04/24/2009

News / Former Owner of Noble Trust Company Pleads Guilty

CONCORD, NH—Acting United States Attorney Michael J. Gunnison, New Hampshire Attorney General Kelly Ayotte, New Hampshire Banking Commissioner Peter Hildreth, and Special Agent in Charge Warren T. Bamford of the Boston Division of the Federal Bureau of Investigation, announced that Colin P. Lindsey, the founder and former owner, President and Chairman of the Board of Directors of Noble Trust Company (NTC) pleaded guilty late yesterday to two counts of mail fraud. Documents previously filed in United States District Court allege that Lindsey, a 41-year-old resident of Manchester, New Hampshire, created and managed an investment product called the “Noble Alternative Income Fund” (NAIF). Investors who owned NAIF accounts were promised interest payments of at least 12 percent per year, payable on a periodic basis or as a lump sum whenever the accounts were closed. While managing the fund, Lindsey used monies in customer NAIF accounts to make loans to a Colorado company known as “Sierra Factoring, Inc.” (Sierra), in a manner which was not disclosed to some of the NAIF account holders. After Sierra stopped making payments on the NTC loans in August 2006, NTC’s ability to honor its obligations to NAIF investors was adversely affected, and Lindsey took steps to recoup NTC’s losses and to prevent NAIF investors from learning that their money had been lost.

According to the court filings, from October 2006 to September 2007, Lindsey diverted more than $780,000 in funds invested by new NTC customers to make payments to existing NAIF account holders, in violation of the fiduciary duty that Lindsey owed to NTC’s new customers. Lindsey also caused quarterly account statements to be mailed to NAIF investors, falsely reporting that the market value of their accounts remained at least equal to their original investments, thus concealing both the fact that those investments were seriously at risk, and Lindsey’s diversion of new customer monies to shore up the ailing NAIF accounts.

The charges against Lindsey further describe efforts by Lindsey to replace monies loaned to Sierra by obtaining commissions from insurance companies which sold high value life insurance policies to customers of Balcarres, LLC, a Manchester, NH insurance agency that was partly owned by Lindsey. The charges state that another person, Jerry Marino, referred prospective customers to Lindsey, and Lindsey in turn paid Marino a fee each time one of his referrals purchased a high value life insurance policy through Balcarres. Court documents allege that from approximately October 2006, to October 2007, Marino provided false information regarding the applicants’ personal financial status to Lindsey. After learning that applicants’ personal financial information was false, Lindsey nevertheless caused the false information to be mailed with applications for policies to the insurance companies. As a result of that conduct, Lindsey received commissions totaling approximately $5.5 million and paid approximately $2.1 million of that money to Marino.

Commissioner Peter Hildreth of the New Hampshire Banking Department stated, “After our routine examination uncovered possible criminal wrongdoing, the Banking Department reported the suspected activity to the appropriate authorities and took control of Noble Trust Company. It was only through hard work and cooperation by the United States Attorney’s Office, the NH Attorney General’s Office, the FBI and the New Hampshire Banking Department that the individuals were brought to justice.”

Attorney General Kelly Ayotte commented, “These cases demonstrate the State’s commitment to work with federal and state agencies to vigilantly protect investors from fraudulent schemes and to bring wrongdoers to justice.”

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