Money for disabled daughter's trust fund linked to Siskey
A lawsuit filed Tuesday by former business associates of Rick Siskey alleges that his widow, Diane, “actively participated” in her late husband’s Ponzi schemes, received millions in ill-gotten gains and is still hiding significant funds offshore.
The complaint filed by a private equity fund once called Siskey Capital and two of its employees also accuses insurance giant MetLife and its securities arm of turning a blind eye to Rick Siskey’s illegal activities, despite a “clear warning” that he was a “rogue broker.”
Siskey, 58, took his own life in December, days after court filings gave the first public indication that he was under investigation for fraud. An FBI affidavit unsealed in January alleged he was operating a Ponzi scheme for years, costing investors millions.
The new complaint is the first to allege wrongdoing by Diane Siskey in the case and follows a suit earlier this year that accused MetLife of knowing about Rick Siskey’s activities. For years, the Siskeys were MetLife employees, working for a firm that operated under the name Wall Street Capitol. They were prominent fixtures in Charlotte civic and social circles, and a YMCA branch bears their name.
After Siskey’s death, prosecutors have taken no actions against anyone else in the case, although investors have pushed four Siskey companies into federal bankruptcy court in Charlotte.
According to the latest suit, Charlotte businessman Marty Sumichrast established Siskey Capital with Siskey in 2013, but didn’t know about his partner’s illegal activities until they became public in December 2016. The company has changed its name to Stone Street Partners, but the accusations against Siskey have devastated the business and it’s now being wound down, the suit says.
The 32-page complaint lodges a series of claims, from negligence to fraud, against the Siskey estate, Diane Siskey and MetLife. It seeks unspecified compensatory and punitive damages.
Jim Smith, the attorney representing the plaintiffs, said neither he nor his clients would comment beyond the complaint. Kim Friedman, a MetLife spokeswoman, said the company just became aware of the suit and is reviewing the complaint to “determine appropriate next steps.” Lane Williamson, a lawyer for the Siskey estate, said he was “disappointed that the estate will have to expend resources to defend litigation that would have been better utilized to make restitution for defrauded investors.”
Neither Diane Siskey nor her attorneys responded Tuesday to messages seeking comment.
The ‘Siskey Team’
Rick Siskey moved to Charlotte in the 1980s and soon began building a business of selling insurance and other financial services. According to the suit, his “Siskey Team,” which included his wife and other business associates, started working with MetLife in the late 1990s.
“Rick Siskey relied heavily upon his Siskey Team, and most importantly his wife Diane Siskey, to implement his business decisions and activities,” the suit says.
According to the suit, MetLife played a key role in setting up Siskey in a prominent SouthPark office building on Sharon Road, and its well-known brand gave Siskey’s operation “stature and credibility.” He worked under the Wall Street Capitol moniker because the appearance of being independent gave him more “marketplace credibility” when recommending MetLife products to clients, the suit says.
After going to work for MetLife, Siskey formed a series of limited liability companies to implement “several elaborate Ponzi schemes,” the suit says. According to the suit, he enticed clients to invest in these entities, promising fixed returns in safe investments, but actually shifted the money to personal accounts to fund a lavish lifestyle and pay off other investors: the definition of a classic Ponzi scheme. The total amount invested is estimated to exceed $50 million, the suit states.
Siskey concealed the schemes from everyone except his team members, the complaint states. They occupied a separate section of the MetLife offices, and Siskey maintained files related to the scheme in locked cabinets in his assistant’s office, according to the suit.
Siskey’s activities first came under public scrutiny in 2004 when the the National Association of Securities Dealers disciplined him for selling promissory notes in two funds without disclosing his role to his employer. These same transactions later became the subject of a settlement with the U.S. Labor Department in 2011.
According to the suit, Diane Siskey was employed by MetLife and MetLife Securities from 2001 to 2016, managing the Wall Street Capitol office and serving as director of compliance. The suit says she was actively involved in Rick Siskey’s defense and settlement of the securities and Labor Department allegations.
According to the suit, a MetLife fraud investigator attempted to investigate Rick and Diane Siskey’s activities in 2015, including looking into millions of dollars of insurance policies they held on other individuals, but the company terminated the probe when the Siskeys complained.
“If MetLife and MetLife Securities had maintained proper controls and conducted a proper investigation...Siskey’s Ponzi scheme would have been detected and stopped,” the complaint alleges.
Suit: Diane Siskey involved
The suit also alleges that Diane Siskey actively participated in her husband’s schemes. For example, she was personally involved, the suit says, in forming the entity TSI Holdings which was the focus of the FBI affidavit that alleged Rick Siskey was running a Ponzi scheme.
The complaint also says from mid-2005 to mid-2013 there were 45 transactions totaling more than $47 million between her and her husband’s accounts, “effectively a conduit between his various Ponzi entities, and Diane Siskey’s accounts.”
The plaintiffs in the case, according to the suit, became involved with Rick Siskey starting in 2013, when he approached Sumichrast for his help with investments in publicly traded companies. After describing his accomplishments and touting Diane Siskey as his business partner, Siskey later suggested they go into business together, and Sumichrast agreed. Other employees came on, including the other two plaintiffs – Dawn King and Paul Porter – who left lucrative positions to join the company, the suit says. (Sumichrast is not named as a plaintiff but has an ownership stake in Stone Street Partners, according to the suit.)
The suit says Sumichrast, Porter and King were blindsided when the FBI allegations emerged in December 2016 and had no knowledge of Siskey’s illegal activities. About two weeks before his suicide, Siskey even came into the office to say the investigation was a minor technicality and all investors would be repaid, the suit says.
Although Rick Siskey resigned as a managing member of Siskey Capital on Dec. 14, 2016, Diane Siskey sent a text message to Sumichrast saying her husband retained his ownership stake in the company, the suit says. After her husband’s death, the suit states, she demanded that Siskey Capital continue to pay her health and auto expenses. The suit also alleges Diane Siskey is hiding significant funds offshore.
During her conversations with Sumichrast, she “never expressed any concern or empathy for the investors defrauded by the Siskey Ponzi schemes,” the suit says. “Her only expressed concern was to preserve and protect her ill-gotten wealth.”
In the meantime, Stone Street Partners and its employees have suffered due to guilt by association, the suit states. Unable to raise additional capital, the fund is being wound down and its “existing investments are being distributed to repay its investors to the extent possible.” Siskey Capital’s past investments have included expansion capital for Kure Corp., the vaping company.
The suit filed Tuesday comes as claims are due this week against the estate and in bankruptcy court. Diane Siskey has pledged to set aside $37.5 million of the $47 million in life insurance proceeds from her husband’s death for investors. Proceeds from the sale of the couple’s home and an estate auction are also expected to benefit investors. The bankruptcy trustee, Joseph Grier, has said he expects to make a “substantial distribution” to investors.