Litigation Release No. 18323 / September 4, 2003
REED E. SLATKIN SENTENCED TO 14 YEARS FOR RUNNING A $600 MILLION PONZI SCHEME AND OBSTRUCTING JUSTICE
U.S. v. REED E. SLATKIN, CR 02-313 (C.D. Cal.)
Los Angeles, CA, September 4, 2003 - The U.S. Attorney for the Central District of California announced yesterday that Reed E. Slatkin was sentenced yesterday by United States District Judge Margaret M. Morrow to 14 years in prison after pleading guilty last year to a series of criminal charges related to a massive Ponzi scheme, including conspiracy to obstruct justice during an SEC enforcement investigation. In March 2002, Slatkin pleaded guilty to 15 felony charges, including mail and wire fraud, money laundering and conspiracy to obstruct justice, for fraudulently soliciting nearly $600 million from approximately 800 investors during a 15-year period.
In his plea agreement, Slatkin admitted that, in order to obstruct the SEC's investigation and to conceal the fact that his investment program was a massive Ponzi scheme, he and other co-conspirators provided to the SEC false documents, including fabricated correspondence and account statements, and he lied to the SEC under oath about the success of his investments, the accuracy of account statements, and his intention not to accept additional investor funds.
On May 11, 2001, the SEC obtained a temporary restraining order and asset freeze against Slatkin, a co-founder, former director and substantial shareholder of Earthlink, Inc., in federal district court in Los Angeles. The Commission alleged that Slatkin defrauded hundreds of clients through his unregistered investment advisory business located in Santa Barbara, California.
On June 7, 2001, the U.S. District Court for the Central District of California entered a Judgment of Permanent Injunction against Reed E. Slatkin. The judgment enjoins Slatkin from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and the investment adviser registration provisions of Section 203(a) of the Advisers Act. Slatkin, without admitting or denying the allegations in the complaint, consented to the entry of the injunction. Slatkin has also been barred by the Commission from associating with any investment adviser.
Additional information can be found in Litigation Release No. 16988 (May 15, 2001), No. 17033 (June 12, 2001), No. 17796 (September 12, 2002) and No. 18107 (April 25, 2003) and Advisers Act Release No. 2006 (January 2, 2002).