New Mystery In Ponzi Scheme Centers On Life Insurance

Nov. 30--After one of Charlotte's biggest Ponzi schemes unraveled last year, the widow of accused fraudster Rick Siskey pledged to hand over a significant portion of the life insurance proceeds she received to investors.

But as the case moves through bankruptcy court, some of Siskey's victims are raising intriguing questions: Was their money fraudulently used to pay the premiums on his life insurance policies in the first place? And if so, shouldn't all of the insurance proceeds go to investors?

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 Siskey -- who long sold insurance and other financial products to Charlotte clients -- was operating a Ponzi scheme for years, costing investors millions.

Now a federal bankruptcy court in Charlotte is charged with sifting through claims made by Siskey's victims and figuring out how much money is available to them.

Siskey's records showed that investors were owed around $51 million, including interest. But a Nov. 1 report by a court-appointed bankruptcy trustee indicated investors could receive much less, if promised interest and other gains are excluded. For example, investors in one fund submitted claims of of $29.6 million, but the trustee said they might only get $17.5 million back.

Investors, however, can object to the trustee's recommendations, and some are raising questions in court filings about how much insurance money should be made available to them.

Diane Siskey has indicated she plans to turn over $37.5 million of the $47 million she has received from her husband's MetLife policies "subject to reaching a mutually acceptable agreement," the trustee report says. Life insurance proceeds typically pay out after two years even in suicides.

A hearing scheduled for Dec. 11 will kick off court proceedings over the claims. If enough funds end up being available, according to the report, it's possible that investors could receive interest and lost profits.

One of Siskey's investors, according to a court filing this week, is a 79-year-old widow from Charlotte who loaned $120,000 to a Siskey entity called WSC Holdings in return for a 7 percent annual interest rate. The trustee's "base-line" recommendation, however, has called for the widow to receive only about $19,000 after excluding promised interest and money she has already received.

In the filing, the widow questions whether this is fair because her money may have been used "to pay the premiums for the life insurance policies which have now paid monies to the account of Diane Siskey."

"It certainly appears that (Siskey) misled a lot of people," Keith Johnson, a Lincoln County attorney representing the widow, told the Observer. "If he took that money and paid these insurance premiums, why equitably would those people who put that money in under false pretenses not own that policy?"

In another filing this week, a couple that invested more than $1 million argued that all of Siskey's insurance money and other assets should be used to pay investors "some type" of gains and interest -- "especially when you consider that all estate property items and the life insurance premiums were paid for, in most cases, with money stolen from investors."

Joe Grier, the court-appointed trustee, declined to comment on the filings. MetLife and an attorney for Diane Siskey also declined to comment.

MetLife connections

The insurance money makes the Siskey case different from most Ponzi scheme cases, according to the trustee report. That's because typically "claimants recoup only a fraction of the amount of their claims as the funds invested have been depleted," the report says.

Money raised from estate and wine auctions is also expected to benefit Siskey's investors.

It's not surprising that Siskey bought life insurance through MetLife. His former financial services firm, Wall Street Capitol, was long affiliated with the New York-based insurance giant.

A lawsuit filed in August by former business associates accused MetLife of turning a blind eye to Siskey's activities while also alleging Diane Siskey, who had once worked at Wall Street Capitol, "actively participated" in her husband's schemes. Through her attorney, Diane Siskey has denied those allegations. MetLife hasn't commented on the suit.

It's not clear how much the premiums were for Siskey's insurance policies.

"The question is why did he buy so much life insurance?" asks Johnson, the attorney representing the widow with a claim in the Siskey case. "Someone in his position with $8 (million) or $10 million wouldn't raise too many flags. So $50 million of life insurance is a hell of a lot of life insurance. Why did he do that? I don't know the answer to this question, but I think it's a good question."

Rick Rothacker: 704-358-5170, @rickrothacker

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