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Reed Slatkin Media Resource

 

 

Source of this page: www.slatkinfraud.com

 
 
Earthlink co-founder Reed Slatkin, an unregistered investment manager and ordained Scientology minister, admitted to defrauding clients of approximately 255 million dollars in a Ponzi-type investment scheme. Many of his victims were fellow Scientologists; others were wealthy investors with Hollywood connections.

Scientology has a long history of association with financial scams. How much of the money Slatkin took in was funneled to Scientology organizations ? And how many of his fellow Scientologists were in on the arrangement ?

news:

  
 
LA Times
Dan Jacobs Sentenced to 4 Months
2005-10-27

A former Southern California business consultant received a four-month prison sentence for conspiring to obstruct a Securities and Exchange Commission investigation of financial advisor Reed E. Slatkin’s $593-million investment scam, federal prosecutors said Tuesday.

Daniel W. Jacobs helped stall the SEC for more than a year by pretending to represent a Swiss brokerage holding hundreds of millions of dollars in funds from Slatkin investors, according to his plea agreement with the government.

Jacobs, 63, who pleaded guilty and cooperated extensively with prosecutors, is expected to serve his time near his Michigan home, said Assistant U.S. Atty. Michael Wilner.

At Jacobs’ sentencing Monday in Los Angeles, U.S. District Judge Margaret Morrow also ordered him to repay $450,000 to victims of Slatkin’s schemes.

Also, AP story here:

Daniel W. Jacobs, 63, of Burbank pleaded guilty three years ago after agreeing to cooperate with federal prosecutors in their case against Slatkin.

Authorities say Jacobs lied to the Securities and Exchange Commission and provided false documents so victims’ investment statements in Slatkin’s Ponzi scheme would seem legitimate. He also acknowledged fabricating account statements and setting up false phone numbers to make it seem like a Swiss firm held hundreds of millions of dollars in investor money.

 
Los Angeles Times
Slatkin Associate, Girlfriend Face Tax-Evasion Indictment
2004-11-17
Federal prosecutors announced tax-evasion charges Tuesday against former Grateful Dead road manager Ronald L. Rakow and his girlfriend in connection with a scheme to conceal Rakow’s income, much of which he earned working for convicted Ponzi scheme operator Reed Slatkin.

Assistant U.S. Atty. Michael R. Wilner said Rakow diverted $5.2 million that he received from Slatkin and other sources to his girlfriend, Denise Del Bianco, from 1998 through 2001.

At the time, the Internal Revenue Service was trying to collect $2.2 million in unpaid taxes from Rakow, according to an indictment returned last week. Del Bianco paid income tax on the funds, but the alleged diversion kept the IRS from seizing Rakow’s cash and securities outright, the indictment alleged.

Rakow "falsely made it appear to the IRS that he had only minimal income and assets with which to pay the unpaid tax," the indictment said.

Rakow was charged with tax evasion and falsifying tax returns. Del Bianco was charged with aiding and abetting tax evasion and also with wire fraud.
Associated Press - San Francisco Chronicle
Settlement reached in investor-related Ponzi scheme
2004-09-15
Former bankers for EarthLink co-founder Reed Slatkin have agreed to pay $26.5 million to settle a lawsuit alleging that they helped him appear to be an investment advisor while he operated a multi-million dollar Ponzi scheme.

Attorneys involved in the 2-year-old lawsuit said the last of the documents were being signed Monday but still must be approved by U.S. District Judge Margaret Morrow in Los Angeles. The recovery would be the largest yet for investors in what Slatkin has admitted was a fraud that began in the mid-1980s and was revealed in 2001.

The settling defendants included Union Bank of California and Bank of Orange County. Other defendants were Imperial Management Inc., the former trust division of Imperial Bancorp, an Inglewood bank acquired in 2000 by Comerica Inc., and Mary Catherine Leider, a former vice president in Imperial’s trust division who handled accounts for some Slatkin investors.

Full text available here.
 
Off Topic - Echoes of Slatkin seen in new Ponzi scheme
2004-06-15
500 Investors see $200 million disappear
Check out FourStarFraud.com - a site not unlike this one, dedicated to unraveling the aftermath of a high stakes con game. The numbers (200+ million from 500+ investors) and location (Southern California) certainly harken to Reed’s Ponzi scheme. The most significant difference between Four Star Financial Services and Reed Slatkin, though, is that the Four Star fraud was allegedly perpetuated by financial advisors - real ones, unlike Reed and his cronies. Be sure to read the Wall Street Journal article - the top news story on the site.
SEC / Stockwatch
Jean Janu to plead guilty January 12
2004-01-01
Slatkin ex-bookkeeper Jean Janu has agreed to plead guilty at an arraignment scheduled for January 12. From a December 10, 2003 SEC release :

In her plea agreement, Janu admitted that, at Slatkin’s direction, she created and revised account statements and other documents that supported Slatkin’s claim that he held over $500 million in securities in brokerage accounts at the fictitious entity "NAA Financial" of Zurich, Switzerland. Janu knew these documents were to be submitted to the SEC. Janu created these bogus statements on her computer and printed the NAA account statements on blank, European-sized stationary provided to her by Slatkin that contained NAA’s name and purported Swiss address. Slatkin then instructed Janu to erase the account statements from her computer.

Additional coverage can be found at stockwatch.

LA Times
Victims of Slatkin May Get More Money Back (free registration required)
2003-12-11
The Los Angeles Times reports on what may be an early Christmas present for Slatkin victims -- Trustee Todd Neilson has now doubled his estimate for debtors, and now suggests that investors could get back as much as 40% of their money. Of course, he explained to the court earlier this week, that all depends on whether the net winners pay back the "profits" that came from the pockets of less fortunate Slatkin Investment Club members:
In a memo presented at a hearing Monday before Bankruptcy Judge Robin Riblet in Santa Barbara, Neilson said the 20-cent reckoning was made at a stage of the case when "it was very difficult to estimate with any degree of reasonable accuracy possible payout percentages."

The main reason for the uncertainty was the fact that only some of Slatkin’s clients were paid back more than they invested — a common occurrence in such so-called Ponzi schemes, which use funds from later investors to pay phony profits or dividends to the earliest participants.

Neilson sued 430 of these so-called "net debtors," seeking the return of anything they received in excess of the amount they put in.

So far, 144 of those suits have been settled — typically at about 80 cents on the dollar — for a total of $31.8 million, most of it to be collected in payments over the next two or three years. For example, tobacco litigator John Coale and his wife, legal commentator Greta Van Susteren, agreed to return about $700,000 of the $939,000 they netted.

Suits seeking an additional $138 million are pending against other defendants, including actor Peter Coyote, who made $943,000.

If those defendants "were to simply find it within their hearts and wallets to pay the $138 million without any further litigation," Neilson wrote, it would yield a return to the creditors of 84% of their losses.

But Neilson called that scenario "highly unlikely." A "more realistic approach," according to his memo, would be to assume that 35% of the $138 million can be collected by spending an additional $7 million on litigation — a formula that would bring the recovery to about 40% of the losses.

Slatkinfraud.com wishes the best of luck to net losers, and joins them in hoping that the net gainer gang, in Neilson’s words, "finds it in their hearts and wallets" to help hundreds of investors begin to put the whole Slatkin mess behind them.
slatkinfraud.com
Some Scientologist Slatkin victims still not happy with Neilson
2003-12-11
Despite the good news on higher than expected returns, some of Slatkin’s Scientologist victims have long been unhappy with the performance of trustee Todd Neilson. A small band of aggrieved net losers -- all, apparently, Scientologists -- have launched another court challenge against Neilson’s handling of the case, as reported last week by the LA Times [registration required for link]:
In a letter Wednesday to the office of the U.S. trustee in Los Angeles, the investors complained that 10 legal and accounting firms had submitted $19 million in bills as of June. Meanwhile, unsecured creditors in Slatkin’s bankruptcy have received only $12 million so far.

"We are petitioning you to step in and take action to stop the runaway fees in this case," the investors wrote. "Many of us are middle-income people, who lost substantial sums to Slatkin."
Scientologist attorney Steve Hayes has filed a formal objection to the fees [warning: large PDF file] on behalf of Scientologist net losers Kendell Dorsett, Michael McGahee and Ann and Seymour Thomas. Another group of Scientologists, led by Jane Allen, has filed a similar motion, and Scientologists David Curtis and Thelma Rosenkranz have also filed pro per objections with the court.

(Curiously, the self-proclaimed pro per Ms. Rosenkranz appears to have misspelled, and then corrected, her own name at the top of the letter. An errant T preceding the Z in her last name seems to have been struck out with a pen on the original document.)
LA Times
Ex-Slatkin Associate Is Sentenced in Scam (registration required)
2003-12-02
A former associate of Santa Barbara investment scam artist Reed Slatkin was sentenced to five months in federal custody and five months of home detention for obstructing a federal probe and lying to investigators. Richard D. McMullin, 39, worked as an assistant in Slatkin’s office from the mid-1980s until 1999, handling phone calls from investors, helping to create account statements and researching stocks. U.S. District Judge Margaret Morrow ordered McMullin to pay a $4,000 fine. Assistant U.S. Atty. Steve Olson said McMullin paid $1.55 million in restitution to the bankruptcy trustee to help make up for his role in the scam, which fraudulently raised $593 million from some 800 investors over 15 years.
slatkinfraud.com
Reed Slatkin sentencing transcript now available courtesy of Buttersquash Ranch !
2003-11-27
Including cross examination of Slatkin associated and alleged co-conspirator Dan Jacobs, profiled here, who does his best to defuse Slatkin’s claim that it was pressure from the Church of Scientology that forced him to misappropriate millions in his failed investment club.
Los Angeles Times
Law Firm in Slatkin Case Agrees to Pay $650,000
2003-09-17
A court trustee says the asset manager’s attorney should have uncovered his pyramid scheme.
Another legal victory for Slatkin trustee Todd Neilson: The Los Angeles Times (original (registration required) or via Google) reported today that lawfirm Bryan Cave LLP, which represented Slatkin during his 2000 appearance before the Securities and Exchange Commission, will pay $650,000 to settle a lawsuit launched by Neilson that argued the firm should have realized that Slatkin was running a Ponzi scheme:
Slatkin’s attorney, Gerald Boltz, a former Securities and Exchange Commission administrator, should have discovered the pyramid scheme in early 2000, shortly after he was hired, Neilson said. But Slatkin’s scheme wasn’t spotted until it began to come apart shortly before he filed for Chapter 11 bankruptcy protection in May 2001. "Bryan Cave did not recognize possible signs that Slatkin was running a Ponzi scheme, or at the very least defrauding hundreds of investors," Neilson said in a court filing.

Boltz and other Bryan Cave officials declined to comment.

Under the terms of a tentative settlement filed last week, the law firm does not admit to wrongdoing. But it will pay $650,000 to Slatkin’s trust to be distributed to creditors, said R. Alexander Pilmer, Neilson’s attorney.

slatkinfraud.com
"The domino effect of misery is too extensive to be measured by just the $240 million lost ... We want justice": Gregory Abbott speaks out
2003-09-08
Full text of Slatkin Creditor Committee Co-Chair Greg Abbott’s appearance before Slatkin’s sentencing hearing on September 2, 2003
In his plea before the court, Creditor Committee Co-Chair Greg Abbott said that he came forward not just on his own behalf, but for those who could not afford to be in the courtroom on the day of Slatkin’s sentencing:
I am speaking not just for myself and my family, but for hundreds of smaller investors who can’t afford to come here and speak, who may have in fact been damaged far more in relative terms than I have been, whose collective suffering is monumental. I have commiserated with many of these victims, and they want and deserve justice. Hundreds of lives have been permanently disfigured – not just the victims but their family members and those connected to or dependent on them. The domino effect of misery is too extensive to be measured by just the $240 million lost by them.
Despite the fact that Slatkin will finally be sentenced, Abbott says there are still many unanswered questions as to what became of the millions of dollars in ill-gotten Ponzi gains -- and blames Slatkin’s reluctance to cooperate for allowing alleged co-conspirator and longtime Scientologist Tony Hitchman to flee the country before he could be questioned about his role in the scam:
Slatkin’s stalling enabled one of his oldest buddies Tony Hitchman, who was on his monthly payroll, who owes the Slatkin estate millions of dollars and may have known of the Ponzi from the very beginning, to flee the country just ahead of a subpoena. Slatkin still won’t answer questions about his hundreds of overseas phone calls, his foreign bank accounts, or his and Ron Rakow’s many journeys abroad. He still hasn’t come clean about the full extent of the gold coins and silver bullion, the crated art, and the staggering amounts of cash the FBI found when they raided his and Rakow’s homes. We strongly suspect he has stashed away millions, which will be waiting for him when he gets out of prison. Had Slatkin been as proactively helpful to us as he was proactively a criminal -- in the spirit of the plea agreement -- millions in legal fees could have been saved and distributed to victims. Instead, Slatkin and his attorneys are floating a smokescreen of theories in order to obscure reality, from saying that Slatkin made some of us offsetting money at EarthLink to claiming that he was brainwashed by the Church of Scientology. With all due respect, the only brainwashing that took place was Slatkin brainwashing his investors and the SEC.
To read the full speech, click here.
slatkinfraud.com
***EXCLUSIVE: Eyewitness court report and hearing summary by slatkinfraud.com correspondent
2003-09-04
As promised, slatkinfraud.com has obtained a detailed summary of yesterday’s hearing from a regular reader and Slatkin-watcher who prefers to remain anonymous. The report gives added colour and context to the story - and it’s almost as good as being right there in the courtroom:
To understand how far Reed Slatkin has come, know that even some of the people who knew him, who invested with him, and who had him over to their homes, did not recognize him seated at the defense table. But then, Reed hardly looked at the Los Angeles courtroom audience of approximately 40 who filled every available seat and even stood at the back, at least at first. Many were the very people he had both befriended and defrauded. Perhaps it was his significant bald spot; did he used to have a toupee? Wearing a green windbreaker, grey t-shirt, blue pants, and white slippers, Reed’s prison garb was not the type of clothing seen at Hope Ranch. Neither were the handcuffs, tied to a chain around his waist, nor the leg cuffs, that he wore the entire time of the four-hour proceeding, but they were pretty much not noticed by many in the courtroom until he rose to speak.
Read the full report here. slatkinfraud.com would like to thank our correspondent for the time he spent sitting through this hearing, and writing it up for our readers. We’d also be happy to publish any other accounts of the hearing, or any other thoughts on the sentencing of Reed Slatkin from his erstwhile investors. Confidentiality will, as always, be protected. Email info@slatkinfraud.com to tell us your story.
LA Times
Reed Slatkin Given 14-Year Prison Term (registration required) or via GoogleGroups
2003-09-03
The District Court ruling factors in the harm the former money manager caused bilked investors
[ ... ]
Investors who had criticized prosecutors’ recommendation for an 11-year sentence praised the judge for coming down heavily on Slatkin, 54, who lived on a four-acre estate near Santa Barbara, accumulated an extensive collection of art and spent lavishly on cars and airplanes. But one Slatkin victim, former venture capitalist John Poitras, said the 14-year sentence was too little for someone who cost his purported friends their retirement funds, college savings and proceeds from sales of businesses.

The sentence was "a slap on both wrists" and "an insult to the victims," said Poitras, who lost $15 million. "The system is still broken."

A lawyer for the Church of Scientology praised the judge, saying she "saw right through" Slatkin’s claims about Scientologists. "The church had nothing to do with the fact that he lied, cheated and stole," the lawyer, David Schindler, said after the hearing. Slatkin’s fraudulent financial empire lasted 15 years, dissolving into bankruptcy proceedings in May 2001, leaving investors with a loss prosecutors set at $240 million. Taken into custody in April 2002, he pleaded guilty to 15 counts of fraud, conspiracy and money laundering. [ ... ]
 
Santa Barbara News Press
Slatkin handed 14-year sentence (via GoogleGroups)
2003-09-03
Claim that church to blame for massive scam rejected
[ ... ]
U.S. District Judge Margaret M. Morrow rejected defense claims that Mr. Slatkin had kept his fraud going for 15 years because of his strong beliefs in - and fear of - the Church of Scientology, saying that she wasn’t convinced he acted under such duress.

"There is no evidence the church urged the defendant to engage in this conduct," she said from the bench, moments before handing down a sentence more than double the 6 1/2-year term urged by Mr. Slatkin’s attorneys. It is three years longer than the sentence recommended by Assistant U.S. Attorney Steven Olson, for what was one of the biggest Ponzi schemes in U.S. history.

"The harm is immense," Judge Morrow noted. "Innumerable lives have been damaged or destroyed. He even cajoled people with fake illnesses to get them to invest," all the while living a "lavish lifestyle" filled with Lear jets, luxury cars, a beautiful home and expensive country-club memberships.
[ ... ]
 
LA Times
Defrauded Investors Have Stories to Tell
2003-09-02
Slatkin’s victims, who thought he was a friend, want no leniency at his sentencing today.
On the day of his sentencing hearing, Reed Slatkin makes the front page of the LA Times business section:
During more than 15 years of fraud that cost his investors $240 million, Reed E. Slatkin seemed as much trusted friend as money manager. He schmoozed clients with tips on how to landscape their estates, attended funerals of their family members and all the while offered assurances that he would protect their college and retirement funds. His victims have asked to tell some of those stories today at Slatkin’s sentencing hearing in Los Angeles, hoping to persuade U.S. District Judge Margaret M. Morrow to throw the book at the former Santa Barbara financial advisor.
Read the full story here (registration required) or a transcript of the text via Google Groups here.
MSN Money & Reuters
Ex-EarthLink Executive Is Heading to Jail
2003-09-02
Slatkin, who had a number of celebrity and high-profile clients, had portrayed himself as a shrewd manager whose investments were outstripping the market, but prosecutors said he was actually running a Ponzi scheme. His attorneys blamed much of his behavior on the influence of the Church of Scientology, of which he was a member and from where many of his victims came. ``There is no question that the hold the Church had on Mr. Slatkin was significant,’’ lawyer Brian Sun told the court. ``It took us a while to de-program Mr. Slatkin.’’ But an attorney for the Church told Reuters that Slatkin’s claims, and those of his lawyers, were all a ruse designed to draw attention away from his crimes. ``We were pleased the judge saw through it,’’ said David Schindler, an attorney from the firm of Latham & Watkins who represents the Church. ``It was shameful of (Slatkin). He sold the psychiatrists a bill of goods.’’
 
Associated Press
Reed Slatkin gets 14 years in prison for huge investment scam
2003-09-02
Slatkin’s attorneys claimed he was influenced by the Church of Scientology, from which he has been ousted. His attorneys said investors who did receive returns donated between $25 million and $50 million to the church, an arrangement Slatkin was afraid to end.
David Schindler, an attorney for the Church of Scientology, was present for the sentencing. He said later the comments were outrageous.
The judge noted that during most of the time Slatkin was allegedly in fear, he lived a lavish lifestyle.
 
slatkinfraud.com
Date confusion - Sentencing hearing
2003-08-29

Slatkinfraud.com would like to apologize for the recent confusion surrounding the date on which Reed Slatkin will appear before Judge Margaret Morrow for sentencing.

In the last week, several sources have contacted us to let us know that the hearing will take place on Tuesday, September 2 at 9:30 A.M.

However, the docket report for Judge Morrow’s court shows the hearing scheduled for Wednesday, September 3, 2003:

8/18/03 28 MINUTES OF IN CHAMBERS HEARING held before Judge Margaret
M. Morrow as to Reed E Slatkin: Continuing sentence
hearing for 9:30 9/3/03 for Reed E Slatkin. C/R: None. (step)
[Entry date 08/25/03]

It is very possible that the later date is simply a typographical error on the court webpage, and we will do our best to clarify this question as quickly as possible, so that those who are interested in dropping by the courtroom to watch justice take place will be able to do so.

While attempting to determine the exact date of next week’s hearing, we also noticed that several of Slatkin’s victims have filed letters with the court in advance of sentencing, including his fellow Scientologists, Charles Borom and Charles Ohl:

8/27/03 29 LETTER re defendant sentence filed as to Reed E Slatkin by
Terry Johnston (ca) [Entry date 08/28/03]


8/27/03 30 LETTER Re: Sentencing filed as to Reed E Slatkin by Charles
Borom (ca) [Entry date 08/28/03]


8/27/03 31 LETTER Re: Sentencing filed as to Reed E Slatkin by Charles
N. Ohl (ca) [Entry date 08/28/03]

Given the rumour that Slatkin will attempt to dodge a heavy sentence by blaming Scientology "brainwashing", we are, of course, most curious as to how his (former?) fellow Scientologists will react to this particular legal dodge.

 
slatkinfraud.com
News from the Slatkin Front - Sentencing Countdown: Six Days to Go!
2003-08-28
To tide over Slatkin watchers until next week’s sentencing hearing, currently scheduled for September 3, 2003, here are some new tidbits courtesy of the Slatkin rumour mill.

A correspondent to info@slatkinfraud.com (anonymous, naturally) tells us that Reed may, indeed, lay the blame on Scientology brainwashing at next week’s sentencing hearing, and plead for mercy on the grounds of mental illness.

If this sounds too fantastic for Slatkin-watchers, we offer this entry in the docket report from the court itself:

8/11/03 23 ORDER filed by Judge Margaret M. Morrow as to Reed E
Slatkin: granting ex parte application for order permitting
filing under seal of (1) Sentencing Memorandum and Exhibits
of Defendant Reed e. Slatkin; and (2) Report of Shelia
Balkan, PH.D. and Exhibits [22-1] (cc: all counsel) (roz)
[Entry date 08/12/03]

Note the report from Sheila Balkan, a Santa Monica criminologist and private investigator who has authored several widely-cited papers on criminal behaviour who, in 2001, was touted to be the "real-life" model for a planned NBC crime drama about a female criminologist. Will her next role be as apologist for Reed Slatkin?

Since the filing is under seal, we’ll just have to wait until September 3 to find out, but our correspondent suggests that Slatkin’s attorneys are pushing for a 3-5 year sentence - far less than the double digits initially sought by the state. Even if he did throw himself on the mercy of the court with a "Scientology made me do it" defence, it’s likely that a such a light sentence would satisfy the hundreds of bilked investors who want to see Slatkin due hard time for his crimes.

But just how "hard" is the year and a half of jail time that Slatkin has served so far? Our sources say that far from pining for the fresh air and unrestricted privileges of his erstwhile Hope Ranch estate, Slatkin is actually enjoying his time in prison, morphing into a real-life Andy Dufresne. We hear the inveterate schmoozer is not only winning friends and influencing people within the convict population, but is actually giving them investment advice - advice the prison guards are heeding as well!

In other news, we’re told that Mary Jo Slatkin, the embattled soon-to-be-ex Ponzi spouse, has resurfaced, and is seeking comfort - both emotional and financial - from her former friends, many of whom were victimized by her husband’s scheme.

According to witnesses who have heard her tale of woe, Mary Jo claims that the day her husband turned himself into authorities, he blithely informed her that he was "just going to LA for the day." Of course, he’s been in jail ever since. But instead of tying yellow ribbons round an old oak tree, the embattled Mary Jo, who is reportedly facing six figure liens courtesy of the IRS, is headed off to divorce court to rid herself of her troublesome spouse.

Our source also reveals that up to this point, the Slatkin children have sided with their father in the familial dispute, who has assured them that the whole matter is just a big misunderstanding that he will explain later. It’s not clear whether the Mess’rs Slatkin, who were both submitted to Scientology auditing performed by Slatkin co-conspirator Dan Jacobs, are equally serene with their father’s reported about face on his once beloved faith.

 
slatkinfraud.com
New Slatkin sentencing date - September 2, 2003 @ 9:30 a.m.
2003-08-22
According to our sources (thanks, everyone !), Slatkin’s sentencing hearing is currently scheduled for Tuesday, September 2, 2003, in front of Judge Margaret Morrow. We’ll keep the site updated with the latest information. We would also love to have eye-witness comments on the procedure, so if any slatkinfraud.com readers out there are planning to attend the hearing, please drop us a line to give us your impressions. We can be reached at info@slatkinfraud.com, and, as always, your privacy will be protected.

 

 


more disclaimer info here
questions ? information@slatkinfraud.com

Dès que l'affaire en question a été connue du public (et non pas quinze jours avant, lorsqu'elle fut probablement connue des scientologues eux-mêmes), la scientologie a fait disparaître toute mention du nom de Slatkin sur ses sites.

Original anglais du Los Angeles Times: http://www.latimes.com

Monday, May 14, 2001

A la pêche aux solutions dans le puzzle Slatkin

By LIZ PULLIAM WESTON, Times Staff
Writer

Résumé de l'article)

L'investisseur Reed E. Slatkin a fêté son anniversaire en compagnie de stars comme Kevin Costner et Arnold Schwarzenegger en 1999, ainsi qu'avec quelques 150 invités.

C'était incroyable, explique Doug Neuman, co-investisseur avec Slatkin. Les stars ne connaissaient pas Slatkin, mais la vidéo qui fut projetée montrait les liens tissés par Slatkin pour ses investissements.

Hélas, la joie est de courte durée. Les Hollywoodiens, entrepreneurs Internet et autres confiants qui ont passé des centaines de millions de dollars à Slatkin essaient désormais de savoir où a passé leur argent. La Commission des Sécuriés et Echanges enquête pour escroquerie aux placements. Slatkin doit aussi faire face à des poursuites lancées par des investisseurs et a déposé sa demande de faillite voici quinze jours. Le FBI a fait une saisie vendredi, mais n'a pu pour l'instant découvrir qu'une fraction de l'argent que contrôlait Slatkin. Les plaintes des investisseurs démontrent qu'il pourrait y avoir plus de 4 milliards de F dans l'affaire (600 millions de dollars).

Les enquêteurs pensent qu'il pourrait s'agir d'un des plus importants "schèmes Ponzi" jamais rencontrés (=repaiement d'intérêts ou de dividendes grâce à l'argent des nouveaux investisseurs).

Slatkin ne nous a pas rappelé suite aux demandes d'éclaircissement. Ses amis de longue date espèrent encore que Slatkin, bon père de famille, activiste civique, et chef spirituel, peut n'avoir fait aucun mal.

Neuman dit "Ce n'est pas le Reed que je connais"...

Ces amis rappellent qu'il n'a pas commencé comme gourou en investissements, mais que sa première passion fut la scientologie. Son intérêt daterait du décès de son père alors qu'il avait 14 ans. Il a passé par sciento- logie St Hill en Angleterre.

Il a obtenu un diplôme avec félicitations de l'université du Michigan en 1974, étudié les langues asiatiques à Berkeley, s'est engagé comme membre du staff du centre des célébrités et est devenu ministre de l'église.

Les semaines de travail qui n'en finissaient plus et le non-salaire eurent raison de sa décision; en 1983, il commença à apprendre les lois du marché par leçons d'un autre scientologue. Il emménagea dans une maison de quelques pièces avec sa famille - il a deux garçons, et se servit du garage transformé comme bureau pour ses investissements. En 85, il travaillait pour un petit groupe de scientologues "amplifiant leurs efforts pour l'église" dit-il.

On disait aux investisseurs que leurs sous étaient redirigés vers d'autres investisseurs achetant des actions. Comme les relevés gonflaient régulièrement, ces investisseurs expliquent qu'ils donnèrent de plus en plus de fonds à Slatkin, et encouragèrent leur famille et relations à faire de même.

"Il ne promettait rien qui ait l'air impossible," - juste assez pour qu'on n'ait pas envie de retirer l'argent, explique Michael Stoller, avocat pour un investisseur.

Il achète une seconde maison à Santa Barbara

En 93, la famille déménage dans une propriété de la zône du Hope Ranch à Santa Barbara - on y trouve un lac des cygnes, un golf, des chènes. Mais il conserva sa maison de Goleta comme bureau.

Les investissements de Slatkin ne disparurent pas tous. Il dit s'être essayé à plusieurs reprises aux investissements à haut risque. Il acheta par exemple 20% des actions d'une affaire "Havenwood Ventures Inc", qui devait bâtir un parc à thêmes (lequel ne vit jamais le jour).

Mais ces investissements à risques marchèrent mieux en 1994, quand il fut contacté par un scientologue, Kevin O'Donnell, qui lui fit investir auprès d'un autre jeune scientologue nommé Sky Dayton, 22 ans, qui désirait monter une affaire autour d'internet. Slatkin investit 75'000 dollars. Or, Earthlink Network allait devenir le troisième fournisseur d'accès national.

Les actions de Slatkin valaient 122 millions de dollars en février 2000. Et lui fournissaient un accès à d'autres grands investisseurs. Ce qui lui donna une image stellaire d'une grand investisseur doublé d'un dirigeant de société qui réussissait.

Quatre dirigeants de Earthlink lui donnèrent de l'argent à investir, dont Dayton, Charles Garry Betty, ainsi que divers bénévoles s'occupant d'organismes sociaux par ailleurs.

Slatkin atteignit alors Hollywood - grâce à ses liens scientologues, ainsi que l'investissement O'Donnell en 99, une société de production cinématographioque dirigée par Armyan Bernstein.

La clientèle de Slatkin toucha des cabinets d'avocats, de comptablité, des fonds de pension et de tas d'investisseurs privés. Certains y mirent moins de 100 000 dollars, d'autres dépassant 10 millions.

Alice Wintz, paralysée qui a investi environ 1,5 million reçus des assurances après accident de voiture et les frais d'école de ses enfants, craint que l'argent ne revienne pas. "C'est tout ce que j'avais, explique Wintz, qui se déplace en voiturette. Elle était présente lors de la réunion des créditeurs qui s'est tenue la semaine passée.

En 99, Slatkin maniait au moins 230 millions pour plus de 500 investisseurs. Il avait expliqué qu'il ferait "la faveur" de s'occuper de leur argent à ses clients - mais demandait habituellement 10 % pour prix de cette faveur.

Les comptes de réassurances étaient liquidés

De janvier à décembre 2000, Slatkin et ses avocats ont garanti à l'enquèteur de la SEC que les comptes étaient liquidés et qu'ils rendaient l'argent aux investisseurs. Le 27 décembre 2000, il indiquait en avoir fini et répétait la même chose dans une lettre du 29 mars à la SEC. Ce n'est pas ce que les centaines d'investisseurs de Slatkin apprirent. Des centaines de millions de dollars sont encore dues.

Lors d'entretiens et de poursuites devant les tribunaux, les investisseurs indiquèrent aussi qu'ils commencè- rent à avoir des problèmes pour sortir l'argent de leurs comptes au moment où les valeurs start-up s'effon- drèrent - en mars 2000.

Slatkin reçut cependant de nouvelles sommes - 64 millions de $ de nouveaux dépôts entre septembre 99 et septembre 2000, et il chercha activement de nouveaux clients jusqu'en février de cette année. Le service des faillites US pense que plus de 600 millions pourraient être disparus.

Premières plaintes le 12 avril

Le SEC explique que Slatkin avait vraisemblablement monté un "schème Ponzi", opération où les nouveaux investisseurs paient les intérêts et le principal des anciens.

Les enquèteurs ne savent pas pour l'instant ce que Slatkin avait investi ni où est passé l'argent.

Le 12 avril, les investisseurs ont déposé une première plainte sur les trois, l'accusant d'escroquerie pour ne pas leur avoir rendu quelques 35 millions de dollars.

Slatkin a démissionné du conseil de Earthlink le 26 avril et demandé la protection de la loi sur les faillites, estimant les dettes à 100 millions de dollars et les disponibilités à 50 millions.

Vendredi, les agents du FBI et de l'IRS faisaient une descente aux bureaux de Slatkin à Goleta. Le SEC obtenait un ordre de gel des comptes par le tribunal, sur la base d'investissements frauduleux effectués depuis 1985.

Le SEC a trouvé moins de 30 millions de $ sur les comptes de Slatkin. Les comptes en Suisse que Slatkin prétendait contenir 585 millions de plus n'existent pas, semblerait-il.

On ignore combien de cet argent confié pourra être récupéré, explique Richard Wynne avocat de Slatkin.

Par ailleurs de nombreux autres "scientologues avancés" ont été impliqués dans des escroqueries d'importance, la secte n'étant pas blanche. Voir par exemple:

Revenons sur la dernière escroquerie d'un très haut scientologue - Reed Slatkin - qui se trouve désormais face à des centaines de plaignants et des **milliards de F** de dettes. Slatkin était rappelons-le l'un des fondateurs d'Earthlink, FAI américain de première grandeur.

On peut se demander ce que l'on va découvrir en matière de dévoiement possible des circuits financiers par la scientologie, ou de blanchiment d'argent via des sociétés ayant un ou plusieurs dirigeants scientologues (dont la célèbrissime "Clearstream" suisso-luxembourgeoise). Rappelons que Clearstream, 2e société mondiale de "stockage" de titres financiers, est mise en cause dans des affaires de blanchiment financier et de comptes secrets, et qu'on aurait constaté qu'elle possède au moins un dirigeant scientologue

Rappelons que la banque au Luxembourg avait refusé d'expliquer la provenance des sommes importantes transitant sur le compte de la scientologie à la justice française. Qu'ont-ils à cacher ?

Rappelons aussi l'affaire suisse encore récemment devant les tribunaux:

Un ex-scientologue a escroqué 300 investisseurs de quelques 90 millions de FF. Il ne veut cependant pas accepter la prison.

Zurich, Switzerland
March 3, 2001
Tages-Anzeiger
http://tages-anzeiger.ch
par Hugo Stamm

Fin des années 80 début 90, des scientologues ont provoqué des pertes financières partiellement fraudu- leuses pour un montant de 400 millions. L'un d'eux, [Kaspar Rhyner], ancien juge et cadre bancaire, a passé vendredi en Cour Supérieure. Il a écopé de 2 ans et neuf mois de prison ferme.

Son co-défendant de 40 ans, qui était responsable de la programmation dans l'affaire et écopa quant à lui de six mois en premier lieu, a clairement expliqué d'emblée: "Si nous n'avions pas été scientologues, nous ne serions certainement pas ici aujourd'hui, je peux vous le garantir." Cela en tête, le co-défenseur invisible rôda dans le tribunal : c'est la Scientologie, qui se retrouve au coeur des discussions ici.

Raison primordiale : l'argent cher joue un rôle pimordial dans l'organisation. Les deux accusés avaient d'énormes dettes afin de payer "léglise": 1,4 million et 1,8 million de cours et "services". De plus, l'avocat avait acheté pour des millions de FF des peintures sans valeur représentant le fondateur de la secte, Hubbard, et avait amassé des dettes de 14 millions de FF.

Une banque Rothschild" fondée...

Une fois que le principal défenseur tomba sur cette source financière paresseuse et intarissable, il n'y eut plus rien pour l'arrèter. Il partit en quête d'investisseurs pour le compte d'un homme d'affaires munichois. Les annonces qu'ils passèrent parlaient de "L'association fédérale des banques américaines" et promettait des intérêts de 9 à 10 %. Mais on ne trouvait là-dessous que 2 bureaux portant le nom rassurant de "Banque Rothschild". De 91 à 94, l'inté- ressé prit l'argent, surtout en liquide, et l'emmena à Münich. Il empocha ainsi 2,5 millions de commissions de l'allemand. Une fois le pot-aux-roses découvert, le munichois disparut dans la nature et ne reparut plus jamais.

Le co-défenseur quadragénaire a travaillé comme technicien informatique pour le collègue scientologue. Le tribunal de district a estimé qu'il s'agissait d'une complicité et d'une escroquerie commerciale et a exigé que les scientologues compensent ensemble pour les torts chiffrés en millions. Ils ont fait appel, trouvant la sentence trop élevée. Le défenseur principal a demandé une réduction de sa peine à six mois avec sursis, son co-défenseur demandant la relaxe.

Il a expliqué avoir fait entière confiance à son partenaire en affaires de Münich. Il dit n'avoir jamais soupçonné que son partenaire ait pu escroquer les fonds jusqu'à peu de temps avant l'effondrement.Son avocat a dit que qu'il y avait un lien avec tous les cours que son client avait pris en scientologie : il explique que son client a fortement été influencé mentalement et qu'il a appris à refouler ses doutes. De plus, on dit que ces cours ont profondément modifié sa structure de pensée.

Son co-défendant et l'avocat de ce dernier ont enfoncé un peu plus le clou. Ils ont parlé d'incapacité à différencier, de systèmes totalitaires, deprocédures inquisitoriales et de lavage de cerveau. Les juges ont aussi poséquestion après question sur la scientologie. Mais n'ont pour l'instantécarté aucune part de l'accusation.

http://news.newspress.com/toplocal/slatkins0621.htm

Les biens de Slatkin sont visés

Investissements: Le Hope Ranch pourrait servir à payer une nuée de créanciers.

6/21/01

Par MARK VAN DE KAMP
Du NEWS-PRESS

Le spécialiste en investissement Reed E. Slatkin, qui a été mis en faillite, pourrait vendre son bien immobilier le Hope Ranch et d'autres propriétés, ainsi que plus d'un million de dollars en oeuvre d'art et en pièces de collection, même son titre de membre du La Cumbre Country Club, si l'équipe du groupe de travail sur les faillites continue à fouiller et à saisir ses biens.

L'équipe en question, menée par R. Todd Neilson de Los Angeles, un fondé de pouvoir nommé par le tribunal, cherche activement à se faire une image exacte des affaires financières avant le 23 juillet et à établir la liste des biens, qui pourront être vendus pour rembourser les créanciers.

Les régulateurs fédéraux disent que Mr Slatkin a escroqué des centaines de personnes pour une valeur d'au moins 230 millions de dollars à l'aide de son affaire d'investissements non déclarée. Les avocats ont répertorié cette semaine les créanciers qui sont au nombre de 850, alors qu'on pensait auparavant qu'ils n'étaient que 500, et ils maintiennent que l'ensemble de la dette pourrait dépasser 600 millions de dollars.

Environ 75 des créanciers habitent le comté de Santa Barbara, d'après les informations déposées devant les tribunaux.

Prélude à une vente possible, le fondé de pouvoir a inspecté le Ranch Hope de Slatkin mercredi, afin d'évaluer l'état des bâtiments. Cette propriété qui se trouve au 4480 et 4484 Via Esperanza vaut 3,4 millions de dollars, mais ces propriétés se vendent facilement à un prix supérieur à ce qu'elles ont été estimées.

Une propriété de Mr Slatkin, dans Santa Ynez Valley d'environ 40 hectares, a été également inspectée.

L'équipe du fondé de pouvoir enquête également sur les procédures pour vendre la carte de membre de La Cumbre Country Club de Hope Ranch de Mr Slatkin, qui donne accès à un golf de 18 trous. Un officiel du club dit que ces cartes valent facilement 100 000 dollars.

L'équipe du fondé de pouvoir a appris que Mr Slatkin possédait de nombreuses pièces de collection, y compris des toiles de Albert Bierstadt et Thomas Hart Benton. Dans une lettre aux avocats de Mr Slatkin, le fondé de pouvoir demande que ces pièces et d'autres, soient immédiatement placées sous séquestre.

Mr slatkin a de lui-même déclaré faillite d'après le chapitre 11 en date du 1er mai, en expliquant que ses dettes dépassaient 100 millions de dollars. Les créanciers, avocats et fondé de pouvoir ont exprimé leur mécontentement quant au fait qu'il n'ait pas obéi aux exigences du tribunal, de fournir la liste complète de ses biens, de ses affaires financières lors des sept semaines qui ont suivi.

L'équipe du fondé de pouvoir essaie activement d'obtenir ces renseignements. De plus, c'est près de 320 cartons de documents concernant Mr Slatkin qui ont été fournis par les agents fédéraux et par l'agence de comptabilité.

Le chapitre 11 permet à un débiteur de rester en possession de ses biens temporairement, le temps qu'il essaie de s'organiser.

Cette semaine, Mr. Neilson a identifié une "liste importante de titres, d'hypothèques et autres notes de frais" qui ne se trouvaient pas dans les comptes et a demandé qu'elle lui soit transmise. Il a également ordonné à 39 sociétés de courtage et à des banques de geler tous les comptes de Slatkin et de lui faire passer tous les biens en liquide, comme en donnait l'ordre le tribunal.

Des centaines de créanciers sont invités le 30 juillet à Santa Barbara, peut-être à l'hotel ou dans le bureau du fondé de pouvoir, pour discuter du procés. Nombre des créanciers, dont certains ont investi plus d'un million de dollars, se demandent combien ils pourront récupérer, leurs avocats les ont avertis qu'il ne pouvait s'agir que de quelques pennies par dollar investi.

Mr Slatkin réside à Hope Ranch depuis huit ans et il est co-fondateur de EarthLink, un important fournisseur d'accès Internet. Il a abandonné son poste au conseil d'administration en avril.

Selon les documents du tribunal, les avocats et les régulateurs, Mr Slatkin, qui n'est pas déclaré en tant que conseiller financier, avait dit qu'il faisait fonctionner un club d'investissement pour ses amis et ses connaissances et que ce n'était pas commercial. Il a commencé ses activités en 1985, en recueillant de l'argent auprès d'amis, de partenaires en affaires et de membres de l'Eglise de Scientologie dont il fait partie.

Les investisseurs ont dit qu'il leur avait promis de gros gains -- parfois 60% l'an -- mais les enquêteurs fédéraux le soupçonnent d'avoir payé certains avec l'argent des investisseurs suivants, un type d'escroquerie connu sous le nom de Ponzi scheme.

Times staff writers Claudia Eller and Karen Kaplan contributed to this story.

http://www.thestandard.com
 

From: http://www.thestandard.com/article/0,1902,436,00.html

EarthLink Connects
By Michelle V. Rafter
May 28 1998 12:00 AM PDT

The Southern California Internet Service Provider has defied conventional wisdom just by surviving. Now Dayton and Betty are betting the company on a $180 million deal with Sprint.

-----------------------------------------

Driving down a steep mountain road after a weekend on the slopes of Big Bear in Southern California, EarthLink Network (ELNK) founder Sky Dayton and his promising COO candidate, Charles "Garry" Betty, had an unexpected chance to see how well they worked together. A storm the previous night had covered the road with a slick layer of ice and snow, and the way ahead was obscured by a swirling blanket of fog.

Although an avid snowboarder, Dayton hadn't brought chains for his BMW M5. He remembers thinking he wouldn't make it off the mountain. But Betty took charge from the passenger seat and coached Dayton through every mile of icy, hairpin curves.

The 1996 ski trip was the then 24-year-old Dayton's idea of a final interview for Betty, a Georgia native 15 years his senior. Betty got the job at the fledgling ISP and rose to CEO six months later.

Dayton and Betty may be nearly a generation apart, but their close working relationship lies at the heart of the company's success. Dayton, an ambitious GenXer who never went to college, started EarthLink on little more than a dream, but it was the industry-wise Betty who took Dayton's vision and ran with it.

At a time when most consumer ISPs still counted customers in the thousands and analysts regularly issued dire warnings of telephone companies and cable operators engulfing the industry, the two men transformed EarthLink from a small Southern California outfit to a national powerhouse. In three years, EarthLink has amassed more than 500,000 subscribers, seen revenue more than triple to $79.2 million in 1997 and watched its stock price soar. Since the company's January 1997 initial public offering, EarthLink stock rose from $13 to a high of $77 before slipping lately to $58.375, giving it a market capitalization of $610.9 million.

The secret of Dayton's and Betty's success has been equal parts intuition, luck, timing and moxie. Colleagues and analysts credit Dayton with a keen ability to act early on trends: He leased bandwidth rather than build his own network infrastructure and dropped prices to $19.95 a month for unlimited access before other ISPs saw the wisdom of flat rates.

Time and again, Dayton and Betty have also found ways to raise cash from public markets and private investors just when they needed it most. This week, EarthLink expects to close a deal with Sprint that analysts calculate is worth about $180 million in cash, credit lines and new subscribers. EarthLink is looking to raise another $174 million in a secondary stock offering set to take place later this month. Fueled by the new funding, analysts believe EarthLink could become the nation's No. 2 consumer gateway to the Net by 1999.

But questions remain about the future of the EarthLink Sprint (dossier) deal. EarthLink has yet to make a nickel, and won't for at least another two years because of write-offs associated with the deal, according to analysts who follow the stock. Likewise, Sprint could prove more of a hindrance than a help to EarthLink. A latecomer to the consumer dial up business, Sprint has seen its Internet Passport service flounder while the company invested in other areas. And executives at both companies won't rule out the possibility that Sprint could buy EarthLink after a three-year hands-off period spelled out in their deal.

If Dayton has his way, though, EarthLink will still be independent in the future - and he'll still be running it. "Somebody has to be out way ahead saying we have a long way to go," he says. "It doesn't keep me up at night, but I do worry. Are we talking to customers ? Is our present technology palatable ? Our bread and butter for many years to come will still be getting people connected."

The Internet was relatively unexplored territory when Dayton first caught wind of it in 1993. As a teenager, he had tinkered with computers - his grandfather was an IBM fellow - and had worshiped motorcycles and fast cars. He hung out with a crowd in Los
Angeles' Los Feliz neighborhood that vowed to be millionaires by the time they were in their 20s.

A practicing Scientologist, Dayton graduated at age 16 from the Delphian Academy, a Scientology-affiliated boarding school in Sheridan, Ore. But ambition moved him to choose entrepreneurship over college. His first venture was a money-losing coffeehouse named Cafe Mocha, located on trendy Melrose Avenue in L.A. Dayton's next business was a graphic design shop, started with long-time friend Adam Walker.

When another friend introduced him to the Internet, Dayton says he spent more than 60 frustrating hours attempting to establish a TCP/IP connection. The experience sparked an idea for a business: An Internet access provider that would make it as easy as possible for novices like himself to log on.

To fund the venture, Dayton talked to anyone who would listen, eventually hooking up with two Sciento- logists who would become his first angel investors. He raised $100,000 by selling a 40 percent stake to Kevin O'Donnell - the father of a school friend and founder of Government Technology Services Inc., a Chantilly, Va., computer reseller - and Reed Slatkin, a Santa Barbara, Calif., stock trader, financial manager and long-time friend of Walker's family.

Equally important, O'Donnell and Slatkin acted as Dayton's management and financial advisors, filling gaps in his limited experience. Both O'Donnell and Slatkin remain on the board, and although EarthLink's subsequent private and public offerings have diluted their stakes, they still hold 7.9 percent and 8.8 percent of the company's shares, respectively. The only shareholders whose stakes are higher are Dayton, who owns approximately 10 percent of EarthLink shares, and billionaire financier George Soros, who has acquired approximately 10 percent through several private placements.

In 1994 EarthLink introduced its first sign-on software kit, an all-in-one bundle with TCP/IP, e-mail, a Web browser and other Internet software that was among the first of its kind. To help run the business, Dayton hired friends and drew on management
courses he'd taken at L.A.'s Hubbard College of Administration International, another Scientology-affiliated school.

Dayton acknowledges the role his Scientology training played in his career: He says it helped him learn new subjects quickly, think for himself, manage people and structure a growing company.

"I've found that the approaches I started with were totally common sense," Dayton says. "Every good manager applies them anyway."

In EarthLink's early days, some employees objected to the company's Scientology techniques and the company drew suspicion after the Church's controversial role in cases involving free speech on the Internet.

But EarthLink's Scientology influence waned as the company grew, according to people who worked there at the time. The change became most apparent, they say, after Dayton hired Betty, a veteran corporate exec who had run networking-software company Digital Communications Associates and had held management posts at modem-maker Hayes Microcomputer.

Acquaintances such as Linwood A. "Chip" Lacy, an EarthLink director and investor since 1995, credit Dayton with a maturity beyond his years, comparing him to computer wunderkind Michael Dell, who started Dell Computer while an undergraduate. The best indicator of Dayton's maturity was his decision to hire Betty when the company was still small, says Lacy, former co-chairman of computer distributor Ingram Micro.

"We've all dealt with founders who can't make that transition, but he wanted this company to fulfill its destiny," Lacy says.

Dayton's admirers also credit him with the prescient decision not to invest in building his own Internet network. While other ISPs were spending precious capital erecting modem banks and high-speed fiber-optic lines, Dayton figured EarthLink was better off buying access from IP backbone wholesalers and spending its money snagging customers.

In 1995 EarthLink signed a wholesale bandwidth agreement with UUNET, instantly transforming itself into a national provider and giving itself an endless supply of bandwidth. EarthLink immedately cut its monthly fee to $19.95 for unlimited access, the first ISP in the country to offer a cheap, all-you-can-eat dial-up plan. Later EarthLink signed a similar wholesale access contract with PSINet, bringing the number of dial-in numbers it offers to 1,100. As part of the Sprint deal, Sprint will become EarthLink's third access provider, adding 200 access numbers.

By 1997 most consumer ISPs had gotten out of the once-novel Internet backbone business and leased capacity from major providers such as UUNET (dossier) or MCI. With high-speed cable modem and digital subscriber line (DSL) technologies around the corner, it now makes more sense than ever for consumer ISPs to be "network agnostic," says Forrester Research analyst Kate Delhagen.

In many ways, Dayton and Betty are opposites. Tall and lank, with close-cropped brown hair, Dayton, now 26, is guarded in conversation and is well known as the company's resident worrier. "I worry about everything," he says. Betty, 41, is more jovial and open.

For the past two years, Dayton has played Mr. Outside to Betty's Mr. Inside. Dayton represents EarthLink on the Internet conference circuit while Betty handles the company's day-to-day operations. One week in April found Betty in his office while Dayton flew to Washington, D.C., to lead the president and first lady through the EarthLink sponsored Webcast of the White House's annual Easter Egg Roll.

"I'm the original user of our service," he says. "I go home at night and use it. I dial in via modem. I use ISDN. I worry about all of the long-term stuff, the high-speed access and R&D stuff."

These days Dayton, whose stake in EarthLink is worth about $100 million, is enjoying the fruits of his labors. He bought himself a silver 1997 Porsche Twin Turbo last fall and recently gave his mom a Toyota RAV4. In February Dayton and his wife, Arwen, a budding screenwriter and novelist, paid $1.9 million for a 6,400-square-foot, 1920s-era mansion in Pasadena, Calif.

But financial success hasn't left much time for hanging out with his old buddies. "A lot of the guys he used to spend time with wonder what happened to him," says Walker, Dayton's one-time business partner. "He's joined the big-business gang. That's one of the sacrifices anyone has to make."

When Betty joined EarthLink in 1996, the company had 30,000 subscribers and was growing at a rate of 15 percent to 20 percent a week. Despite Dayton's best efforts, the frantic pace made for virtually nonexistent financial controls, Betty says.

"They didn't know how much cash they had," he says. "They didn't know how much they needed, how much they owed."

Over the following six months, Betty installed the kinds of accounting and financial systems he'd used to manage larger, public companies like Hayes Microcomputer. The corporate makeover helped EarthLink tap investors for the capital it desperately needed to continue growing.

Betty logged 80 to 100 hours a week and claims he was hooked on the company's pace from the moment he stepped into the company's first office. "I go in to meet Sky, and there's 200 people in this little bitty building, and the electricity is just incredible," Betty remembers. "There's nothing like being in the excitement of a start-up."

Before Betty's arrival, EarthLink had raised $4.4 million from existing and new investors to promote its national status after the UUNET deal. But the company burned through the money in a five-month marketing blitz.

In subsequent private placements, EarthLink raised $22.7 million, including investments from Soros, before its $26 million public offering in January 1997. In September the company raised another $15.4 million in a private placement, with $5 million coming from Soros' investment arm, Soros Fund Management.

To continue its expansion, however, it needed more funding. Betty and Dayton spent the first half of 1997 talking to the Baby Bells about marketing partnerships but came away empty handed. Then, in September 1997, EarthLink director Sidney "Sam" Azeez, asked his friend Carl Peterson, president and general manager of the Kansas City Chiefs, to pass the word to Sprint Chairman William Esrey, another Peterson buddy, that EarthLink was looking to do a deal.

Esrey liked the idea and set the wheels in motion for a meeting between top EarthLink and Sprint execs, which took place in Sprint's Kansas City, Mo., headquarters on Halloween. Within a month, Esrey and top Sprint Internet managers were in Dayton's office finalizing negotiations, and the deal was announced Feb. 11 of this year.

"They had the scale we were looking for and the strategy and direction right in sync with where Sprint wanted to go," says David Owen, Sprint's Internet marketing director. " #91;Sprint] customers will be very happy because they'll get a better product than what we provided and equal to one we thought it would take us 12 to 18 months to get to."

Sprint will pay $4.2 million for 10 percent of EarthLink stock, extend it a three-year, low-interest $100-million credit line and become EarthLink's third access provider. Sprint will also hand off to EarthLink its 130,000 Sprint Internet Passport customers. Sprint promises to deliver another 750,000 customers over the next five years through a joint marketing program.

In exchange, Sprint also picks up 4.2 million restricted, nonvoting shares (in addition to EarthLink common shares), giving it an aggregate 30 percent stake in the ISP, as well as two seats on EarthLink's board, to be filled by Esrey and Patti Manuel, head of the $14.8 billion company's consumer long-distance division.

Once the deal closes, Sprint's 2,000-person telemarketing staff will pitch "EarthLink-Sprint" Internet access to long distance customers and prospects. Beginning in the fourth quarter, EarthLink-Sprint Internet access will be featured in Sprint TV commercials, possibly including those starring celebrity pitchwoman Candice Bergen.

Analysts expect additional subscriber revenue from the deal to kick EarthLink's operations into the black by year-end. But because EarthLink will write off an undisclosed amount of goodwill associated with assets exchanged in the pact, the company will continue to show a net loss for another two years, analysts and company officials predict. In the quarter ended March 31, EarthLink lost $6.4 million on revenue of $29.2 million, compared with a $8.4 million loss on revenue of $15.7 million in the same period last year. In 1997 EarthLink lost $29.9 million on revenue of $79.2 million, compared with a $31.1 million loss on revenue of $32.5 million in 1996.

To keep up with its growing customer base, EarthLink has invested more than $23 million in a 10,000- square-foot data center at its year-old Pasadena headquarters, which can handle the needs of up to 3 million subscribers. EarthLink's customer-support department is in perpetual hiring mode, and the department accounts for 600 of the company's 1,000 employees.

Ultimately, the big winner in the deal could be Sprint, which had been a distant third behind competitors ATT (T) and MCI in the consumer ISP business. As part of their agreement, Sprint could buy EarthLink outright at the end of 39 months, if the companies agree on a price. Sprint officials refuse to speculate on the likelihood of such an acquisition.

"It's a great scenario for Sprint," says Forrester's Delhagen. "Two or three years from now if they realize owning Internet customers is a valuable proposition - whether they make money or it's a feeder for their core [long-distance] business - that's a lot of customers for Sprint."

But some question whether Sprint is up to the challenge. "I don't think [adding 150,000 subscribers per year] is a large threshold to meet. From what they've done in #91;the last] 18 months, they have to be more serious," says Joe Bartlett, a Yankee Group (dossier) analyst.

Expect to see EarthLink announce more marketing partnerships in the coming months. EarthLink recently unveiled a marketing pact with the Discover Card unit of Morgan Stanley Dean Witter (MWD) to offer cobranded Internet access to 30 million Discover Card holders. In an upcoming agreement with the Los Angeles Dodgers, EarthLink will offer "dodgerblue.com" vanity e-mail addresses to baseball fans.

"This is so fun," Betty says of the Sprint deal. "They've put us on the map."

 

Les biens et le calendrier Slatkin...

Santa Barbara News-Press http://news.newspress.com/topsports/033102timeline.htm - 3/31/02

TIMELINE

* 22 janvier 49, naissance de Reed Slatkin à Detroit, Michigan

* 1963: le père de M. Slatkin se suicide, celui-ci va vers la scientologie

* 1966: Etudes auprès de L. Ron Hubbard à l'école de St Hill à East Grinstead, Sussex, UK.

* 1973: Déménage sur Los Angeles avec son épouse mary jo et commence à travailler à plein temps pour l'église de scientologie

* 1975: Ordonné ministre de l'église, commence à entraîner d'autres scientologues.

* 1983: Après la naissance de son second fils, déménage à Goleta et commence son apprentissange d'investisseur auprès de son ami et "coréligionnaire" Bob Duggan.

* 1984: Commence à investir et signale certaines années avec des rendements de 100 %.

* 1987: Après avoir aidé des délinquants condamnés, Chris Mancuso, Ron Rakow, à investir l'argent malhon- nête de l'escroquerie "Fermes de Culture", il reçoit une note de Mancuso, qui est en prison, "Un jour de plus au Club Fed [eral]" commence la lettre, qui poursuit: "je sais qu'on fera de grandes choses ensemble" !

* 1988 il confesse, dans une note à lui-même, avoir menti sur ce qu'il fait "au lieu de bosser sur la Bourse, j'ai bossé pour faire des fausses déclarations de résultats."

* 1990: " Un associé en affaires, Patriick Gallagher, s'inquiète des affaires menées par Slatkin; et ses programmes d'ordinateur dissolvent toute implication avec lui. Il dit "je crains qu'une inspection des affaires de Slatkin ne révèlent des caractéristiques scabreuses impliquant des irrégularités en matière de règles voursières - et qu'après analyse, cela puisse mener à des poursuites de la part de diverses agences officielles".

* 1993: Il achète deux propriétés à Hope Ranch.

* 1994: Il rencontre Sky Dayton et Kevin O'Donnell, et décide d'investir 75000 dollars dans l'affaire qu'ils fondent, Earthlink. En trois ans, son investissement vaudra 200 millions de dollars.

* 1995: Il explique aux 383 investisseurs de son club que les 133 millions ont fait 77 millions de bénéfices et valent dontc 210 millions de dollars.

* 1997: La Commission Actions et Obligations (SEC) entame une enquète informelle sur Slatkin.

* 1998: Il annonce posséder 50 millions de dollars dans un compte en banque, mais il n'y en a que 3.

* 1999: Il dit à la SEC qu'il liquide son club et rend l'argent aux investisseurs.

* January and February 2000 repeats claim to SEC that he is in the "process of liquidating accounts," and that "I am not accepting any new accounts or any money from existing accounts." Il répètre en janvier et février 2000

* February 2000: Associate Chris Mancuso helps set up a telephone line with a fake Swiss number that, "when you dial the number the line has been conditioned to provide a truly genuine European ring (nice touch, huh ?)"

* January 2000 to May 1, 2001: Mr. Slatkin takes in more than $100 million from investors instead of closing accounts and returning money as he promised the SEC.

* November 2000: Gets a $10 million unsecured personal loan from Sidney Azeez.

* December 2000: Convinces John Poitras to invest an initial $5 million; he later adds another $10 million to the pot.

* March 30: Mr. Slatkin produces a memo from a Swiss financial firm, NAA, showing he has $380 million in investment account. Mr. Steadman and his attorneys make a few phone calls and discover there is no such firm as NAA in Switzerland.

* April 7, 2001: Sends letter to investors saying: "We are experiencing delays in our ability to meet your request for withdrawl of funds... Rest assured your funds are safe and the delay has nothing to do with the current fluctuation in the market."

* April 13, 2001: Frustrated that he hasn't had his money returned, John Poitras files suit and Mr. Slatkin's assets are frozen.

* April 20, 2001: Texas foundation manager Stuart Steadman files suit to get his and his foundation's money $18 million returned. From the quarterly statements generated by Mr. Slatkin, Mr. Steadman thought the account had grown to $34 million.

* April 27, 2001: Denise Del Bianco, Mr. Slatkin associate and wife of Ron Rakow, receives $1.9 million, court records show.

* April 30, 2001: In a meeting at the office of his Los Angeles attorney, first informs his investors that there's a problem with the money.

* May 1, 2001: Files for bankruptcy.

* May 11, 2001: FBI and IRS raid and search Mr. Slatkin's homes and offices.

* May 11, 2001: The SEC sues Mr. Slatkin for violating federal securities laws.

* May 29, 2001: Mr. Slatkin agrees to a consent decree to stop any investment activity.

* May 30, 2001 FBI searches the New Mexico offices of Mr. Slatkin's bookkeeper Jean Janu.

* June 1, 2001 a early attempt at a plea bargain is stopped.

* June 24, 2001: FBI and IRS agents raid and search the home of Slatkin associate Ron Rakow.

* July 30, 2001: The U.S. Bankruptcy Trustee tells 800 investors that their money is mostly gone. He's assets total perhaps $30 million on debts that exceed $250 million.

* August 8, 2001: The trustee begins to put Mr. Slatkin's homes and property up for sale.

* December 14, 2001: The trustee says Slatkin's investment club was a scam from the start.

* February 28, 2002: The last day for creditors to file claims against the estate.

* March 25, 2002: More than 500 people and institutions have filed claims against the estate totaling $817 million.

* March 26, 2002: Reed Slatkin agrees to sign a guilty plea, taking responsibility for $254 million in losses and admitting to orchestrating one of the largest Ponzi schemes in history over a 15 year period.

ASSETS

An accounting of Mr. Slatkin's assets listed a value of just $30 million for the estate, including:

* Hundreds of bottles of wine including four bottles of Mountain Rothschild valued at $300 each.

* One million shares of EarthLink stock, which has ranged in price from $4.75 to $18.92 in the past year.

* Three country club memberships: El Caballero Country Club, The Alisal and La Cumbre Country Club.

* Vehicles: A 2001 Porshe Turbo, 2000 Volvo C70, 2001 Toyota Prius, 1967 Chevrolet Corvette, 1969 Pontiac Firebird, 1998 Lectr golfcart, 1994 Volvo 960, 1995 Jeep Grand Cherokee.

* Properties: Hope Ranch homes at 4480 and 4484 Via Esperanza estimated to be worth $6 million. Goleta home at 890 N. Kellogg Avenue estimated to be worth $775,000. Solvang property 3125 Riley Road worth about $400,000. Undeveloped property in Santa Ynez 1275 Roble Branco Road, Santa Ynez Valley 100 acres estimated to be worth about $1.6 million. Newport Beach property 6 Sea Greens, Newport Beach, worth about $1.14 million. Undeveloped parcels in Ashland, Ore., on Strawberry Lane worth about $5.25 million. Interest in three malls in Tennessee, Florida and Louisiana, worth about $14 million.

2001 - Los Angeles Times

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