An inside look at Rick Siskey and one of Charlotte’s biggest frauds
With bankruptcy court proceedings already in a second year, a handful of investors ensnared in the Ponzi scheme allegedly run by the late Rick Siskey have decided to cash out early.
About a half dozen people have sold their bankruptcy claims to a New York investment firm that specializes in buying up distressed debt at a discount, court records show. One of the victims selling a claim was social media personality and actor Nash Grier, who grew up in the Charlotte area.
New York-based Argo Partners began contacting investors about their claims when the bankruptcy case began in January 2017, said Zeeshan Aziz, Argo’s head of trading. The firm buys the claim for less than its original amount and then waits to see if the bet will pay off once investors receive a distribution in the case.
“We are in a strange space,” Aziz said of the firm’s business model. “Bankruptcy filings, in a sense, are business for us.”
Aziz declined to say what what the firm is paying for the claims, but he said the price has gone down as the case moves slowly through court.
“It has been a bit of a roller-coaster,” said Aziz, who declined to name any of the individuals. “Events over the last month or so have not been favorable to creditors. So let’s say whatever my price was six months ago, it would be less now.”
Siskey, 58, took his own life in December 2016, shortly after public filings indicated he was involved in a fraud. For more than a year, court-appointed trustee Joe Grier (no relation to Nash Grier) has been unraveling the case in federal bankruptcy court, working to gather assets and figure out claims that can be paid out to investors.
The original claims in the case reached about $50 million, but the “base claims” that exclude promised returns and money investors already got back are around $40 million. The trustee has indicated that investors could get back their base claims, if not more.
Using money largely from life insurance payouts, Grier has said he hopes to provide investors with money for these base claims, if not more, but he is still negotiating a settlement with Siskey’s widow, Diane. In the meantime, he is seeking court approval for an interim distribution of $15 million that would go toward investor payments and administrative fees.
The trustee declined to comment on Argo’s purchases.
Argo mostly focuses on buying up debt in corporate bankruptcies, but has seen a rise in Ponzi scheme investment opportunities in recent years.
“Something we have noticed post the financial crisis is the uncovering of a plethora of Ponzi schemes,” Aziz said.
Court records show that Argo has assumed claims from five sets of investors, initially valued at around $1.5 million. After the firm buys out a claim, the investor is no longer involved in the case unless Argo only buys a portion of their total claim.
“This is a straight asset sale,” Aziz said. “I have done my homework and put a market price on it.”
Nash Grier, who grew up in the Charlotte area and gained fame for his Vine videos, transferred his $105,000 claim to Argo in October, court records show. A representative for Grier could not be reached for comment.
Argo is open to more deals with investors, noting they can choose to sell all or part of their claim, Aziz said.
“It’s a non-performing asset,” Aziz said of the claims. “They can take the liquidity and put it to work elsewhere.”