Business

Rick Siskey Ponzi victims will finally get paid, as part of a $10 million deal

Investors duped by a Ponzi scheme operated by Charlotte businessman Rick Siskey are expected to receive at least 90 percent of their investments as part of a major settlement that won approval this week from the Securities and Exchange Commission.
Investors duped by a Ponzi scheme operated by Charlotte businessman Rick Siskey are expected to receive at least 90 percent of their investments as part of a major settlement that won approval this week from the Securities and Exchange Commission. Observer file

Victims of the Rick Siskey Ponzi scheme are finally expected to receive their first payments under a plan a federal bankruptcy court approved this week to partially reimburse them.

The $10 million in total payouts come from insurance proceeds Siskey's widow, Diane, received following the death of her husband, who took his life in 2016 after court filings revealed he was under investigation for fraud. The disbursements will cover more than 100 investors, some of whom entrusted Siskey with hundreds of thousands of dollars apiece, according to court filings.

The payments represent about 28 percent of each investor's "base claim." Original bankruptcy claims in the case reached about $50 million. But base claims, which exclude promised returns as well as money investors already got back, are about $40 million.

It's a milestone for investors, who have been waiting more than year and a half to get any of their money back.

Charlotte resident Barbara Kovalev, who invested with Siskey proceeds from a legal settlement related to the birth of her disabled daughter, had mixed feelings on the plan approved Monday by Judge Craig Whitley.

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It's good that victims are finally getting some money, she said. But she also said she's concerned the complex case could take a long time to get resolved — adding to legal fees paid out of the insurance proceeds.

In the deal approved Monday, Diane Siskey agreed to release $11 million in insurance proceeds, of which $1 million could go to "administrative expenses," according to court documents. That decreased the amount available to investors to the $10 million.

"Definitely worried that's all we'll ever get," Kovalev said. "All these delays just keep costing more and more money."

Diane Siskey has previously agreed to hand over $37 million of the nearly $50 million in life insurance she received. But it's not clear when investors might see additional funds, as future deals will hinge on reaching agreements with the parties involved in the case.

One of those is private equity firm Stone Street Partners, which was once affiliated with Siskey.

In May, Stone Street had demanded Diane Siskey immediately release $10 million in insurance proceeds to be distributed to investors.

The next month, Stone Street objected to a proposed settlement that would have given investors nearly $15 million in payments. Those payments would have accounted for about 39 percent of each investor's base claim.

In making its objection, Stone Street had opposed a motion to convert the bankruptcy cases from Chapter 7 to Chapter 11 status. In a statement Wednesday, firm attorney Andrew Houston said the motion had too many strings attached compared with the $10 million plan Stone Street backed in May.

"We are working with the trustee and the other interested parties to try to reach a global resolution that will benefit all of the victims of the Ponzi scheme," Houston said.

Siskey, 58, took his own life in December 2016. An FBI affidavit unsealed weeks after his death alleged he had operated a Ponzi scheme for years.

The case that has since unraveled amounts to one of the biggest investment frauds in Charlotte's history.

Some of his investors were unsophisticated or elderly, placing retirement accounts, pension funds and insurance payouts with Siskey, according to the FBI affidavit.

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