Slatkin Half a Billion Short, Court Trustee’s Report Says

Fallen money manager Reed E. Slatkin owes investors and other creditors $576 million but apparently has assets of less than $45 million, according to a report filed by a court-appointed trustee in Santa Barbara this week.

The first official accounting of Slatkin’s finances is probably incomplete because the unregistered money manager cooperated only intermittently in identifying his assets and debts, trustee R. Todd Neilson, a forensic accountant, said in the report.

Neilson’s report was in line with earlier estimates by bankruptcy officials of how much money Slatkin owed investors. Bankruptcy officials believe Slatkin managed money on behalf of as many as 850 investors, including Hollywood celebrities, Internet executives and socialites from around the country. Slatkin is under criminal investigation for investment fraud.

According to the trustee’s reports, Slatkin’s assets include more than $12 million in loans made to some of his investors and associates, including $835,200 to fellow EarthLink co-founder Kevin O’Donnell, $1 million to investor Anthony Podell and $1.1 million to Santa Barbara resident Denise Del Bianco.

In the three months before he filed for bankruptcy, Slatkin paid out more than $26 million to investors, creditors and vendors--including $3 million to his own relatives, according to the report.

Slatkin also donated more than $200,000 to various Scientology causes in the year before his bankruptcy. He also gave $257,000 to Santa Barbara charities, including $224,000 to the Santa Barbara Bowl Foundation, which raises funds for a local entertainment venue.

Neilson said Slatkin did not file a tax return for 2000, but his 1999 return showed income of $29.1 million, including $12.7 million of taxable investment gains.

Slatkin is scheduled to face his creditors for the first time at a Bankruptcy Court hearing Monday in Santa Barbara.

Slatkin’s attorneys and a creditors’ committee had said they had identified about $30 million of assets, including brokerage accounts and his home in Santa Barbara’s pricey Hope Ranch area. Neilson identified dozens of limited partnerships and other ventures that Slatkin invested in, but said the value of those assets is still unknown.