In the latest twist in the Rick Siskey Ponzi scheme case, a bankruptcy court judge on Monday denied a request to approve an interim settlement that would have provided up to $12.7 million for victims.
Charlotte businessman Siskey, 58, took his own life in December 2016, shortly after public filings alleged he was involved in fraud, costing investors millions. For more than a year, a court-appointed trustee has been unraveling the case in federal bankruptcy court, working to gather assets and figure out claims that can be paid to victims.
Last month, trustee Joe Grier reached a settlement with Siskey’s widow, Diane, that would have allowed about $12.7 million to be distributed for partial payments to claimants and to cover administrative fees. More than $2 million would also have gone to a Charlotte home builder who had made an investment that included Diane Siskey as a signatory.
During the hearing, Anna Gorman, who is working with Grier on the case, said the purpose of the interim settlement was to get funds to “some desperate folks who need it.” Bankruptcy court judge Craig Whitley, however, denied the motion to approve the settlement, saying it violated bankruptcy court procedures. The agreement would have treated similarly situated investors differently, he said.
Whitley has repeatedly said that the case is extremely complicated because it has facets in bankruptcy court as well as state probate court. The main asset in the case is nearly $50 million in life insurance that Diane Siskey received after her husband’s death. She has previously agreed to hand over $37 million of that amount.
Whitley said the best solution is a global settlement among all the parties, including the trustee, Diane Siskey and a private equity firm called Stone Street Partners that was once affiliated with Siskey. The firm objected to the settlement because its claims were excluded.
Grier said in court that he has been making progress in negotiating a settlement with Diane Siskey. The next hearing in the case is scheduled for March 26.
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.