Dead Harnett businessman at center of money probe
Posted September 21, 2010 5:33 p.m. EDT
Updated October 7, 2010 4:28 p.m. EDT
Dunn, N.C. — Banks and individuals could have lost as much as $32 million in dealings with a Harnett County businessman who recently committed suicide.
Ray Mulkey Jr., 63, was found dead in North Myrtle Beach, S.C., on Aug. 16. Authorities ruled his death a suicide.
Mulkey was well-known in Harnett and Cumberland counties. He owned or was a partner in four companies that dealt with financing and real estate: Mulkey & Associates Inc., North Carolina Premium Finance Cos. Inc., Ray Mulkey Realty Inc. and Southeastern Insurance Services.
Almost all of the $8 million in assets listed by his estate has already been claimed, and the estate lists almost $41 million in liabilities, including money owed to 21 banks and numerous individuals.
Fayetteville attorney Lonnie Player said 11 of his clients gave money to Mulkey with a promise of repayment with 12 percent interest. He said he believes Mulkey engaged in a Ponzi scheme, and his clients have filed claims against the estate totaling $2.3 million.
"He was just using the money not for its intended purpose. He was simply using it to advance the scheme," Player said, adding that he plans to contact law enforcement authorities about the case and file suit against Mulkey's estate.
Mulkey paid the interest on time, Player said, but never repaid any principal of the investments. He said Mulkey's reputation as a pillar of the community duped investors.
"He was showing tens of millions of dollars in accounts receivable when, actually, the legitimate receivables totaled only about $3 million," he said. "I'm not so sure that anyone should have seen at the time that this was some sort of artifice to defraud people."
One of the biggest losers in the apparent fraud is Dunn-based New Century Bank, which Mulkey helped start several years ago.
The bank recently reported in a U.S. Securities and Exchange Commission filing that an investigation uncovered up to $11 million in bad loans. Bank Chief Operating Officer Lisa Campbell declined to comment on whether the loans were tied to Mulkey.
Others who sat on the New Century board with Mulkey included former Senate Majority Leader Tony Rand and former state Transportation Secretary Lyndo Tippett.
Player said he believes the bank was a victim in the alleged scheme and wasn't involved otherwise.
The state Department of Insurance is auditing Mulkey's insurance business after the estate administrator contacted officials about the firm's debts.