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Earthlink co-founder charged with fraud, money laundering

LOS ANGELES, California (CNN) -- Reed Slatkin, one of the co-founders of Internet service provider Earthlink, has agreed to plead guilty to 15 felony counts connected to a scheme that bilked hundreds of investors out of hundreds of millions of dollars. The charges were filed in federal court Tuesday.

The U.S. Attorney for the Central District of California said Slatkin orchestrated "a massive Ponzi scheme in which he solicited more than $593 million from approximately 800 investors over a 15-year period."

According to the U.S. Attorney's office, Slatkin agreed to plead guilty and acknowledged that he is responsible for at least $254 million in losses resulting from the scam. Slatkin, 53, was named in a criminal information that accuses him of five counts of mail fraud, three counts of wire fraud, six counts of money laundering and one count of conspiracy to obstruct justice.

In a statement of facts in his plea agreement, Slatkin admits that he portrayed himself as a successful financial planner, providing victims with false account statements that showed fabricated returns. According to the plea, Slatkin admitted that he used the bulk of investor funds to operate a Ponzi scheme in which he paid investor returns with funds raised from other investors.

Slatkin, who resides in Santa Barbara, California, will be arraigned on the charges in U.S. District Court in Los Angeles sometime next month. The charges carry a maximum possible penalty of 105 years in federal prison and fines up to $3.75 million.




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