15 May 2001

EARTHLINK FOUNDER IN FRAUD SUIT
New York Post
By JOSEPH GALLIVAN
http://www.nypost.com/technology/30506.htm

Talk about getting audited.

Earthlink co-founder, Hollywood money manager and top Scientologist Reed Slatkin, was hit with a SEC lawsuit Friday which charged that he operated a $230 million Ponzi scheme.

The civil lawsuit alleges that Slatkin committed fraud while acting as an unregistered investment adviser.

At the same time, FBI and IRS agents raided Slatkin's offices looking for the money.

Slatkin allegedly pretended to invest money on behalf of 500 clients, beginning in 1985. He met many of them at Hollywood parties.

However, he is alleged to have used some of the money to pay his country club fees, credit card bills and pool maintenance. The SEC, which won a court order to freeze his assets, says Slatkin had just $30 million in his brokerage accounts.

Among the list of investors is actor Giovanni Ribisi, whose movies include "Boiler Room."

Slatkin could not be reached for comment.

Others who invested with the ordained minster of the Church of Scientology were Earthlink Chairman Sky Dayton and CEO Garry Betty.

An Earthlink spokesman declined comment and said it was a "personal one and involved no Earthlink dollars."

However, law firms and pension funds also handed over their money to Slatkin, who appeared to be a genius when his stake in Earthlink shot up to $122 million in value in 1999.

Slatkin first admitted he was under investigation in January 2000 in a letter to clients which said he was liquidating their accounts. However, the SEC says he kept some accounts going and $585 million in Swiss banks accounts has disappeared.