The Ponzi Scheme Blog: As Many Ponzi Schemers Go Into Prison, One Comes Out

Kathy Bazoian Phelps
Senior Counsel in Ponzi Scheme Litigation
and Bankruptcy Matters

Kathy is a senior business trial attorney with more than 30 years experience prosecuting and defending claims for high net worth clients involved in Ponzi scheme matters and in bankruptcy proceedings. Kathy’s practice includes recovering assets for clients in complex fraud cases under standard fee and alternative fee arrangements. She also handles SEC and CFTC whistleblower claims. Kathy also serves as a mediator in bankruptcy matters, in complex business disputes, and in matters requiring detailed knowledge about fraud or Ponzi schemes.

Kathy’s Clients in Ponzi Scheme Cases and Bankruptcy Matters
Equity Receivers
Bankruptcy Trustees
High Net Worth Investors
Whistleblowers
Debtors in Bankruptcy
Secured and Unsecured Creditors

Friday, July 12, 2013

As Many Ponzi Schemers Go Into Prison, One Comes Out

Posted by Kathy Bazoian Phelps

Reed Slatkin is 64. And he is now free, after having served his 10 year prison sentence. Slatkin had pleaded guilty to charges relating to his $600 million Ponzi scheme that defrauded 800 investors. In one of the early and more notorious Ponzi schemes of this generation, Slatkin defrauded Hollywood celebrities and fellow Scientology members. He returned money to only select investors, many of which were his friends in Scientology.

Out of the financial and emotional wreckage caused by the Slatkin Ponzi scheme came some significant law, including a Ninth Circuit decision holding that a criminal guilty plea can be used as conclusive evidence of fraudulent intent for purposes of proving an actual fraudulent transfer claim. Johnson v. Neilson (In re Slatkin), 525 F.3d 808 (9th Cir. 2008).

Since many Ponzi schemers are sentenced these days to what is effectively a life sentence (e.g. Bernard Madoff for 150 years; Allan Stanford for 110 years), it will be interesting to see what this Ponzi schemer does with his life on the other side.

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Kathy has significant experience with the issues arising in Ponzi scheme cases, and in tracing and recovering assets in complex fraud cases. She has represented all types of parties in Ponzi scheme cases, including investors, defendants in litigation, trustees, and receivers. She has extensive litigation experience in a wide variety of bankruptcy litigation matters, representing operating and liquidating trustees, debtors, and secured and unsecured creditors. Kathy also serves as a mediator in bankruptcy matters, in other complex disputes, and in other matters requiring an expert on fraud or Ponzi schemes.

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