Raleigh, N.C. — The profile of Ponzi schemers is one of a successful façade, according to a former SBI agent who profiled the white-collar criminals.
Ray Mulkey Jr., William Wise and Bernie Madoff all had ties to North Carolina, and all were caught up in recent suspected Ponzi cases.
“They drive nice cars. They have nice clothes. They take great vacations. They give to charity,” said Ken Dickson, a former agent with the State Bureau of Investigation. “It's not really tied to need. It's tied to greed.”
Dickson is a Raleigh accountant who investigated white-collar crime for the SBI and still helps profile suspects caught up in financial corruption.
“They get accolades from the community. People think they're great. People obviously think they're successful and obviously as a result of that people want to invest more with this individual,” Dickson said.
The ability to win trust ties all these men together. Before police say he killed himself in August, Harnett County businessman Mulkey impressed friends with his charm and lifestyle.
“You couldn't buy anything. Ray was always willing to pick up the tab,” said friend Lynn Jernigan.
He built dozens of businesses and took millions in investments.
“People believed in him. They trusted him. It appeared to be legit,” said Lonnie Player, a Fayetteville attorney.
Player said he believes that's how Mulkey ran up more than $40 million in liabilities in an alleged Ponzi scheme.
When authorities seized Wise's Raleigh home and auctioned off tens of thousands of dollars in high-end belongings, they say his illegal operation pulled in $68 million from investors.
Madoff, the king of Ponzi schemers, is now serving a life sentence at a federal prison in Butner for bilking investors for billions.
Large or small, a Ponzi scheme works like a house of cards. Investors unknowingly build the house with their money and stay hooked with regular interest payments, but over time it is new investors’ principal that pays that interest and the lofty lifestyle of the person leading the scheme. That is, until it falls apart.
“It's a snowball. Once it gets going, it just has momentum and doesn't stop,” Dickson said.
As the pressure builds, white collar criminals keep a positive front, but behind the scenes nobody gets close, not even family, according to Dickson.
“They are very good at keeping people at arm's length, keeping them away from looking at records,” he said.
In the end, though, suspicious investors, attorneys and law enforcement usually close in to get a glimpse behind the façade. Dickson urges investors to constantly demand proof about the status of their money.