Scientology's Reed Slatkin

Tuchman among swindled
TeleTech founder sues over $2 million lost in investment club
Rocky Mountain News
February 1, 2002
By John Accola, News Staff Writer

TeleTech founder Kenneth Tuchman counts himself among a group of unwitting investors that federal securities regulators say were swindled out of millions of dollars by a California celebrity investment guru.

Tuchman -- one of Colorado's richest residents -- is suing his investment advisory firm over the $2 million he lost in the Reed Slatkin Investment Club, whose members included CNN legal anchor Greta Van Susteren and actor Peter Coyote.

The investment club's bankrupt founder, Reed Slatkin, is under criminal investigation for running an alleged $600 million Ponzi scheme.

Tuchman's lawsuit, filed last month in Denver District Court, accuses the Pell Rudman Trust Co. of failing to conduct due diligence on Slatkin, who filed for bankruptcy last May after he was accused of investment fraud.

Pell Rudman, based in Boston, says Tuchman's damage claims for breach of contract and negligence are groundless.

A bankruptcy trustee's report lists Tuchman, chairman and chief executive of the Denver customer calling-center giant Teletech Holdings Inc., as one of more than 800 investors with claims against Slatkin's estate.

The Securities and Exchange Commission says Slatkin wasn't registered as an investment adviser, even though he was managing nearly $600 million on behalf of clients, many of them Hollywood celebrities and online executives.

R. Todd Nielson, the U.S. Bankruptcy Court trustee in the case, said it appears that Slatkin started the Ponzi scheme in 1986, using new investors' money to pay bogus returns to old investors.

The Santa Barbara money manager is a co-founder of the Internet company EarthLink, and once held a personal fortune of $122 million, most of it in EarthLink stock.

In a report filed with the court, Nielson said 75 investors -- including Coyote and Van Susteren -- invested $128 million and received $279 million in payments. But the majority of Slatkin clients lost a collective $255 million, even though they were led to believe their money had grown 20 percent to 50 percent a year, the report said.

In the Colorado lawsuit, Tuchman claims he invested "substantial monies" with Slatkin in early 2001, after assuming that Pell Rudman had acted on his instructions to check out Slatkin.

"Unbeknownst to Tuchman at the time, Pell called no references about Slatkin, conducted virtually no due diligence, and exercised no independent judgment regarding the advisability of investing with Slatkin," the complaint said.

Pell Rudman has yet to file a court answer to the complaint. But Holly Stein Sollod, the Holland & Hart attorney representing Pell Rudman, said her client "had no role in choosing the investment or duty to investigate the investment."

Tuchman had over $50 million under investment advisory services with Pell Rudman, but he made the decision to invest with Slatkin on his own, she said.

Pell Rudman, a prominent investment firm that caters to wealthy families, endowments and foundations, was acquired last August by Amvescap, the London-based parent of Denver's Invesco Funds group.

The suit also names four other Amescap affiliates as co-defendants, including Sovereign Financial Services Inc., a Denver venture capital firm.

The complaint refers to a "client services agreement" in which Pell said it would use "in-house expertise in the assessment of alternative investment and business ventures." Although the suit said Tuckman specifically asked Pell to check out Slatkin, the firm "failed to make a simple inquiry" to determine if Slatkin was registered as an investment adviser or was the subject of an SEC investigation. The SEC obtained a court order on May 11 to freeze Slatkin's assets.

Tuchman's Denver attorney is Nancy Gegenheimer at Holme Roberts & Owen. Tuchman and Gegenheimer didn't return phone calls.

Dow Jones News Service contributed to this report.


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