Kathleen Peterson’s Mysterious Staircase Death: Accident or Homicide?

Michael and Kathleen Peterson’s Finances

Regarding the Petersons’ finances and Kathleen’s job status at Nortel Networks, Raymond Young, a Special Agent, Certified Public Accountant, and Certified Fraud Examiner with the North Carolina State Bureau of Investigation, testified that at the time of Kathleen’s death, the value of the Petersons’ major assets was $1,618,369.00, including various real properties.

In 1999, $276,790 was received into the Petersons’ bank account and $461,400 left the account. The amount coming into the bank account included: Kathleen’s salary from Nortel, payments for Defendant’s work, Defendant’s disability income from the VA and military, Defendant’s retirement account distribution, VA and civil service payments for Martha and Margaret Ratliff, gross rental income, and miscellaneous income.

In 2000, $203,390 was received into the account and $300,760 left the account.

In 2001, $180,480 was received into the account and $288,000 left the account. On the Petersons’ 1999, 2000, and 2001 tax returns, defendant had no taxable income from employment.

Katherine Kayser, an administrative assistant at Nortel Networks, testified that in 2001, Kathleen earned $145,000 plus a bonus of $10,750. At Nortel, she obtained the following stock options: In 1994, 4,800 shares at $3.94 per share and she had 1,600 shares outstanding; in 1995, 5,600 shares at $4.2113 per share; in 1996, 4,800 shares at $5.6175 per share; in 1997, 5,600 shares at $8.8513 per share; in 1998, 6,000 shares at $11.29 per share; in 1999, 4,000 shares at $17.43 per share; in January 2000, 2,000 shares at $37.94; in April 2000, 2,000 shares at $57.41 per share; and in July 2000, 2,000 shares at $80.69 per share, and all were outstanding. In September 2000, Nortel’s stock plunged.

All of Kathleen’s stock options from 2000 were cancelled as the market price fell below the option price; she was going to trade them in; however, upon her death they were reinstated.

Kathleen exercised 3,200 shares of options with a purchase price of $3.94 in five separate transactions of 500, 800, 500, 200, and 1,200 shares with market prices of $36.75, $32.75, $37.625, $31.94, and $19.40 respectively, for a total profit of $80,431.50, less $31,054.05 in taxes for a net profit of $49,377.45. She exercised her last option in March 2001.

Ms. Kayser also testified that as Kathleen’s beneficiary, Michael Peterson received $29,360.38 after taxes from her 401(k) plan; $94,455.75 after taxes from her retirement benefits; and $223,182.46 from her deferred compensation fund.

Kathleen also had a life insurance policy for which she had filled out a “Life Insurance Beneficiary Designation Form” listing Defendant as the beneficiary; however, she had neither signed nor dated that form. The form was entered into the system on July 29, 1997. But she had previously filled out and signed another beneficiary form, in which Fred Atwater, her prior husband, was the beneficiary. As of the trial, Prudential had not yet determined who would receive the $1,450,000 in funds.

Kim Barker, a human resource employee at Nortel, testified that from the fourth quarter of 2000 through 2001 Nortel laid off employees, described by Nortel as “optimization.” In November of 2001, Kathleen was placed on the “optimization list” for three days. However, Ms. Barker did not know if Kathleen knew that she was on the list. Ms. Barker testified that a terminated employee is not entitled to continue a company life insurance policy.

John Huggard, an expert in the field of estate planning, testified as to how Kathleen’s estate would be divided, pursuant to the laws of intestate succession, between Michael Peterson and Kathleen’s daughter Caitlin Atwater.

When Michael Peterson’s wife Kathleen was found dead at the bottom of a flight of stairs, he told police that she fell. Durham, N.C., police thought it was murder. But with no witnesses and no weapon, it would be a difficult case to prove. Then, investigators uncovered an unbelievable twist. Had Peterson done the same thing before? 


Page 7: Prosecutors Try to Link Mike Peterson to His Friend, Elizabeth Ratliff’s Staircase in German