The largest Ponzi schemes in US history:
- Bernie Madoff: $65 billion. The largest Ponzi scheme in history. Madoff is serving 150 years in prison.
- Robert Allen Stanford: $7 billion Ponzi scheme. Stanford is serving 110 years in prison.
- Tom Petters: $3.65 billion Ponzi scheme. Petters is serving a 50 year prison sentence.
- David Gentile: $1.8 billion alleged Ponzi scheme. Gentile was arrested on February 4, 2021. Gentile today entered a plea of not guilty at his arraignment.
- Bernie Madoff: $65 billion. The largest Ponzi scheme in history. Madoff is serving 150 years in prison.
If proved, it would be one of the largest such schemes to target individual investors since the massive frauds of Bernard Madoff and Robert Allen Stanford came to light.The criminal and civil liability David Gentile and his co-conspirators Jeffry Schneider and Jeff Lash are facing at present:
* Criminal charges filed by the US Department of Justice.
* A civil lawsuit filed by the US Securities and Exchange Commission. Additionally, the SEC filed papers today to put a court-appointed monitor in place to take over GPB Capital Holdings. This is being done to protect the remaining shareholder value.
* Lawsuits to recover investor money have been filed by many US States. These State lawsuits show the focused and coordinated law enforcement actions that were taking place in the time leading up to the arrests of David Gentile and his accomplices. The US State lawsuits:
- New Jersey
- South Carolina
Other states are expected to follow.
Forbes: New York Money Manager Pleads Not Guilty In $1.8 Billion Fraud Case
Wall Street Journal: Complaints Detail Self-Dealing and Phony Transactions at GPB Capital
Bloomberg: GPB Capital Ponzi May Put $1.7 Billion at Risk, U.S. Says
Reuters: NY money manager pleads not guilty to $1.8 billion Ponzi-like fraud
Tampa Bay Times: GPB Capital CEO with Clearwater ties arrested in $1.8 billion fraud
SCIENTOLOGIST REED SLATKIN & HIS 1990’s $593 MILLION DOLLAR PONZI SCHEME
Reed Slatkin (1949-2015) was a Scientologist whose $593 million 1990’s Ponzi scheme was, at the time, the largest Ponzi scheme in US history. Slatkin perpetrated his Ponzi scheme over a period of fifteen years from 1986 to 2001. In what began as an affinity fraud, many of Slatkin’s initial victims were his fellow Scientologists including celebrities Greta Van Susteren, Anne Archer, and Giovanni Ribisi.
David Gentile’s $1.8 billion Ponzi scheme has vastly eclipsed Reed Slatkin’s Ponzi scheme. Moreover, the Church of Scientology is now part of a notorious historical record: Two of its members were the central figures in two of the largest Ponzi schemes in American history. This serves as a damning indictment of the permissive attitude towards financial criminality inside of the nefarious “Cult of Greed and Power” as Time magazine described Scientology.
We ask this question: Why were Scientologists Reed Slatkin and David Gentile allowed to remain in good standing within the Church of Scientology even while the Church knew these two individuals were engaging in felonious criminal conduct?
Scientologists had been turning in Knowledge Reports on Slatkin for years before his arrest. These KR’s were ignored because Slatkin and the Scientologist beneficiaries of his fraud donated tens of millions of dollars of criminally-obtained proceeds to the Church and its various front groups.
To the best of our knowledge, David Gentile remains a Scientologist in good standing and has not been declared even after his arrest by the FBI; the flood of Federal and State lawsuits against him; and the torrent of global media stories on GPB Capital Holdings as a Ponzi scheme.
Is the Church of Scientology protecting David Gentile because it cannot afford to declare him an SP and cut him loose? David Gentile’s actions have clearly violated numerous points of KSW which outline “High Crimes.” Gentile’s conduct would seem to demand an immediate SP Declare. Where is COB RTC David Miscavige? His duty is to protect the Church of Scientology. There are glaring inconsistencies in this situation. Is there a cover up?
Added together, the crimes of Slatkin and Gentile total $2.4 billion in money stolen by means of swindling innocent people, including many elderly people whose were conned out of their life savings by these two Scientologist con artists. Scientology has allowed the white collar criminals in its midst to go unreported and unpunished so long as the Church gets its cut.
Who was Reed Slatkin and how did he create and engage in his Ponzi scheme? We discuss this in the next section. We also include the American Greed episode on Reed Slatkin which aired over 20 years ago.
Scientology: Reed Slatkin’s $593 Million Dollar Ponzi Scheme – Part 1 of 3
Reed Slatkin had absolutely no training or credentials as an investment advisor or securities broker. Rather, in 1974 Reed Slatkin was 25 years old when he joined the Church of Scientology. He became a staff member at the Celebrity Centre in Hollywood, California. There, Slatkin trained other Scientologists.
Slatkin’s pathetic weekly pay as a Scientology staff member would not allow him to support himself let alone his family. He therefore left staff, moved to Santa Barbara, and began to work in the investment world. His mentor was his fellow Scientologist Bob Duggan who taught him the basic principles of investing.
In 1986 Slatkin created and operated an informal “investment club” wherein investors entrusted him to take care of the money they invested with him. Most of Slatkin’s early investors were his fellow Scientologists. Slatkin plodded along for many years with results that were impressive enough for him to solicit even more of his fellow Scientologists for money.
Slatkin soon had seven million dollars under management. Slatkin used this money to buy and sell stocks. In the quarterly statements he mailed out, Slatkin fraudulently represented returns to his investors as being 25%. This in turn brought in more investors.
In typical Ponzi scheme style, Slatkin was paying his early investors with the money from new investors. Lightning struck for Slatkin in 1993 when he made a $75,000 investment in a tech startup named EarthLink.
Reed Slatkin got lucky with the $75,000 he put into EarthLink. After that, however, he made incredibly bad investments with the money he collected from his victims. Slatkin had no coherent strategy and his portfolio was scattered across real estate, investment partnerships, and risky securities.
Scientology: Reed Slatkin’s $593 Million Dollar Ponzi Scheme – Part 3 of 3
Slatkin even invested in one of the worst high risk investments possible for amateurs and that is Hollywood film and production companies. Slatkin had no experience in the cutthroat world of investing in Hollywood. However, Slatkin’s partner Ron Rakow had at one time managed the Grateful Dead and perhaps this influenced Slatkin. Later, when Slatkin’s Ponzi scheme was falling apart, the FBI raided Rakow’s home in 2001. The news emerged that Rakow was a fellow Scientologist with a criminal past:
In late June, the FBI also raided Ron Rakow’s house. Rakow turned out to be more than just Slatkin’s concerned neighbor. A onetime manager of the Grateful Dead, Rakow was a Scientologist and sometime art dealer who had gone to federal prison for mail fraud in connection with a cosmetics scam in 1985. According to someone close to him, Slatkin told associates that he had driven Rakow to prison in 1987, weeping all the way.Rakow seems to have never given up his life of crime. From the Wikipedia page on Ron Rakow:
Ronald Leon Rakow or Ron Rakow was the head of now defunct Grateful Dead Records and manager of The Grateful Dead. Rakow allegedly embezzled $225,000 from the band. When confronted by band members Phil Lesh and Jerry Garcia, Rakow allegedly told them to go “fuck themselves”; he had cut himself a check for “what he was owed” and then left.[ On April 11, 2007, Rakow was sentenced to five years in federal prison for tax evasion of $2.2 million since 1985. On December 1, 2011, Rakow was released from prison.Like all con artists, Slatkin used the money he swindled from his victims to finance a lavish lifestyle for himself and his family. Private jet travel, luxury vacations, expensive cars, an art collection, jewelry, exclusive country club memberships, and donations to charities allowed Slatkin to present himself to his fellow Scientologists and his community as a sterling example of success and philanthropy.
Slatkin’s prestige in wealthy Santa Barbara grew to immense proportions. Slatkin also donated significant sums of money to the Church of Scientology as did his clients who were Scientologists. As wealth is valued above all things in Scientology, Slatkin was used in Scientology PR to exemplify the ideal Scientologist.
Slatkin was criminally charged and cooperated with the authorities. According to a US Department of Justice Report:
[Reed Slatkin] misappropriated over $230 million, defrauded more than 500 investors, concealed $90 million in accounts, and commingled investor funds with personal funds. Criminal charges were later filed against Slatkin, and he pleaded guilty to 15 counts of mail fraud, wire fraud, money laundering, and conspiracy to obstruct justice in connection with an investigation by the Securities and Exchange Commission.Slatkin filed for bankruptcy due the collapse of his Ponzi scheme and the criminal charges against him. In 2001 the bankruptcy trustee wrote of Slatkin:
While the underlying issues in the Slatkin bankruptcy case are primarily economic, not religious, it would be difficult to imagine a more dominant force in the life of Slatkin than Scientology. It would be fair to say that Scientology permeated almost every aspect of his life.We think the same is true of David Gentile: Scientology permeates and dominates every aspect of his life. Indeed, several Scientologists work, or have worked for, David Gentile. These Scientologist most notably include former GPB senior executive Manuel Vianna who disappeared off the radar after the FBI raid on GPB Capital’s headquarters in February 2019. Former Scientology Sea Org members Brian Marshall and Dustin Muscato work for GPB Capital at present according to their LinkedIn pages.
The key difference between Slatkin and Gentile is that Gentile operated a much bigger Ponzi scheme and has ties to Michael Cherney’s Russian Izmaylovskaya crime family as has been documented. Gentile further appears to have ties to the Mafia through GPB Capital’s Five Star Waste Management component. Located in New York City, Five Star’s headquarters was also raided by the FBI. GPB Capital sold Five Star sometime after the FBI raid.
In September 2003 following trial, Slatkin was sentenced to fourteen years in prison. The authorities used the US law to claw back money from those who had benefited from Slatkin’s Ponzi scheme — and this included the Church of Scientology. As reported by the LA Times in 2003:
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. The investors won an initial battle when a bankruptcy judge in Santa Barbara recently refused to block subpoenas ordering the Scientology groups to hand over records of money transferred to them by certain Slatkin investors who came out ahead financially.The Church of Scientology and its affiliated groups fought tooth and nail and refused to give back any of their ill-gotten gains. After spending a fortune on lawyers fighting the Trustee and the bankruptcy court, Scientology agreed to disgorge $3.5 million, a pathetic amount given what the Church had raked in on Slatkin’s scam. As reported by the Los Angeles Times in November 2006:
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… Slatkin, whose clients included actor Peter Coyote and television legal commentator Greta Van Susteren, paid $1.7 million in ill-gotten gains directly to Scientology organizations, bankruptcy trustee R. Todd Neilson said in court filings. Millions of dollars more in tainted funds were funneled through other investors to Scientology-affiliated groups, including Narconon International, the Church of Scientology Celebrity Centre International and the Church of Scientology Western United States, the filings said.
Reed Slatkin served ten years of his sentence and was released in 2013. He thereafter stayed in hiding. This was likely due to his fear of reprisal from the many people he had destroyed financially by his crimes.
Reed Slatkin died of a heart attack in June 2015 at age 66. The only real winner in Reed Slatkin’s Ponzi scheme was the Church of Scientology which fought a legal battle to keep virtually all of the money it had gained from Slatkin’s fraud. Always a tawdry and extreme hypocrite, the Church of Scientology kept the money Slatkin stole from his victims even as it expelled Slatkin for not living up to its “high moral standards.”
Historical information: The Reed Slatkin Media ResourceBelow: The 2001 Trustee’s Report to the Court on Reed Slatkin presents an overview of what had been discovered up to that point about Reed Slatkin’s Ponzi scheme.
Categories: The Scientology Money Project