- LOS ANGELES (Reuters) - Financier
Reed Slatkin, a key player in the creation of Internet service provider
EarthLink Inc. (Nasdaq:ELNK - news), was sentenced on Tuesday to 14 years
in prison after pleading guilty to bilking investors out of hundreds of
millions of dollars.
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- A federal court in Los Angeles also ordered Slatkin to
pay more than $240 million in restitution to clients of his fund management
business.
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- The government had asked that he be sentenced to the
minimum in a range from 11 years and three months to 14 years after defrauding
investors of nearly $600 million, but Judge Margaret Morrow chose the more
severe option.
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- "The scope of the illegal activities was immense,"
she told a courtroom packed with attorneys and victims of Slatkin. "The
havoc that the defendant has wreaked is immense, the loss is immeasurable."
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- The court heard arguments from Slatkin's lawyers pleading
mitigating circumstances that they said should factor in a reduction in
his sentence, including his cooperation with prosecutors and the resulting
indictments they have gotten against Slatkin associates.
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- They asked the judge to impose a sentence of 6 1/2 years,
which they said was fair considering the circumstances.
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- Appearing in prison garb with manacles around his hands
and waist, Slatkin asked the court for leniency, with his lawyers saying
that he had been under psychological pressure.
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- Referring to the 500 or so days he has already spent
in federal custody, Slatkin said, "Not one of these days has gone
by without (my) feeling the overwhelming responsibility for the harms I
caused these people.
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- "The future for myself is only one of isolation
and decline," he said.
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- PLEADED GUILTY ON 15 COUNTS
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- Slatkin pleaded guilty in 2002 to 15 counts, including
mail fraud, wire fraud, money laundering and conspiracy to obstruct justice.
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- Slatkin, who had a number of celebrity and high-profile
clients, had portrayed himself as a shrewd manager whose investments were
outstripping the market, but prosecutors said he was actually running a
Ponzi scheme.
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- Some of his victims recently received a distribution
of about 5 percent of their losses from the ongoing proceedings involving
Slatkin's estate, though prosecutors said they were worried some assets
were still hidden.
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- "Where are his assets? Do we have everything? That's
a major concern for both us and the (bankruptcy) trustee," prosecutor
Steven Olson said in court.
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- His attorneys blamed much of his behavior on the influence
of the Church of Scientology, of which he was a member and from where many
of his victims came.
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- "There is no question that the hold the Church had
on Mr. Slatkin was significant," lawyer Brian Sun told the court.
"It took us a while to de-program Mr. Slatkin."
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- But an attorney for the Church told Reuters that Slatkin's
claims, and those of his lawyers, were all a ruse designed to draw attention
away from his crimes.
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- "We were pleased the judge saw through it,"
said David Schindler, an attorney from the firm of Latham & Watkins
who represents the Church. "It was shameful of (Slatkin). He sold
the psychiatrists a bill of goods."
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- One of Slatkin's victims said he was happy the judge
acknowledged the severity of his frauds.
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- "I think under the circumstances, given the reality
(of the situation), we're happy the judge went higher than the government
recommended," Gregory Abbott told Reuters.
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- But another victim said closure did not come so easy.
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- "It's hard for me personally to say it's over,"
Charles Ohl said after the sentence was pronounced.
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