EarthLink co-founder pleads guilty to fraud

Reed Slatkin, an investor who co-founded Internet Service Provider [ISP] EarthLink, has agreed to plead guilty to 15 federal charges, published reports said. Slatkin could face up to 105 years in jail but is expected to be sentenced to between 12 and 15 years.

Slatkin was charged with five counts of mail fraud, three counts of wire fraud, six counts of money laundering and one count of conspiracy to obstruct justice during an investigation being conducted by the U.S. Securities and Exchange Commission. Federal prosecutors said he orchestrated a Ponzi scheme in which he solicited more than $593 million for 800 investors.

Slatkin resigned from EarthLink’s board last spring, and his assets were frozen. He has filed for Chapter 11 bankruptcy protection and is being sued by the victim investors, published reports added. The guilty plea does not impact EarthLink, said a corporate spokesman.

“What’s happened to Reed is outside the purview of EarthLink,” the spokesman said, noting that investor suits are aimed at Slatkin, not EarthLink. “These are funds that are outside of EarthLink’s funds; no financial impact on EarthLink whatsoever.”

Even as an EarthLink board member, Slatkin “did not have any day-to-day responsibilities. No monies were involved that were EarthLink-related,” the spokesman added.

The spokesman even took umbrage at Slatkin being called an EarthLink co-founder.

“He’s listed as a co-founder in original documents, but truth be told, his real position was that he put up some early investment dollars in the company,” the spokesman said.