Just a day after his assistant was unexpectedly fired by Samex Capital CEO Keenan Hawke, investment adviser Scott Noble spotted a computer technician in the office. Red flags were raised.
“I had a computer background,” Noble explained. “I went into the server and searched what was different.” What he found were folders of 60 previously unseen hedge fund statements. “The rates of return were not the rates we were publishing publicly,” he said. “I got my jump drive and made a copy.”
What Noble (pictured at right) discovered that Wednesday morning at the small Fishers, Indiana, firm in 2011 were more than just files. He found $7 million in accounting irregularities – ultimately leading to the securities fraud conviction of Hawke, who remains imprisoned.
On Wednesday, April 15, Noble told his story to a near-capacity audience at Lowder Hall as part of the annual Whistleblower Tour, sponsored by the Auburn University School of Accountancy in the Harbert College of Business and the Government Accountability Project (GAP).
This is the tour’s fourth stop at Auburn. In 2012, the GAP brought whistleblowers Sherron Watkins (Enron scandal) and Kenneth Kendrick (peanut butter/salmonella scandal) to Auburn. In 2013, Bernie Madoff whistleblower Frank Casey and Jon Oberg of the federal student loan scandal visited campus. Last January, quantitative risk analyst Eric Ben-Artzi, who claimed Deutsche Bank failed to accurately report the value of its credit derivatives portfolio, shared his story at the college.
A day after discovering the irregularities, Noble verified his findings with an outside an accounting firm. Why? Reporting it internally was not an option.
“In the financial industry, protocol is you go to the chief compliance office,” he noted. “Our business was so small, he (Hawke) was … (chief compliance officer). So the person perpetrating the crime was the person you were supposed to report the wrongdoing to. That’s a problem.”
By that Friday, Noble retained an attorney. Three days later, the discovery was turned over to the Securities and Exchange Commission and the Indiana Secretary of State Securities Division. “There wasn’t a ‘yes’ or ‘no’,” Noble said. “It was something that had to be done.”
Within 11 days of the discovery, Hawke’s assets were frozen and he was sentenced to prison less than one year later. “He took people’s money,” Noble said. “His grandparents’ money, his mom’s money, his church’s money.”
But blowing the whistle on his boss cost Noble 14 months of employment. He told students he was behind on his mortgage and had to liquidate his retirement funds to pay bills in the interim. Would he do it again?
“Certainly,” he replied. “I had time to recover (financially). Some of the victims were in their 50s and 60s, and they didn’t.”
Noble was joined Wednesday night by Louis Clark, founder and President of GAP, the leading whistleblower protection agency in the country.
“Whistleblowers … they tend to be the hardest-working employees and will commit to an organization,” Clark said. “They almost always try to raise concerns and resolve them internally. Usually, they are the kind of people employers say they would like to have in the office.
“Your choice (to blow the whistle) is one of personal integrity. ‘Am I going to ignore it or do something about it?’”
Noble finished by telling students, “Every one of you will be faced with a challenge to stand up and make a statement for what’s right or wrong. Take the stand and do the ethical thing.”