An inside look at Rick Siskey and one of Charlotte’s biggest frauds
The trustee unraveling the Rick Siskey Ponzi scheme case has reached an agreement with Siskey’s widow to turn over $15 million in insurance money in order to make partial payments to victims.
In a court filing late Saturday, trustee Joe Grier asked the federal bankruptcy court to grant a motion allowing the agreement to be carried out.
Siskey, 58, took his own life in December 2016, days after court filings gave the first public indication that he was under investigation for fraud. An FBI affidavit unsealed weeks later alleged that Siskey – who long sold insurance and other financial products to Charlotte clients – was operating a Ponzi scheme for years.
Grier and his team are sorting through claims from investors and accumulating assets that can be distributed to them. So far, however, the victims – who put more than $50 million into the scheme – have yet to receive any money back in the bankruptcy court process.
Siskey’s widow, Diane, received $47 million in insurance money after her husband’s death and has pledged to provide $37.5 million to investors. But so far she has not reached an agreement to turn the money over more than a year after the bankruptcy case began. The new agreement would provide a boost to investors, especially those who lost retirement savings.
Under the agreement filed Saturday evening, Diane Siskey proposes to pay $2.225 million of the money to home builder Michael Salamone to resolve payments owed under four promissory notes.
The remaining $12.75 million would be used to pay bankruptcy estate administrative expenses allowed by the court and to fund an interim payment to Ponzi scheme claimants. No distribution would be made, however, to a private equity firm called Stone Street Partners and two of its employees, who have filed a lawsuit against Diane Siskey and other parties.
Stone Street, formerly known as Siskey Capital, once counted Rick Siskey as one of its principals. The firm’s lawsuit has said others at Stone Street were unaware of Siskey’s illegal activities, and they are now seeking damages because of the harm to their reputations, careers and future income from being associated with Siskey.
Saturday’s filing does not provide specifics on what investors would receive but says if the agreement is approved the trustee “will be able, in short order, to propose an interim distribution to allowed claimants,” the filing says.
The agreement, the filing adds, “represents only a partial resolution of the disputes” between the trustee and Diane Siskey and “facilitates an interim, not final, distribution of the proceeds.” The trustee and Diane Siskey “are actively engaged in negotiations to reach a more comprehensive settlement that would bring this case closer to a full and final resolution,” the filing states.
Grier told the Observer that he hopes to make a distribution to victims equal to at least 30 percent of the “base claims” that he has previously determined for each creditor. These amounts are based on how much money investors put in and how much they received back from Siskey, excluding any promised returns. The trustee has said he hopes to return more than the base claims if assets are available.
Jim Smith, an attorney for Stone Street Partners, said he and his clients had not yet seen the motion, adding: “My clients’ greatest concern has always been and continues to be the repayment of the monies to the Siskey victims.”
An exhibit with Saturday’s filing says the agreement came at Diane Siskey’s request and is not an acknowledgment of culpability or liability. Thomas Walker, an attorney for Diane Siskey, said his client is “hopeful this interim distribution can be accomplished and will continue to cooperate with the trustee toward a resolution of this matter.”
The agreement comes days after Charlotte attorney Charles Monnett III, who represents victims, filed a request to interview Diane Siskey to “fully determine the extent of (her) knowledge of or participation in the Ponzi scheme, the source of any funds used to pay life insurance policy premiums from the time each policy was issued, as well as the existence of any other assets available for payment of claims of the estate.”
Monnett’s 13-page filing said that from 2001 until late 2016 Diane Siskey was employed by Wall Street Capitol, the financial services business started by her husband and affiliated with the MetLife insurance company. At one point, she was MetLife’s managing director for the Carolinas and was responsible for compliance functions in the two states, according to the filing.