By Mike Hixenbaugh
The Fayetteville Observer
He was memorialized as an astute businessman who used his riches to entertain friends, impress young women and care for his family.
But on the day an associate found Ray Mulkey Jr. slumped over a steering wheel in North Myrtle Beach this summer, he was broke and alone.
Mulkey killed himself days after rewriting his will and months after borrowing hundreds of thousands of dollars from friends, business partners and the bank he helped start some 10 years ago.
In place of the image of a respected businessman, Mulkey, 63, left behind at least $42 million in debts and few assets to repay them.
His business dealings have become the subject of a criminal investigation by the N.C. Department of Insurance, and his relationship with lenders has caught the attention of the Secretary of State’s Office.
At least 20 banks and more than a dozen people appear to have lost millions investing with the former trust officer who built what appeared to be a fortune out of a family-owned insurance company in rural Harnett County.
The details of Mulkey’s swift fall from prominence remain a mystery to most who knew him. Some who saw him just weeks before his suicide said he showed no signs of anxiety or depression – no warning that he might take his own life.
“He was the same good man I’ve always known,” said Dunn businessman and longtime Mulkey friend Johnny Simpson.
A few odd financial moves, though, and a documented effort to borrow huge sums of business capital in the final months of his life indicate there might have been some reason for concern.
But no one seemed to notice.
Friends praised Raymond Lee Mulkey Jr. at his funeral for his generosity, kindness and charm.
Those who lost chunks of their life savings investing with the man have different memories.
Leroy Morgan’s long-term financial plans died along with Mulkey this summer. A third of his fixed retirement income was tied to a $200,000 investment he made in 2008.
Morgan, 64, met Mulkey a few years ago through their shared association with the Fayetteville Shrine Club. Mulkey had a standing offer among his fellow Shriners back then – invest in his premium finance companies and receive 12 percent annual interest payments, guaranteed.
It was an offer Mulkey first began making to friends and business partners more than 20 years ago.
“It sounded too good to be true,” Morgan said. “That was my first reaction. But you check the guy out, and he’s a pillar of the community. He was a founder of New Century Bank in Dunn, you know? He was just what you would think a real pillar of the community is. I was hoodwinked.”
Morgan wasn’t alone.
Between 1993 and earlier this year, more than a dozen people – including some of Mulkey’s own family members and former in-laws – took up his lucrative investment offer.
Mulkey was rarely late on interest payments, several of his creditors said. But soon after he killed himself this summer, the monthly payments stopped and checks started to bounce.
“I don’t know much of what’s going on,” said Robert English, an elderly man who invested with Mulkey two years ago. “I know he died, and I had money involved that I ain’t getting back. That’s about it.”
Lawyers representing several of the investors said they believe Mulkey was running a Ponzi scheme – using new investments and bank financing to pay dividends to earlier investors.
If that was the case, it’s unclear what Mulkey did with much of the money, lawyers said. He owed banks more than $38 million when he died and was under water on almost every property he owned.
Estate filings in Harnett County Superior Court indicate that most of the money is gone.
“That’s money I was counting on,” said Morgan, who has since moved with his wife to Fancy Gap, Va. “Now what am I going to do?”
Not everyone who invested lost big with Mulkey.
Some of his creditors – friends such as Barbara Godwin, John C. Allen Jr., Sam Ausley and others – began investing with him more than 15 years ago.
Dewey Meshaw said he was happy with the arrangement. Meshaw, the general manager of the North Carolina Joint Underwriting Association in Cary, invested $150,000 in Mulkey’s companies beginning in 1995.
“I more than made my investment back over the years,” said Meshaw, who considered Mulkey a good friend. “I’m certainly not going to get my principal back, but that’s OK. I just took what he was paying interest-wise, reinvested it and did very well with Ray.”
Those who invested later, such as Morgan, weren’t as lucky. Fellow Fayetteville Shrine Club member John English and his family invested more than $1.1 million in Mulkey’s companies in recent years. The Shrine Club itself, which raises money annually to buy vans for transporting burned and crippled children to the hospital, invested $55,000 with Mulkey only months before his suicide.
“We didn’t get to cash in for 20 years like some of these other folks,” Morgan said. “I’m just an old redneck country boy. I’m not a big finance guy. I worked hard for that money, and it really hurts that it was taken from me.”
Even in his final months, as he scrambled to stabilize his financial house of cards, Mulkey was able to persuade a few new associates to invest in his businesses.
“It’s like he was working so hard to fool everybody,” one of the later investors said. “We all bought into it, but it was all a fraud.”
Mulkey worked more than 30 years to build his reputation as an honorable businessman throughout southeastern North Carolina and beyond. He cut his teeth in assets management as a trust officer at Waccamaw Bank in Whiteville after his graduation from Campbell University in 1968.
A decade later, Mulkey moved back to Dunn with his first wife, Elizabeth Denning Berryhill, and bought her father’s insurance company. He excelled in the business, friends said.
“Everybody in this town knew Ray Mulkey,” said Stan Coleman, a Harnett County financial planner. “He really built a name for himself over the years as someone who you sort of admired.”
Mulkey relied on his Southern charm and a firm handshake to sell insurance policies in the early years, friends and associates said. But in 1980, the businessman found a more efficient way to increase his revenue stream.
Mulkey opened Budg-O-Matic that year – the first of his many companies offering in-house financing to policyholders. Premium financing – a service giving short-term loans to help low-income people pay for expensive insurance policies – is a no-lose investment, Mulkey was known to tell potential investors.
He expanded the financing service to other area insurance companies in the early 1990s, according to records. He borrowed hundreds of thousands of dollars from friends and millions more from banks to incorporate dozens of the businesses under variations of the name N.C. Premium Finance.
The companies became the centerpiece of Mulkey’s business portfolio. In May, just months before his suicide, the insurance salesman was claiming a net worth of roughly $10 million, crediting the financing companies for the lion’s share of his income.
He used the reported revenue as leverage to buy properties and open businesses from Fayetteville to the coast. Over the years, he became a legitimate player in industries from residential development to financial planning, all the while hanging his hat on his insurance and premium finance ventures.
When he died, Mulkey was running more than 30 financing businesses out of a single office in Dunn.
They were all shut down a few weeks ago. State insurance regulators audited the companies after his death and found they were “in severe financial duress” – worth a fraction of what Mulkey had claimed.
Bill Hedgepeth, president at New Century Bank, said he was stunned. For more than a decade, Mulkey had been presenting the bank he helped start with falsified financial statements to borrow large sums.
The bank expects to write off up to $11 million as a result of Mulkey’s dealings, and the community lender has launched its own civil investigation to determine if money can be recovered.
New Century is one of several banks that had provided Mulkey with business capital. BB&T, Cornerstone Bank in Wilson and Four Oaks Bank in Johnston County are expected to lose millions of dollars each.
“We were all fooled,” Hedgepeth said during a meeting with reporters last week. “We were all led to believe something that wasn’t true. It was a shock, honestly.”
David Warren, the lawyer representing New Century in the case, said that although the premium finance companies appear to be at the center of the fraud investigation, they were, at least at some level, functioning companies.
“Don’t think the whole thing was a scam,” Warren said. “There are people out there who got car insurance through these companies, and thank God they did. What was inflated and was a scam was the true receivables at all these companies versus what was reported to lenders.”
Lonnie Player Jr., a Fayetteville lawyer representing at least seven people who invested with Mulkey and lost big, said he wonders if living parties might have known something was amiss.
“My first question to anyone who is discovered to have known about (the fraud) would be, ‘Why didn’t you bring this to light?’ ” Player said. ” ‘Why did you stay silent?’ Because innocent people were being harmed.”
Teresa Smith, the manager at each of the finance companies for the past 20-plus years, has refused to speak with reporters since Mulkey’s death.
The younger of Mulkey’s two sons, Lee Mulkey, is listed as the owner of two of the finance companies that have been shut down, but he, too, has declined to comment.
Many of the people who knew Mulkey best during his early years as a Dunn insurance salesman say they lost touch with him as he moved his primary business interests to Fayetteville, then to the coast.
One former Harnett County lawyer, speaking on the condition that his name not be published, said his old friend seemed to fall in love with money later in life.
“Ray could get bank financing better than anyone I’ve ever known,” the lawyer said. “That’s a hell of a lot of money to spend, though. I don’t know what he did with it all.”
That’s what his creditors hope to learn. Private investigators for multiple law firms have been combing through Mulkey’s personal life in recent weeks, asking friends and old business partners where the insurance salesman liked to spend his time and money.
The trail seems to lead east.
Mulkey bought his first coastal residence in 1994, a year after he and his first wife divorced.
In the years that followed, he made a second home for himself in Wrightsville Beach and North Myrtle Beach, S.C. That’s where Mulkey loved to golf with friends and dine with business associates.
It’s also where, in 2003, he married his second wife, Debbie Livingston – a fair-skinned Charleston, S.C., native 22 years his junior.
They had been married less than a year when Mulkey learned that his new spouse had an affair with a younger man while she was on a cruise, according to court filings. In court records, he accused her of running up $50,000 in debt on his credit cards and smearing his good name.
“The word is all over town, all of our friends know about this and I have never been more embarrassed in all my life,” Mulkey wrote when he filed for legal separation in August 2005.
He filed for divorce two years later. When the dust settled, Livingston walked away from the brief marriage with about $110,000, according to records, as promised in their prenuptial agreement.
Livingston, who did not respond to interview requests for this story, wasn’t the only younger woman whom Mulkey courted during his final years, friends and associates said.
Mulkey spent many evenings sharing drinks with pals and dining with girlfriends at The Bridge Tender restaurant at Wrightsville Beach, a bartender at the upscale establishment said.
He was known to golf a few times a month with fellow New Century founder Bozie Tart at the Landfall Country Club in Wilmington, a clubhouse employee said.
A manager at Seapath Tower, where Mulkey kept a waterfront condo, said he had been instructed by family members not to speak with reporters about Mulkey’s affairs.
But a trail of property records in the two coastal communities where Mulkey loved to work and play showed the first signs of financial irregularities.
The businessman owed The Bank of The West more than $50,000 for a three-year-old motorboat valued at half that.
He owed Horry County State Bank nearly $1.4 million on a few North Myrtle Beach properties worth a combined $450,000, and he was behind on tax payments for each.
Mulkey was claiming an annual income of about $1.1 million in 2008, according to North Carolina tax records, but in 2009 he began taking out second mortgages on a few properties.
His portfolio was showing signs of cracking, yet the bank financing and investments from friends kept rolling.
Jimmy Smith, a partner with Mulkey at Southeastern Insurance in Fayetteville, said there were no signs his associate was struggling – financially or emotionally.
“In all my years dealing with Mr. Mulkey, there was never any evidence of fraud,” Smith said. “I was shocked like everybody else. Nobody saw this coming.”
Terry Price was starting to get worried. The North Myrtle Beach home builder had left several messages with his friend and business partner, but they had all gone unreturned.
And it wasn’t like Ray Mulkey to ignore phone calls.
Adding to the stress, Price said, Mulkey’s son Lee had called him a few days earlier and asked him to look out for his father.
“He said something wasn’t right,” Price recalled.
Around 9 a.m. on Aug. 16, Price slipped through a faulty back door at 1212 Clipper Drive and found Mulkey’s body in the garage. His body was cold in the driver’s seat of a luxury sedan. A black pistol was resting next to it.
Price – like almost everyone who knew Mulkey – said he was stunned. There was no reason to believe Mulkey might kill himself.
“No reason,” Price said, weeks after finding Mulkey dead. “I never thought that would happen.”
Mulkey’s coastal real estate business was doing well despite the recession, Price said. Almost every time the two men partnered on a project in North Myrtle Beach the past several years, Price said, the property sold and both men profited.
Of the seven or eight houses Price and Mulkey built together, the Clipper Drive property was the only one yet to sell.
“The world lost a great guy, a hell of a man,” Price said. “I wouldn’t have ever thought anything like that would happen.”
Many others who knew Mulkey said there was little indication of financial trouble. A series of decisions in the final months of his life – documented in claims against his estate and public records across four counties – tells another story.
In early March, Mulkey used his connections at Highland Country Club to persuade prominent Fayetteville lawyer Mike Williford and his brother to invest a combined $400,000 in his premium finance companies. The Shrine Club gave Mulkey $40,000 on the same day.
They were the first of several personal investments Mulkey collected in the final months of his life.
In the weeks leading up to his suicide, Mulkey borrowed $50,000 from a friend, opened two personal lines of credit totaling $260,000, renewed nearly $11 million in corporate loans, refinanced a few beach properties and started moving assets.
In late April, he closed on the North Myrtle Beach home he shared with his second wife during their brief marriage. He sold the house in the gated Bluffs at Tidewater community for $399,000 – about $30,000 under tax value.
Two days later, Mulkey paid $120,000 for an ocean-front condo in North Myrtle Beach and later signed ownership of the property over to his son Lee.
Lee sold the property a couple of months after his father’s death for $109,000.
In June and July, Mulkey accepted additional individual investments in his premium finance companies totaling $415,000 – including $100,000 from his first wife.
“He was working … to bring in new money,” one of Mulkey’s later investors said. “He must have known he was running out of time.”
On Aug. 9, the same day he signed the condo over to his son, Mulkey rewrote his will, leaving $10,000 to his older son, Robert, and everything else in the estate to Lee.
A day later, Mulkey visited doctors in Wilmington for a CAT scan and MRI on his brain and later told friends he planned to spend some time at the beach.
By the end of the week, Raymond Lee Mulkey Jr. was dead.
The image he built over three decades was fading. The financial mess he left in its place could take years to settle.
And the people who trusted him are left with the bill for his lifetime of luxury and excess.
“It hurts,” Morgan said. “I’m sitting here smiling, but tonight, when I’m trying to go to sleep, and I’m tossing and turning, I would have somebody’s legs broken if I thought it would do any good. But that’s not going to do any good.
“He’s dead; he’s gone. And I have to move forward. We all do, I guess.”
Staff writer Greg Barnes contributed to this report.