Fraud Alleged.A group of investors have filed lawsuits accusing EarthLink Inc. co-founder Reed E. Slatkin of defrauding them of more than $35 million in what was described as a Ponzi scheme A fraudulent investment plan in which the investments of later investors are used to pay earlier investors, giving the appearance that the investments of the initial participants dramatically increase in value in a short amount of time. . Slatkin, who is also being investigated by the Securities and Exchange Commission for his financial activities, resigned from EarthLink's board of directors earlier this month. His lawyer said Slatkin intended to file for Chapter 11 bankruptcy protection. About 80 individuals, who together invested more than $250 million, attended a meeting last week at the Santa Monica Santa Monica (săn`tə mŏn`ĭkə), city (1990 pop. 86,905), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1886. Tourism and retailing are important, and the city has motion-picture, biotechnology, and software industries. offices of Slatkin's securities lawyer, Gerald E. Boltz Many of the individuals are members of the Church of Scientology Church of Scientology: see Scientology, Church of. , to which Slatkin belongs. The investors who have sued Slatkin allege that he used funds collected from new investors to pay returns to older investors, a form of fraud commonly known as a Ponzi scheme. Last month, one investor won a court order to freeze Slatkin's brokerage accounts and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. , including a ranch home in Santa Barbara Santa Barbara (săn'tə bär`brə, –bərə), city (1990 pop. 85,571), seat of Santa Barbara co., S Calif., on the Pacific Ocean; inc. 1850. . A lawyer representing the Scientology investors declined to say whether his clients intend to sue Slatkin as well. |
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