Angry investor calls Slatkin 'a financial predator'
Santa Barbara News-Press
12/18/01
By MARK VAN DE KAMP
http://news.newspress.com/topsports/1218slatkin.htm

Back in 1988, Reed Slatkin admitted in a handwritten letter that he was lying to investors, fabricating statements and feared giving his Church of Scientology a bad name, investors who say they were duped learned on Monday.

But Mr. Slatkin then spent the next 13 years perfecting and perpetrating the scheme that eventually took in $593 million from about 800 people, investigators said, including Hollywood celebrities, Internet moguls and hundreds of families who entrusted him with their life savings, college tuition and retirement funds.

The revelations are in a new report, detailed Monday in U.S. Bankruptcy Court in Santa Barbara. The documents show the inner workings of one of the largest alleged Ponzi schemes in history, started in 1986 by Mr. Slatkin from his Goleta office and Hope Ranch estate. The scheme uses later investors' money to pay high returns to early participants, all with the hope of attracting new investors. A News-Press review of court records found approximately 75 people in Santa Barbara County among the investors.

Monday's hearing included statements from those who say they were conned by Mr. Slatkin.

"He's a monster," said Greg Abbot of Colorado, whose family lost millions of dollars. Mr. Slatkin, he said, went so far as to get $7 million from Mr. Abbot's father, who had throat cancer.

"He is a financial predator," said Michael Azeez of New Jersey, whose family also lost millions of dollars. He described Mr. Slatkin to the courtroom audience as a family friend who "came to family functions, to bar mitzvahs," even to his father's funeral, only to steal.

Fortunately for those who say they've been duped, Mr. Slatkin was a pack rat. He kept hundreds of boxes of records and numerous computer files, including the handwritten note.

Many were seized in an FBI raid in May, shortly after Mr. Slatkin declared bankruptcy -- and the alleged scheme folded. Investigators are using them to piece together what happened to all the money, link dozens of business associates, and help investors recoup some of their losses.

"He was essentially running a criminal enterprise," said Richard Wynne, an attorney who helped prepare the 2,000-page interim report with the court-appointed trustee, Todd R. Neilson.

The huge sums involved have been revised. An earlier trustee's report issued in July said Mr. Slatkin owed hundreds of investors and creditors more than $539 million but apparently had only $44 million in assets.

The new report paints a different picture. It says Mr. Slatkin received $593 million from investors from 1986 to 2001 and distributed $535 million to investors.

That left $59 million.

However, 450 investors received $195 million more than they invested, so adding the two sums together, investigators believe Mr. Slatkin duped people out of $255 million. He has about $30 million in assets.

The top six investors have lost $116æmillion, Mr. Wynne said. The next 15 lost $61.6 million. That means the other 700 lost about $77 million combined.

Some of that money was paid by Mr. Slatkin in consulting fees to dozens of people around the country, the report said. Among them were Ron Rakow and Denise del Bianco, who live in Hope Ranch.

The federal probe of Mr. Slatkin widened on June 25: FBI agents raided the Rakow-del Bianco home, searching for business and financial records for at least 10 corporations and partnerships operated by Mr. Slatkin or Mr. Rakow "for the purported purpose of investing money for others since 1986" using funds raised by Mr. Slatkin, according to court documents.

Agents seized $386,885 in cash from the home, according to court papers.

On Monday, Mr. Wynne told the U.S. Bankruptcy Court audience that Mr. Rakow was paid handsomely by Mr. Slatkin to be a consultant.

"He brought other investors to Mr. Slatkin," Mr. Wynne said.

Mr. Rakow's attorney was not present and could not be reached for comment after court recessed at 5 p.m.

Mr. Slatkin has not been charged with any crime. While he has provided limited assistance to investigators, the trustee said, he has not agreed to formal questioning under oath. Mr. Neilson said he will continue investigating and seeking more assets, and wants to have a liquidation plan ready by April 2002.