Reed Slatkin

Reed Slatkin
Born Reed Eliot Slatkin
(1949-01-22)January 22, 1949
Detroit, Michigan
Died June 23, 2015(2015-06-23) (aged 66)
Los Angeles, California
Cause of death Heart attack
Nationality American
Occupation Former investment manager
Criminal penalty 14 years in U.S. federal prison
Criminal status USP Lompoc: released on 6 July 2013[1]
Motive Ponzi scheme
Conviction(s) Guilty plea, 15 counts: mail fraud, wire fraud, money laundering, obstruction of justice

Reed Eliot Slatkin (born January 22, 1949 in Detroit, Michigan) was an initial investor and co-founder of EarthLink[2][3] and the perpetrator of one of the largest Ponzi schemes in the United States since that conducted by Charles Ponzi himself.[4]

Slatkin had been an ordained Scientology minister since 1975.[4][5][6] Around 1984 he changed from being a full-time minister to becoming a self-employed investor, and many of his investment clients and victims were also Scientologists.[5]

Ponzi scheme

From 1986 to 2001, Slatkin raised approximately $593 million from about 800 wealthy investors. Using the funds from later investors, he paid one group of early investors $279M on their original $128M investment, citing investment success without actually making most of the claimed investments. He also distributed millions in fees to associates as "consultants". He successfully sustained the scheme until 2001, when it was shut down by an investigation by the U.S. Securities and Exchange Commission (SEC).[5] In May 2001, the SEC shut down Slatkin's scheme by filing an enforcement action and obtaining a temporary restraining order freezing his remaining assets.[7] On the same day as the SEC action, the Federal Bureau of Investigation executed search warrants relating to Slatkin.

The civil case was brought by the SEC in SEC v. Slatkin, Civil Action No. 01-04823 (C.D. Cal.). The criminal case was brought by the U.S. Attorney for the Central District of California in U.S. v. Reed E. Slatkin, CR 02-313 (C.D. Cal.).[8]

Among his victims were actors Joe Pantoliano, Anne Archer and Giovanni Ribisi (the latter two being Scientologists), producers Art Linson (father of high-ranking Scientologist Jenny Linson) and Armyan Bernstein, and two additional Scientologists, film composer Mark Isham and commentator Greta Van Susteren.[9] as well as key people of EarthLink, including Gregory B. Abbott and Scientologist Sky Dayton. He funneled millions of dollars to the Church of Scientology and their related entities.[10]

Guilty plea and post-conviction

Slatkin pleaded guilty to mail fraud, wire fraud, money laundering, and obstruction of justice[11] and on September 2, 2003, he was sentenced to fourteen years in federal prison.[12]

His Federal Bureau of Prisons registration number was 24057-112 and he was initially incarcerated at the Taft Community Correctional Institution in Taft, California. By 2010, he had been transferred to the Lompoc Federal Correctional Institution in Lompoc, California.[1]

Many of his victims were also Scientologists.[5] In his fraud case, his lawyers blamed his behavior on Scientology; but Scientology's lawyers from Latham & Watkins characterized Slatkin's explanations as "shameful" and having "sold the psychiatrists a bill of goods".[13]

In July 2013, he was released from a halfway house in Long Beach, California.[14]

On June 23, 2015, journalist Tony Ortega reported on his website that Slatkin had died from a heart attack. Ortega said that he had confirmation of Slatkin's death from Slatkin's ex-wife.[15]

In February 2008, the television show American Greed featured the Slatkin case, which it titled "Stealing $$$ from Scientologists".[4]

References

  1. 1 2 "Inmate Locator". Federal Bureau of Prisons. Retrieved 2011-01-17.
  2. ↑ Staff (March 27, 2002). "Earthlink co-founder charged with fraud, money laundering". CNN. Time Warner. Retrieved 2008-06-12.
  3. ↑ Tkacik, Maureen (March 27, 2002). "EarthLink Co-Founder Slatkin Admits to Fraud in Ponzi Scheme". Wall Street Journal. Retrieved 2008-06-11.
  4. 1 2 3 "Stealing $$$ From Scientologists and the Art of Fraud". American Greed. CNBC, Inc. February 20, 2008. Retrieved 2010-08-31.
  5. 1 2 3 4 Neilson, R. Todd (December 17, 2001). "First Interim Report of the Trustee and the Creditors Committee Under 11 U.S.C. §§ 1103, 1106(a)(3)-(4)". In re Reed E. Slatkin, Debtor (Bk. No. ND 01-11549-RR). Retrieved 2011-01-17. In 1975, Slatkin was ordained a minister in the Church of Scientology (the “Church” or “Scientology”). From 1974 through approximately 1984, Slatkin and his wife did volunteer work for the Church on a full time basis. ... It appears that most of Slatkin’s early, as well as present, business associations relate to his affiliation with Scientology, and a large number of the present investors came to Slatkin for advice because of their mutual involvement with Scientology.
  6. ↑ Liz Pulliam Weston. "The Basics: 7 reasons to fire your financial adviser". MSN Money. Microsoft. Archived from the original on May 1, 2006. Retrieved 2006-08-05.
  7. ↑ http://www.sec.gov/litigation/litreleases/lr16998.htm
  8. ↑ http://web.archive.org/web/20051227190657/http://www.justice.gov/usao/cac/pr2002/057.html
  9. ↑ Stiles, Greg (January 27, 2002). "Fixer-uppers and fishy deals". Mail Tribune.
  10. ↑ Reckard, E. Scott (2006-11-08). "Scientology groups to pay back $3.5 million". Los Angeles Times. p. C1.
  11. ↑ "United States Trustee Program Annual Report of Significant Accomplishments: Fiscal Year 2002" (PDF). United States Department of Justice. pp. 33–34. Retrieved 2009-03-09. The Woodland Hills office obtained appointment of a Chapter 11 trustee in the bankruptcy case of Reed Slatkin, co-founder of Internet service provider Earthlink Inc., based on allegations that he operated a Ponzi scheme through which he misappropriated over $230 million, defrauded more than 500 investors, concealed $90 million in accounts, and commingled investor funds with personal funds. Criminal charges were later filed against Slatkin, and he pleaded guilty to 15 counts of mail fraud, wire fraud, money laundering, and conspiracy to obstruct justice in connection with an investigation by the Securities and Exchange Commission.
  12. ↑ https://web.archive.org/web/20070211220149/http://www.usdoj.gov/usao/cac/pr2003/116.html. Archived from the original on February 11, 2007. Retrieved December 26, 2006. Missing or empty |title= (help)
  13. ↑ Berkowitz, Ben (September 2, 2003). "Ex-EarthLink Executive Is Heading to Jail". Reuters. Archived from the original on 2006-04-13. Retrieved 2011-01-17.
  14. ↑ http://www.independent.com/news/2013/jul/08/ponzi-king-reed-slatkin-freed/
  15. ↑ Ortega, Tony (June 23, 2015). "Reed Slatkin dies of heart attack — Scientologist served time as major Ponzi schemer". The Underground Bunker. Retrieved June 25, 2015.
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