State regulators are investigating two companies run by a deceased Harnett County businessman who has been accused of running a Ponzi scheme.

The administrator for the estate of Raymond Mulkey Jr. has notified the state Department of Insurance about questionable data that was uncovered during a review of Mulkey’s estate, said department spokeswoman Kristin Milam.

The department's Agent Services Division is conducting audits of two of Mulkey's insurance agencies, Mulkey & Associates and Southeastern Insurance Services.

Those audits are ongoing, Milam said.

Mulkey, 63, was found dead in his home in North Myrtle Beach, S.C., on Aug. 16. The Horry County coroner has said a cause of death has yet to be determined.

Since Mulkey’s death several small North Carolina banks have discovered apparent fraud by borrowers on loan applications and paperwork involving the extension of loans.
 

Four Oaks Bank reported another profitable quarter despite the economic downturn leading to foreclosures and loan losses.

The community bank has 18 branches in Johnston County and neighboring counties. Four Oaks reported net income of $289,000 during the second quarter, reversing a loss of $705,000 a year earlier.

The bank charged off $3.5 million in loans during the quarter. Non-interest expenses rose about $1.3 million because of costs related to foreclosures and losses on the sale of repossessed collateral.

"We remain confident in our ability to be ready to meet the increased demand for credit in our markets as the economic recovery strengthens," said CEO Ayden R. Lee Jr., in a prepared statement.

The parent company's shares last traded at $3.50. A year ago, they traded at nearly $7.

The corporate parent of Four Oaks Bank & Trust has reached its previously announced goal of raising $12 million by selling promissory notes, according to documents filed with the Securities and Exchange Commission.

The Johnston County-based bank sold the notes to boost its capital.

"Since we were already well-capitalized, this makes us more well-capitalized," said Nancy Wise, chief financial officer.

The corporate parent of Four Oaks Bank & Trust said today that it expects to lose money in the second quarter and raised the possibility of cutting its dividend.

But Ayden R. Lee Jr., CEO of the Johnston County-based bank, anticipates “a quick return to profitability.” Nancy Wise, the bank’s chief financial officer, said in an interview that the bank could become profitable as soon as the third quarter.

“We’re very optimistic,” Wise said. “Basically, what we’re looking at is a one-time event.”

Meanwhile, the bank also said it is taking steps to “maintain our solid capital base.”

The bank, which has 17 branches in eight North Carolina counties, said it expects its second-quarter loss will range between $1 million and $1.5 million. Its earnings will drop into the red because of a boost in its provision for loan losses and higher payments to the Federal Deposit Insurance Corp.