Scientology's Reed Slatkin

EarthLink Co-Founder a Pyramid Schemer?
Thursday May 3
By Jen Muehlbauer

Can anyone explain the recent rash of white-collar crime exposŽs? First a Cisco boss got fired and busted for embezzling. Former leaders of Christie's and Sotheby's were indicted for auction price-fixing. Lernout & Hauspie's founders have been languishing in Belgian jails during their investigation for stock manipulation and fraud. Now a co-founder of EarthLink has been tied to a bizarre Ponzi scheme involving day-trading and Scientology.

The Los Angeles Times broke the story that Reed Slatkin, venture capitalist co-founder of the ISP EarthLink, is accused of bilking investors of more than $35 million. Slatkin is not registered with the SEC as an investment advisor, but he still persuaded more than 100 people to invest more than $300 million in a day-trading operation promising annual returns of up to 60 percent. It seems he used money from earlier investors to pay later investors - the same theory behind those chain letters that promise to make you rich if you send five people a dollar. Slatkin, a Scientologist, is also accused of ripping off a group of fellow church members to the tune of $250 million. EarthLink hurried to explain that Slatkin quit the company's board last week, wasn't part of the company's daily operations, and didn't use EarthLink money in the scheme.

Meanwhile, observers continued to ponder EarthLink's rollout of satellite Net access. The NewsFactor Network quizzed an analyst, who said rural customers craving broadband will sign up for the costly service because they can't get cable modems or DSL. (But how many such customers are there?) "EarthLink now offers virtually every kind of consumer Internet access imaginable," said the Motley Fool, but it's still having trouble keeping up with behemoths such as AOL and Microsoft. Well, EarthLink, if you need come quick cash, we know this great day-trading program with 60 percent return ...


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