Reed E Slatkin

Groups affiliated with the Church of Scientology have agreed to pay back $3.5 million they received from former Santa Barbara money manager Reed Slatkin and others who invested with him. The settlement, approved Tuesday by a federal bankruptcy judge, is part of final efforts to recover funds for the victims of Slatkin, who is serving a 14-year sentence for fraud, conspiracy and money laundering.

A former Southern California business consultant received a four-month prison sentence for conspiring to obstruct a Securities and Exchange Commission investigation of financial advisor Reed E. Slatkin's $593-million investment scam, federal prosecutors said Tuesday. Daniel W. Jacobs helped stall the SEC for more than a year by pretending to represent a Swiss brokerage holding hundreds of millions of dollars in funds from Slatkin investors, according to his plea agreement with the government.

Reed Slatkin's former bankers have agreed to pay $26.5 million to settle a lawsuit contending that they helped him appear to be a legitimate investment advisor while he ran a $593-million Ponzi scheme, attorneys in the case said Monday. The recovery would be by far the largest yet for investors in what Slatkin, a co-founder of EarthLink Inc., has admitted was a fraud that began in the mid-1980s and was unmasked in 2001.

Federal prosecutors announced tax-evasion charges Tuesday against former Grateful Dead road manager Ronald L. Rakow and his girlfriend in connection with a scheme to conceal Rakow's income, much of which he earned working for convicted Ponzi scheme operator Reed Slatkin. Assistant U.S. Atty. Michael R. Wilner said Rakow diverted $5.2 million that he received from Slatkin and other sources to his girlfriend, Denise Del Bianco, from 1998 through 2001.

A U.S. District Court judge in Los Angeles approved a $26.5-million settlement of an investors' lawsuit that accused Reed Slatkin's former bankers of lending an aura of legitimacy to the Santa Barbara money manager while he ran a huge fraud. Judge Margaret Morrow, who sentenced Slatkin last year to 14 years in prison, said the settlement was reasonable. It was reached in September with Union Bank of California, Bank of Orange County, Imperial Management Inc.

UnionBanCal Corp. must face claims by six investors in Reed Slatkin's Ponzi scheme who claim that California's third-largest bank conspired to conceal the EarthLink Inc. co-founder's fraud. UnionBanCal will have to go to trial on three of four claims over Slatkin's scheme, including aiding and abetting a breach of fiduciary duty and conspiracy to commit fraud, U.S. District Judge Margaret Morrow ruled.

Investors who saw more than $225 million evaporate when Earthlink Inc. co-founder Reed E. Slatkin's long-running fraud collapsed won a court round Friday in their efforts to recover funds from the relatively few Slatkin investors who profited -- a group including celebrities such as actor Peter Coyote and former supermodel Cheryl Tiegs.

Investors defrauded of $255 million by EarthLink Inc. co-founder Reed Slatkin are hoping to recover funds from the Church of Scientology International and six affiliated organizations that allegedly wound up with tens of millions of dollars from the investment scam, their attorneys said Tuesday.

An associate of Earthlink Inc. co-founder Reed Slatkin agreed to plead guilty to obstructing a Securities and Exchange Commission inquiry into a $593-million fraud scheme, prosecutors said. Richard McMullin, 38, will admit to making false statements to the FBI and the bankruptcy trustee for the Slatkin estate. Slatkin, 54, pleaded guilty last year to orchestrating a Ponzi scheme that solicited $593 million from almost 800 investors. He could face up to 105 years in prison and fines of $3.

During more than 15 years of fraud that cost his investors $240 million, Reed E. Slatkin seemed as much trusted friend as money manager. He schmoozed clients with tips on how to landscape their estates, attended funerals of their family members and all the while offered assurances that he would protect their college and retirement funds. His victims have asked to tell some of those stories today at Slatkin's sentencing hearing in Los Angeles, hoping to persuade U.S. District Judge Margaret M.