, and that there was no reason to go to law enforcement. They did pay my client back, and I proceeded to turn everything over to the FBI. They had a case in Columbia, S.C.
"And they didn't know it was the famous Noe brothers until I told them."
After their encounter in the Great American Trust office, St. Laurent arranged to meet Noe at a Boca Raton Starbucks. There, St. Laurent told the con man he knew who he was. Conversation drifted to old times. And then, as tends to happen among people in their 70s, talk turned to the next generation.
St. Laurent says Noe told him that the family's West Coast operation was placing Great American Trust as successor trustee in living-trust documents it was selling to elderly people in California.
"They put a clause in there, and when the trustee dies, the successor trustee shall be Great American Trust," St. Laurent explains. "Once he got Great American Trust on those documents, he could claim his company really did have assets; sure they were successor trustee, rather than trustee, but he could claim that was a technicality. He could tell investors [that] here was a company handling 40,000 trust accounts worth $5 billion.
"Knowing Paul it could be 4,000, but that's still significant."
St. Laurent did some of his own investigating. He retrieved records connected to Paul Howe Noe II and his California ex-wife, Robin Noe. He looked at property records, which I retrieved independently, showing Paul Sr. and Paul Jr. connected to property transactions involving a Paul Noe Family Trust.
"My feelings were that his biggest operation was in California, and I tied it back into that company that was selling [living-trust] kits," St. Laurent says. "I think they were training the second generation."
I began talking to St. Laurent before Paul Noe Sr.'s recent trial had concluded. The ex-prosecutor told me he suspected Noe Sr. might submit evidence showing the connection between his son's West Coast trust mills and Great American Trust, to bolster the argument that he was running a real business, not a con game.
"But he'd put his kids at risk," St. Laurent said. "Either he's going to keep quiet to protect the kids, or he's going to go ahead and introduce it, hoping nobody makes the connection."
Two weeks later, the U.S. Attorney's Office in Columbia, S.C., faxed me the letter, submitted by Paul Noe Sr. in his own defense, that documents the connection between AAIP, the California living-trust operation, and Great American Trust, the East Coast swindle.
Although the Super Swindler connection now has been made public, I have doubts that law enforcement will investigate it thoroughly. I have doubts, even though Noe-related trust mills are already under scrutiny by the California Department of Insurance. I have doubts, even though the Noes' history of scheming appears to represent a real threat to the finances of elderly Californians.
I have my doubts, even though there are multiple regulatory agencies -- including the Attorney General's Office, the State Bar, and local district attorneys' offices -- that have the authority to attempt to curb the types of practices outlined in the Department of Insurance accusation against EPI, EPICO, Robin Noe, and Paul H. Noe II.
I doubt anyone will really look into the Noe trust mills of California because, despite summer campaign-trail rhetoric to the contrary, California is a very "business-friendly" state.
Arnold Schwarzenegger is one prominent proselyte of a commonly accepted doctrine holding that California government needs to become friendlier to business if the state's economy is to revive. Actually, though, the Noe family trust mills operate in a California environment so friendly to business that they feel no compunction about routinely buying large newspaper advertisements announcing their activities. In fact, if the Noes are any guide, California is a state so friendly to business that the only way to make it friendlier would be to adopt a policy of overweening obsequiousness. I suppose that wouldn't make much of a campaign slogan, though.
I laud the California Department of Insurance for its efforts to investigate the Noe family's California companies. But the department is fighting an uphill battle. Investigations into widespread and sophisticated financial wrongdoing require huge investments of time on the part of investigators, attorneys, and regulators, and large amounts of taxpayer money. California Insurance Commissioner John Garamendi was recently quoted in the legal newspaper the Daily Journal as saying the division that investigates consumer complaints has 17 staff vacancies and is operating under a hiring freeze because of California's budget deficit.
And the state's continuing financial problems will almost certainly lead to cuts in the staff of state regulatory agencies, making California business-friendlier still.
Pat McGinnis, director of California Advocates for Nursing Home Reform, which lobbies for stiffer laws against the financial abuse of seniors, believes state Attorney General Bill Lockyer would do more to combat elder financial abuse under current laws -- if he had the staff.
"Bill Lockyer has done more in five years than in the previous 16 years in terms of going after abuse, neglect, and fraud. He's prosecuted well over 100 cases," McGinnis says. "We got statistics in 1998 from the attorney general at the time, and there had been 10 investigations, one prosecution; there was hardly anything. We feel hopeful that Lockyer's office will take this on as well."
But McGinnis acknowledges it might be a strained hope.
"The whole enforcement system needs to be beefed up," she says. "There's no question about it: If you want to really go after people for elder fiduciary abuse, you need staff, you need time. But everybody's budgets are being cut."
It's said that Americans over 50 hold more than two-thirds of the nation's household net worth, some $7 trillion. The largest population of these elderly people resides in California and Florida, states with their fair share of sharpies anxious to exploit a friendly regulatory attitude.
Those who doubt the preceding statement should direct their attention to a September 2003 schedule of public events at the Huntington Beach Public Library. Last Saturday, a company called Estate Preservation Inc. advertised a "Living Trust Seminar" at the library, and left a number interested elders could contact.
"Thank you for calling EPI Estate Preservation Inc.," a recorded voice said when I called the number this week. The voice then directed callers to a company directory, which offered the extensions of four people with the last name Noe, including a Paul Noe.
Note: Readers who have bought, or know someone who has bought, a living trust or similar product from a company with the name EPI, EPICO, EPoC, or AAIP should feel free to contact me at matthew.smith@sfweekly.com or 541-0700. I would also like to hear from anyone who has encountered the names Great American Trust Co., GATCO, or GATCORP in legal or business documents.
