Investors got their first look Wednesday at an analysis of claims made in the Rick Siskey Ponzi scheme case.
They may not all like what they see.
The report by the bankruptcy court losses sets a baseline for what dozens of investors could be paid depending on what funds the trustee ultimately accumulates, such as insurance money pledged by his widow and proceeds from an estate auction and the sale of the couple’s home. The report doesn’t count interest Siskey promised or money investors have already withdrawn.
For example, in Siskey’s largest fund, TSI Holdings, investors submitted claims of $29.6 million, not counting claims made by a firm called Stone Street Partners once affiliated with Siskey. But the trustee sets a base line of $17.5 million, according to filings Wednesday in federal bankruptcy court in Charlotte.
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“We could end up paying more or less, depending on the funds ultimately available,” the court-appointed trustee, Charlotte lawyer Joe Grier, told the Observer.
In the filing Wednesday, the trustee asks the court to approve the report. Claimaints can file responses or objections by Dec. 1; a hearing is scheduled for Dec. 11.
Siskey was a Charlotte financial planner and businessman who was known for owning a prominent mansion in SouthPark and for giving generously to charity. But in December 2016, at age 58, he took his own life, 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.
Since then, four Siskey companies were pushed into federal bankruptcy court in Charlotte, and investors had until Aug. 23 to submit claims. Since then, Grier and his staff have been analyzing those claims and the potential assets to pay them off.
The report filed Wednesday says evidence showed that three of the funds were operated as Ponzi schemes: TSI, WSC Holdings and SouthPark Partners. Some of the investors in another entity, Sharon Road Properties, were also entangled in a Ponzi scheme, the report found. (That entity owned a percentage of a SouthPark office building, and some of its investors’ money did not appear to be part of the fraud, the report said. Once that holding is sold, those investors will receive a portion of the proceeds.)
In general, the balances on statements that Siskey sent to investors over time “appear to have been totally fictitious and not based upon any actual investment or holding,” the report says. Investors were promised interest rates that ranged from 2 percent to as high as 10 percent.
Altogether, Siskey’s records showed that investors in TSI, WSC and SPP, plus some of the Sharon Road Properties investors, had investments totaling $51.5 million, including interest. Some of the investments went back as far as the mid-1990s, the report said.
In Ponzi scheme cases, earlier investors are typically paid out with investments by new investors rather than earnings from actual business activity. This means that “claimants recoup only a fraction of the amount of their claims as the funds invested have been depleted,” the report says.
In the Siskey case, minimal assets also are on hand, but, in an unusual twist, Siskey’s widow, Diane, has expressed interest in turning over $37.5 million in insurance money and other funds “subject to reaching a mutually acceptable agreement,” the report says. The trustee and the administrator of the estate, attorney Lane Williamson, continue to work with Diane Siskey and her attorneys to reach an agreement, the filing says.
Here is a look at the base line determined by the trustee for other Siskey funds, not including the Stone Street Partners-related claims:
▪ WSC Holdings: $11.8 million out of total claims of $28.3 million.
▪ SouthPark Partners: $7.1 million out of claims of about $13 million.
▪ Certain investors in Sharon Road Properties: $552,707 out of total claims of about $2.3 million.
In total, Stone Street Partners and two employees submitted claims of about $26.4 million, but the trustee recommended against those claims because they didn’t involve investments in Siskey’s funds.
Stone Street Partners and the employees filed a lawsuit in August against Siskey’s estate and his widow. That complaint said the firm and its employees had no knowledge of Siskey’s schemes, but their business and reputations have been ruined because of their ties to Siskey. An attorney for Stone Street Partners could not be reached for comment.
The filing also indicates that the U.S. Securities and Exchange Commission still has an interest in the case. The SEC has declined to comment.