Reed Slatkin, a co-founder of US-based Internet service provider (ISP) EarthLink, will plead guilty to 15 charges of fraud, conspiracy and money laundering.
Slatkin has been charged with 15 felony charges, carrying a maximum penalty of 105 years in prison, for allegedly operating a massive Ponzi scheme where he took in more than $593 million (€678.2m) from around 800 people since 1986.
Slatkin admitted that he lost at least $254 million (€290.5m) of investors’ money, while sending out fictional accounts that showed an average annual gain of 24%. Slatkin then paid investors returns that were mostly made up of money raised from newer investors. If convicted, federal sentencing guidelines will probably bring down Slatkin’s sentence to between 12 ½ years and 15 years.
In a written plea agreement Slatkin – an ordained Church of Scientology minister – also admitted that he portrayed himself as a successful financial advisor. Slatkin attracted many high profile clients such as “Pearl Harbour” film producer Armyan Bernstein and Hale Milgrim, a former Capitol Records chairman. However, his only large success was a seed investment in EarthLink, which was valued at upwards of $200 million (€228m) at its peak in 1999.