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2 June – LAWFUEL – The Law News Network – The bookkeeper for a Sant…

2 June – LAWFUEL – The Law News Network – The bookkeeper for a Santa Barbara con man who ran a $600 million Ponzi scheme has been sentenced to 21 months in federal prison for obstructing a Securities and Exchange Commission investigation into Reed Slatkin’s fraudulent investment activities.

Jean Janu, 58, of Santa Fe, New Mexico, was sentenced late yesterday by United States District Judge Margaret M. Morrow in Los Angeles. Janu pleaded guilty in January 2004 to obstructing the SEC’s investigation and to misprision of a felony for concealing Slatkin’s scheme to deceive the SEC regarding the authenticity of Slatkin’s account statements.

From 1986 until May 2001, Slatkin operated a Ponzi scheme in which he solicited more than $593 million from approximately 800 investors. Slatkin, 56, of Santa Barbara, is serving a 14-year sentence after pleading guilty to eight fraud counts, six counts of money laundering and conspiracy to obstruct the SEC

Slatkin portrayed himself as a successful financial adviser and provided investors with fictitious account statements which purported to show that they were achieving, on average, approximately 24 percent annual returns on their investments. Slatkin used the bulk of investor funds to pay some investors “returns” made up primarily of funds raised from other investors. He also used investor money to purchase real estate, corporate jets, automobiles, artwork and other luxury items for his personal benefit and to pay those who assisted him.

Janu assisted Slatkin’s investment activities from her office in Santa Fe from approximately 1993 until his scheme collapsed in May 2001. Janu’s duties included preparing investor account statements and communicating with investors.

The SEC began investigating Slatkin in November 1999 and ordered him to provide the most recent account statements from all financial institutions in which he owned or controlled accounts. Slatkin sought to conceal the fact that his investment program was a massive Ponzi scheme and that his investor account statements were fabrications designed to lull and deceive investors. At Slatkin’s direction, Janu created and revised account statements and other documents to support Slatkin’s claim that he held over $500 million in securities in brokerage accounts with a fictitious entity they called “NAA Financial” of Zurich, Switzerland. Janu knew that these documents were to be submitted to the SEC.

Janu knew that Slatkin intended to convince the SEC that NAA itself, not she, had created the account statements. At Slatkin’s direction, Janu created the overall appearance of these bogus statements on her computer. Janu printed the NAA account statements on blank, European-sized stationary provided to her by Slatkin that contained NAA’s name and purported Swiss address. After Janu printed the statements, Slatkin instructed Janu to fold them into thirds to make it appear that NAA had mailed the statements from Switzerland. Slatkin then instructed Janu to erase the account statements from her computer so that the SEC would not discover that she had created the statements. Janu continued to assist Slatkin in preparing the bogus NAA statements for submission to the SEC throughout 2000.

During the SEC’s investigation, Slatkin falsely claimed that this bogus entity held hundreds of millions of dollars in investor funds. He made this false claim to delay the SEC’s investigation and to hide the fact that he was operating a massive Ponzi scheme in which he had misappropriated investor funds.

On February 16, 2000, Janu falsely testified under oath before the SEC in Los Angeles that she did not have any knowledge of any direct or indirect power held by Slatkin over any accounts in any kind of foreign financial institutions and that she had never heard the name NAA Financial.

The case against Janu is the result of an investigation conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation Division.

Previously in this case, Richard McMullin, who was Slatkin’s office assistant, pleaded guilty to conspiracy to obstruct the SEC investigation, as well as lying to federal agents and the bankruptcy trustee. McMullin was by Judge Morrow in 2003 to five months in federal prison and five months of home detention. McMullin has already paid $1.55 million in restitution to the bankruptcy trustee to be distributed to the victims.

The fourth defendant in this case, Dan Jacobs, pleaded guilty to conspiracy to obstruct the SEC investigation. Jacobs, a business associate of Slatkin, is scheduled to be sentenced on September 12.

CONTACT: Assistant United States Attorney Michael R. Wilner
(213) 894-0687

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.