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Slatkin Associate Agrees to Guilty Plea

October 23, 2002|From Associated Press

A business associate of EarthLink Inc. co-founder Reed Slatkin has agreed to plead guilty in an elaborate scheme to obstruct the Securities and Exchange Commission's investigation of Slatkin.

Daniel Jacobs will plead guilty to conspiracy to obstruct justice when he is arraigned next month, the SEC and the U.S. attorney's office in Los Angeles said Tuesday.

Slatkin, 53, who also served as a financial advisor to celebrities, business executives and socialites, pleaded guilty in April to five counts of mail fraud, three counts of wire fraud, six counts of money laundering and one count of conspiracy to obstruct justice.

In his plea agreement, Jacobs, 60, acknowledged that when the SEC began its investigation of Slatkin in 1999, he and others provided the SEC with false documents on NAA Financial, a bogus Swiss brokerage firm in which Slatkin claimed he was holding investors' funds.

Instead, Slatkin was using money collected from new investors to pay older investors while claiming he was delivering above-average returns.

Jacobs has admitted that during the investigation, he set up phony European phone numbers for NAA Financial, bought European-style letterhead stationery for Slatkin and altered a fax machine at his home so recipients would think faxes were coming from a European phone number.

Jacobs also fabricated bank records and correspondence to convince the SEC that Slatkin had transferred more than $400 million into the phony Swiss bank account.

In return, Slatkin paid Jacobs $1 million and some gold coins, the SEC said.

The plea agreement could bring a sentence of about one year in prison and a maximum fine of $250,000. Jacobs also may be required to pay back the $1 million in fees he received.

Jacobs has agreed to cooperate with an ongoing investigation, federal prosecutors said.

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