2 Apr 2002

http://search.newspress.com//2002/04/02/040202slatside.htm?now=42480&tref=1

Former FBI agent in charge of finding out where all the money went

Former FBI agent R. Todd Neilson didn't mince words when he informed investors last summer that they'd been scammed.

"I can say with certainty from what I know now that you are not going to get all your money back," he bluntly told a packed conference room at Fess Parker's Doubletree Resort.

For the most part, investors' money was gone.

Reed Slatkin had duped them, and now it was Mr. Nielson's job as the bankruptcy trustee to recover as much of the missing money -- anywhere from $254 million to $890 million. While the trustee believes the amount is $254 million, many investors believe their money grew over time -- a belief based on false statements provided to them -- so their claims against Mr. Slatkin's estate could reach the $890 million figure, he said.

Mr. Slatkin, in last week's plea agreement with the U.S. Attorney's Office, admits he is guilty of 15 counts of fraud, money laundering and conspiracy. He takes responsibility for $254 million in losses.

It isn't the first time that Mr. Neilson, who has 15 years experience as a bankruptcy trustee, has had to go after missing millions. It's not the first time he has handled a bankruptcy where he went after a wealthy or crooked debtor to repay millions of dollars to their creditors.

He's operated and negotiated the sale of an extremely large and diverse array of assets, including one of the largest Ford dealerships in the nation, an interest in a professional hockey team, luxury hotels, antique art collections and real estate.

For the past 10 months, he's devoted most of his time to unraveling the Slatkin case. His team of investigators is sorting through almost 3 million documents connecting hundreds of millions lost by hundreds of investors.

"This is an extremely large and extremely complicated case which would rival any other case that I've had in size and complexity," Mr. Neilson said.

That's saying something, considering that he nailed Bruce McNall, former owner of the L.A. Kings hockey team, who served time for defrauding banks of $236 million.

Mr. Neilson supervised the accounting investigation into Mr. McNall's past activities, which included tracing more than $2.5 billion in cash and asset transfers. He also supervised a review to trace what happened to almost $727 million which was bypassed through American Continental Corp., the parent company of Charles Keating's Lincoln Savings & Loan, which collapsed in 1989. Mr. Keating was convicted of fraud but both convictions were overturned on appeal.

Closer to home, Mr. Nielson directed the accounting and litigation effort into Triad Corp., the holding company that managed the U.S. investments of Saudi Arabian billionaire Adnan Khashoggi. Mr. Neilson froze all of Mr. Khashoggi's U.S. assets and ultimately forced Mr. Khashoggi and his brother Essam to repay $32 million to creditors. Mr. Khashoggi lives in Hope Ranch.

Bankruptcy trustees perform a delicate balancing act, navigating a path between fraudulent debtors and angry, emotional creditors. The trustee has the responsibility, under court supervision and with input from various parties, to liquidate the assets of the estate. Also, he can bring legal actions that rightfully belong to the estate and to object to claims which he considers not valid and convert all assets of the estate to cash and distributing them to bona fide claimants on a pro-rata basis.

Early on, Mr. Neilson determined most of the money Mr. Slatkin handled is gone.

"I wish I could tell you there was a hidden pot of gold out there with your money, but there isn't," he told investors last year.

Mr. Neilson has already sold Mr. Slatkin's country club memberships and wine collection. He put several of Mr. Slatkin's 35 properties up for sale and is selling off some of the approximately 400 other assets that include two airplanes under construction, vehicles and 35 partnership investments.