Scientology's Reed Slatkin

SEC bans Athena Gold ex-backer Slatkin from industry
Securities and Exchange Commission

*SEC Thu 3 Jan 2002 Street

Wire Also (U:*SEC) Also EarthLink Inc. (U:ELNK) Also Securities and

Exchange Commission (AGC)
by Brent Mudry

The United States Securities and Exchange Commission has banned controversial EarthLink co-founder Reed Slatkin, a prominent Scientologist minister and stock promoter, from any association with any investment adviser. The industry ban, finalized Wednesday in a consent settlement, is the latest move in the prosecution of Mr. Slatkin, 53, of Santa Barbara, whose $593-million Ponzi scheme, an unregistered operation he ran since 1985, collapsed last spring. (All figures are in U.S. dollars.) The SEC has not yet reached settlements on fines or disgorgement orders against Mr. Slatkin, who remains under criminal investigation.

U.S. officials have called the case one of the largest Ponzi schemes in history. Mr. Slatkin allegedly preyed on the rich and famous, luring and conning scores of Hollywood stars and producers, Internet executives and high-society types. (Locally on Howe Street, Mr. Slatkin was a private-placement investor in Athena Gold Corp. in 1991, when the Vancouver Stock Exchange company was being actively boosted by fellow Scientologists Michael Baybak and Kenneth Gerbino. Athena was subsequently acquired by Wally Berukoff's Miramar Mining Corp. in 1995.

The SEC makes no allegations regarding Mr. Slatkin's dealings on the VSE; nor is any connection to Mr. Baybak, Mr. Gerbino or Mr. Berukoff suggested. Mr. Baybak filed a libel suit against Time magazine over an unflattering May 6, 1991, eight-page cover feature profiling the Church of Scientology, which included a sidebar story featuring the Athena Gold promotion of Mr. Baybak and Mr. Gerbino.) In an unrelated but happy coincidence, the SEC settlement came the same day that one of Mr. Slatkin's favoured investors, longtime CNN anchor and legal commentator Greta Van Susteren, was hired away by the Fox News Channel in a high-profile media defection. Ms. Van Susteren, a veteran criminal defence lawyer, rose to national prominence as CNN's top talker during the trial of acquitted double murderer O.J. Simpson.

The Los Angeles Times reported Dec. 21 that Ms. Van Susteren is one of 75 Slatkin investors who cashed out a total of $151-million in the Ponzi scheme, and who may be asked or sued by the Scientologist financier's bankruptcy trustee to repay their unwitting gains. After a seven-month investigation, the SEC launched its prosecution of Mr. Slatkin last April, and he promptly resigned from the board of EarthLink, the United States' second largest Internet service provider, and filed for personal bankruptcy under Chapter 11.

In a Dec. 14 report, bankruptcy trustee Todd Neilson, a former FBI agent, claims Mr. Slatkin's Ponzi scheme, which took in an estimated $593-million over 15 years from more than 800 investors, was a "carefully orchestrated charade" dating right back to its inception in 1986. Mr. Slatkin only made $65-million in real gains, but he distributed hundreds of millions to investors, leaving a $255-million shortfall as the Ponzi scheme collapsed.

Virtually the entire real profit of $65-million was due to Mr. Slatkin's purchase of cheap shares in EarthLink, while his other purported stock market investments were either disasters or non-existent. In a remarkably simple modus operandi, Mr. Slatkin convinced rich but gullible investors to give him vast sums of money, which he supposedly invested through NAA Financial in Switzerland, which turned out to be little more than an unregistered shell company. The unregistered investment adviser then sent bogus statements to his investors, showcasing his investment prowess with bogus investments and values.

When the SEC came knocking, Mr. Slatkin allegedly kept spinning his web of lies. "The defendant has repeatedly lied to the commission under oath in an attempt to mislead the commission and hamper its investigation. All of these factors demonstrate a strong likelihood that the defendant will continue to engage in future violations of the federal securities laws," stated an SEC prosecutor in a court filing. In a brief appearance before his victims last July in the first bankruptcy meeting, Mr. Slatkin, ordained as a Scientologist minister in 1975, took his 5th Amendment right and refused to answer any questions in a bid to avoid self-incrimination.

No criminal charges have yet been laid, and even if any charges do come down, Mr. Slatkin remains presumed innocent until proven guilty beyond reasonable doubt.


The views and opinions stated within this web page are those of the author or authors which copyrighted and wrote them and may not reflect the views and opinions of the ISP or account user which hosts the web page. The opinions may or may not be those of the Chairman of The Skeptic Tank. The term "Scientology"® is trademarked to the Scientology crime syndicate. This information is provided in Fair Use for the public safety in the hopes that others don't fall for Scientology's related frauds.

Return to The Reverend Reed Slatkin main index page Return to The Skeptic Tank's main index page.

E-Mail Fredric L. Rice / The Skeptic Tank