FILED AUG 23, 2002
JOHN P. REITMAN (Bar No 80579) ANDREW S. ROTTER (Bar No 86725) GUMPORT, REITMAN & MONTGOMERY 550 South Hope Street Suite 825 Los Angeles, California 90071-2627 Telephone: (213) 452-4900 Facsimile: (213) 623 3302
Attorneys for R. Todd Neilson, Chapter 11 Trustee
RICHARD L. WYNNE (Bar No. 120349) R. ALEXANDER PILMER (Bar No. 166196) TIMOTHY B. JAFEK (Bar No. 214066) Kirkland & Elias 777 S. Figueroa Street Los Angeles, California 90017 Telephone: (213) 680- 8400 Facsimile: (213) 680 8500
Special Litigation Counsel for R Todd Neilson, Chapter 11 Trustee
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
NORTHERN DIVISION
In re ) CASE NO.ND 01-11549-RR/ REED E. SLATKIN ) AD 02-01111 ) Debtor ) CHAPTER 11 ) ______________________________ ) ) R. TODD NEILSON, Trustee of the ) DECLARATION OF REED E.
Chapter 11 bankruptcy Estate of ) SLATKIN IN SUPPORT OF Reed E. Slatkin, ) THE TRUSTEE'S EX PARTE ) APPLICATION FOR A ) RIGHT TO ATTACH ORDER Plaintiff, ) AND ORDER FOR ) ISSUANCE OF WRIT ) ATTACHMENT ) ANTHONY and MARGARET ) HITCHMAN, individuals; and Does ) Date: [To be set by Court on 1-50 ) emergency basis] ) Defendants ) Time:
) Place: 1415 State Street ) Courtroom 201 ) Santa Barbara, CA 93101 ) [Judge Riblet]
DECL. OF R. SLATKIN IN SCPP OF TRUSTEE'S EX PART APPLICATION FOR A
RTAO
Exhibit I
I, Reed E. Slatkin, hereby declare:
1. I make this declaration in support of the Trustee's ex parte
application for a right to attach order. I have personal knowledge of
the facts set forth in this declaration and, if called as a witness, I
could and would competently testify thereto.
Mr. Hitchman's Early Involvement with Slatkin's Ponzi Scheme
2. I have known Anthony Hitchman since the mid- 1970's. I met him in the Los Angeles area when we were both involved in the Church of Scientology ("Church").
3. In about 1984, I began soliciting money from others ostensibly to invest for them. I intended to run this "investment" scheme so that fellow members of the Church could have funds available to purchase services from the Church. I planned to take money from people, invest it, and have money available for the withdrawal for Scientologists who needed money for Church services.
4. When I knew that many investments would not cover the withdrawals which were requested, I began to cover the withdrawal requests with funds from new "investors."
5. From the very beginning, I depended on Mr. Hitchman to ensure the viability of my scheme. He, along with a few others, was to bring other, "investors" to me, thus providing a flow of new money which could be used to pay withdrawal requests made by other "investors."
6. Mr. Hitchman was aware of my Ponzi scheme from the beginning and helped me plan and execute it. In about 1985, we discussed my scheme.
We discussed that I would need to cover withdrawals of old "investors" with the deposits of new "investors."
7. We discussed the fact that I falsified records. I told "investors"
that funds were invested in certain securities when that was not true.
I told Mr. Hitchman that the statements I sent to my "investors" were false.
8. We also discussed how Mr. Hitchman would bring new "investors" to me. We agreed that he would promote me to others as an effective investor. WE also agreed that if Mr. Hitchman had his own money with me, it would make it easier for him to convince other people to "invest with me. That way, he could assure people that he also had money "at risk" with me.
9. In Exchange for Mr. Hitchman's assistance to establish and ensure the continued viability of my Ponzi scheme, I agreed to pay him on a regular basis. In 1986, I paid Mr. Hitchman about $6000 a month. By 1988, I was paying Mr. Hitchman about $10,000 a month. My payments to him quickly exceeded the money he "deposited" into my scheme. By no later than mid-1988, I had paid out to him more than he has "deposited." By 1993, I paid Mr. Hitchman about $15,000 a month. By 1999, I paid Mr. Hitchman about $20,000 a month.
10. Attached as Exhibit 1 are accurate copies of requests by Mr.
Hitchman to me for monthly payments during 1999, 2000, and 2001. Most of the requests are for amounts over and above the normal monthly payments. Each of the documents was received from Mr. Hitchman or his wife, Margaret (aka Peggy). I recognize their handwriting because I have received many handwritten and/or signed documents from them over a period of more than twenty years. I received the requests by fax from the fax number Mr. Hitchman uses to send faxes.
11. Mr. Hitchman reported to me on a regular basis as to what he was doing to try to get new "investors" into my scheme and also what he was doing to get old "investors" to contribute new money.
12. Mr. Hitchman acted as an ambassador for me in connection with those people he helped convince to give money to me. For example, he helped deal with people who had concerns about investing with me. Mr.
Hitchman also spoke with persons who were upset with me because of delays in receiving a withdrawal or if a person needed some extra money for the Church. On several occasions, I asked Mr. Hitchman to talk to people out of attempting to withdraw money. Mr. Hitchman reported back to me that he successfully achieved that goal.
-Mr. Hitchman's Assistance in Dealing with Falsified Brokerage
Statements in 1987-
13. Mr. Hitchman also helped me with problems created when I was caught falsifying investment records in 1987. In order to join with an investment firm, Statistical Sciences, Inc. ("SSI"), I created false brokerage records to document a "successful" history of trading securities. The principals of SSI discovered that I had falsified the records and we had a falling out. I consulted MR. Hitchman about how to handle the issue and I told him that I had falsified the brokerage records.
14. Mr. Hitchman helped me deal with the fallout of falsifying the brokerage records in two ways. First, he communicated with Richard Levine, who joined SSI together with me. Mr. Hitchman calmed Mr.
Levine down for me. Second, Mr. Hitchman used his high status in the Church to mollify Church officials and convince them not to investigate me despite reports to them that I falsified the brokerage records.
-Mr. Hitchman's Knowledge of Falsification of Financial Records-
15. Over the years of my investing scheme, I constantly falsified records I sent to my "investors." I discussed this with Mr. Hitchman indirectly dozens of times and directly between five and ten times.
For example, Mr. Hitchman asked me "how are we doing this month" or "how are we doing this quarter." Then he asked if I was making up the numbers I was sending out to "investors." I told him I was.
16. Following such conversations, Mr. Hitchman often asked for an extra $20,000 or $30,000 to his monthly payoff.
17. I also gave MR. Hitchman a check for a new car.
-Mr. Hitchman's Request for False Financial Records-
18. Mr. Hitchman regularly requested that I provide for him false financial records. He told me that he was taking false deductions for the purpose of his tax returns. He requested that I provide false financial records to back up those deductions and I did so.
19. Attached as Exhibit 2 are accurate copies of "interest expense"
statements I made at the request of Mr. Hitchman. These false financial statements supposedly reflect interest on a margin account MR. Hitchman supposedly had with me. In fact, Mr. Hitchman never had any such margin account with me. Instead, Mr. Hitchman and I created the idea of a margin account as a methodology for generating false interest expenses that MR. Hitchman could claim as a deduction on his tax returns. Mr. Hitchman told me that he would use, and did use, the false financial statements for his tax returns.
20. Mr. Hitchman also told me that he did not report all of his income on his income tax returns. The last time he told me that was the last time I worked with him on his taxes, which was 1999 or 2000.
-Mr. Hitchman's Actions During the SEC Investigations-
21. I also told Mr. Hitchman about the Security and Exchange Commission ("SEC") investigations of me in 1997 and 1999.
22. When I received notice in 1997 of the SEC investigation, I immediately went to Mr. Hitchman and told him of concerns that the SEC might find out that I was falsifying records. Mr.
Hitchman worked with me to respond to that investigation to make sure nothing come of the investigation.
23. When I received notice of the SEC investigation in 1 1999, I also immediately informed MR. Hitchman. I told him that I was concerned that the SEC would discover that I was running a Ponzi scheme. Mr.
Hitchman was very alarmed. He said that it sounded bad and that we had to handle the situation. He also implied that he might get caught up in the SEC investigation.
24. I discussed with Mr. Hitchman the progress of the SEC investigation form October 1999 until May 2001, when I filed bankruptcy.
25. In the late spring or summer of 2000, I discussed with Mr.
Hitchman the false account statements from "NAA Financial" ("NAA") that I presented to the SEC and the attorney who represented me to the SEC as supposed proof of overseas assets. NAA was supposedly a Swiss financial institution that held hundreds of millions of dollars of assets I held for my "investors." But I made up the NAA story and supported it with false account statements, persons posing as NAA officials, etc.
26. I discussed the fabricated NAA statements with Mr. Hitchman. I
told him the NAA story was false and that I did not have any money in
Europe. When I told Mr. Hitchman about the NAA story, he laughed and
said, "Are you kidding me? They're not going to buy that.."
27. Mr. Hitchman asked me for an update every week or every two weeks
through the latter part of 2000 on how the SEC investigation was
progressing. In answer to his inquiries, I showed him the false
account statements from UBS, which was supposedly receiving my NAA
assets, and fabricated correspondence from UBS, NAA and RIT, another
fictional European financial institution that supposedly held my
assets. When I showed him these false documents, he laughed and said
"This is amazing."
28. During the time the SEC was investigating me from 1999 to 2001, I
often had conversations with Mr. Hitchman about my payments to him.
Countless times he said to me "You're going to take care of me. You're making sure money's set aside for me."
29. In March and April 2001, Mr. Hitchman even demanded that I sign a
letter stating that I held 200,000 Earthlink shares at a cost basis of
50.33 a share in trust for Mr. Hitchman, his wife, Peggy, and his
children. He also asked me to confirm their ownership and sell the
shares "since I would not want my shares to be incorrectly included in
your assets should you declare bankruptcy." (Ex. 4 at 2803-2015959) I
have attached as Exhibit 3 accurate copies of the faxes Mr. Hitchman
sent me regarding the Earthlink stock. I recognize Mr. Hitchman's
handwriting because of the many times that I have seen his handwriting
over the course of our relationship of over twenty years. Furthermore,
the faxes were sent from the fax machine he used at the time.
30. I never had any agreement with Mr. Hitchman that I was holding Earthlink stock for him. I did sign page 2803-2015928 of Exhibit 3. I did this under duress when I was locked in a room in Mr. Hitchman's house on March 31, 2001. Mr. Hitchman, along with Jack Dirmann, another high-ranking member of the Church, physically restrained me and demanded that I sign the page. They threatened that they would not let me leave until I had signed that piece of paper. Mr. Hitchman told Mr. Dirmann in my presence that I had been engaged in a fraud, and both Mr. Hitchman and Mr. Dirmann were demanding that I give them money.
31. By April 23, 2001, when Mr. Hitchman sent me the letter about the 200,000 Earthlink shares (Ex. 4 at 2803-2015919), I had told him that I would probably file for bankruptcy.
-Indictment and Plea Agreement-
32. In 2002, I was indicted for activities in furtherance of my Ponzi scheme. On March 26., 2002, I signed a plea agreement in which I agreed to plead guilty to 15 felony counts. I admitted to having operated a Ponzi scheme since 1986. A copy of that plea agreement is attached as Exhibit 4.
-Authenticity of Financial Documents-
33. I have reviewed the documents attached as Exhibit 4 to the declaration of Grant Newton in support of the Trustee's motion for an ex parte application for a right to attach order. All of the documents in that exhibit are records used in the normal course of my scheme and are accurate copies.
34. The following documents are accurate copies of checks, or records of checks, payable to Mr. Hitchman and/or his wife on their behalf: 1-7, 10,11, 13, 15-24, 26-40, 42-55, 74, 76-130, 132-139, 157, 161, 172, 189-202, 204-214, 216, 230 and 232-248. The checks, or records of checks, were issued to Mr. Hitchman as part of the Ponzi scheme, were in my possession as part of the records I kept to document my financial activities, and were completed and signed by me or were completed and signed by someone in my office acting at my direction.
35. Most of the checks were completed and signed by me. The others were completed and signed at my direction by Phyllis Rogers, my bookkeeper.
36. The following documents are accurate copies of wire transfer confirmations from me to Mr. Hitchman: 9, 41, 131, 140-156, 158-160, 162-171, 173-188 and 215. The wire transfer confirmations show payments made to Mr. Hitchman as part of the Ponzi scheme, were in my possession as part of the records I kept to document my financial activities and confirmed wire transfers that I had requested be made to Mr. Hitchman.
37. The following document is an accurate copy of a wire transfer confirmation for a wire to Designframe Ltd. made on behalf of Mr.
Hitchman: 231. The wire transfer confirmation shows a payment made on behalf of Mr. Hitchman as part of the Ponzi scheme, was in my possession as part of the records I kept to document my financial activities and confirmed a wire transfer that I had requested be made on behalf of Mr. Hitchman.
38. The following documents are accurate copies of checks from Mr.
Hitchman payable to me: 8, 25, and 203. The payments were made to me as part of the Ponzi scheme and were in my possession as part of the records I kept to document my financial activities.
39, The following documents are accurate copies of account statements and handwritten ledger entries showing payments made to me from Mr. Hitchman: 12 and 14, The account statements and handwritten ledger entries document payments made to me as part of the Ponzi scheme and were in my possession as part of the records I kept to document my financial activities.
40. The following documents are accurate copies of a ledger showing payments made by me to Mr. Hitchman or to others on behalf of Mr. Hitchman: 56-73 and 75. The ledgers document payments made to me as part of the Ponzi scheme and were in my possession as part of the records I kept to document my financial activities.
41, The following document is an accurate copy of a check payable to me for the Hitchman Family Trust: 249. The check documents a payment made to me as part of the Ponzi scheme and was in my possession as part of the records I kept to document my financial activities.
-Mr. Hitchman's Son in England-
42. Mr Hitchman has a son in England, Paul Hitchman. In early 2000, I sent money to Paul Hitchman in England at the urging of Mr.
Hitchman.
43. Attached as Exhibit 5 are accurate copies of emails and fax messages I received from Paul Hitchman regarding his company in England. The documents were received in the regular course of operating my scheme, were made at or near the time the payment requests were made, and were in my possession as part of the records I kept to document my financial activities.
I declare under penalty of perjury under the laws of the United States
of America and the State of California that the foregoing is true and
correct.
Executed this 15th day of August, 2002 at Los Angeles, California.
By [signed] Reed E. Slatkin
Attachment A
Additional relief requested for temporary protective order / right
before order [handwritten]
The defendants shall (1) within two court days of service of this order produce to plaintiff any documentary evidence in defendants' possession showing where the proceeds from the sale of 625 Via Trepadora are located. This shall include the name(s) and location(s) of the financial institution(s) holding the proceeds from the sale, the name(s) on the account and account number(s), and the amount in the account(s) which came from the sale of 625 Via Trepadora. (2) within two court days of service of this order produce to plaintiff any documentary evidence in defendants' possession of any property owned by defendant described in 3b. if defendants do not have in their possession documents regarding the property described in 3b, then defendants shall obtain such documents and produce them to plaintiffs within four court days of the date of this order. (3) deposit their current passports with the Court within one court day of service of this order. The court shall retain defendants' passports for the space of thirty days following the deposit of the passports.
Date: 7 Dec 2002 13:37:02 -0000
Message-ID: <QJFBUIV737597.3173842593@anonymous.poster>
From: Anonymous-Remailer@See.Comment.Header (Cerridwen)
Subject: Re: Reed Slatkin Declaration / Aug 23 2002 (re Hitchman)
Comments: This message probably did not originate at the above address.
It was automatically remailed by one or more anonymous remailers.
Please use abuse@dingoremailer.com to report abuse X-Remailer-Contact: Anonymous Mailer <DingoAdmin<AT>DingoRemailer<DOT>com>
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"tikk" <info@slatkinfraud.com> wrote in message
news:5e0371c5.0212061934.7243077e@posting.google.com...
> can also be seen at :
>
> http://slatkinfraud.com/docs/reed_declare_hitchman_2002_08_23.htm
Very interesting. While Reed Slatkin was pleading guilty to 15 felony
counts (March 26,02) his alledged cohort, Tony Hitchman, was attesting
to OT 8. The C of S has to be freaking out about this. One of their
New NEW NEW OT 8's was up to his eyeballs in the Reed Slatkin Ponzi
scheme. It just doesn't get any better than this.
Here's a bit more data about Tony and Peggy Hitchman.
Freewinds Issue 46 [circa June 2002]
NEW OT VIII, Truth Revealed [33]
Peggy Hitchman
Tony Hitchman
These magazines are a few months behind. Peggy and Tony actually attested to OT VIII in Feb/March of 2002.
Peggy originally completed OT VIII in 1990 (Freewinds Issue #2)
TIME TRACK OF THETA COURSE
Tony Hitchman
```````
Source Magazine Issue 138 [circa late June 2002]
NEW OT VII
Peggy Hitchman Tony Hitchman
``````````
SP Building Contributions
SENIOR FLAG ALUMNI a donation somewhere between $10,000 to $25,000.
Peggy and Tony Hitchman
`````````
OT Festival
Tony Hitchman was scheduled to speak at the Grand Finale of the OT Festival in the AOLA Atrium. For some reason he never showed up.
Sunday July 7th:
12:30 The Admin Scale Workshop with Robbie Robinson Practical data on how to organize your life to acheive your goals.
3:30 Make your dreams come true with Michael Lewis Key LRH referrences on how to really win across your dynamics.
6:30 Grand Finale Event with Tony Hitchman Hear his OT VIII wins Mr. Hitchman was the interviewer in the "Introduction to Scientology" video with LRH.
Scientologists on line page
http://tonyhitchman.our-home.org/
URL: www.our-home.org/tonyhitchman/index.htm
Picture: None
Myself: Hello, my name is Tony Hitchman, and here is a little bit
about myself: I am a minister of Scientology living in California
with my wife and two children. I got into Scientology in 1957 after
reading a book and I am now a highly trained Scientology auditor
(counselor) spending much of my time introducing others to
Scientology.
In 1966, I met and worked with L. Ron Hubbard, and interviewed him on TV and radio. I consider Ron to be mankind's best friend.
I came into Scientology in 1957, as I was looking for a way to improve my life and understand myself. In the many years since then I have found that Scientology works every time in helping me achieve my goals and be a happier person.
This url now gives a 404 message. Tony may be getting erased.
It was always promoted that Tony Hitchman got into Scientology AFTER he interviewed LRH. Per this, he got in 9 years BEFORE he did the interview.
````````
Volunteer Minster Page
Peggy Hitchman correctm@earthlink.net Santa Barbara/California/United States Tony Hitchman correctm@earthlink.com Santa Barbara/California/United States --
Cerridwen
"Informing people doesn't involve trying to silence those who disagree with you." --Prignillius http://www.truthaboutscientology.com/stats.htm
From: martinottmann@yahoo.com (Martin Ottmann)
Subject: Tony Hitchman in 1986: "I work in conjunction with Scientology churches."
Date: 7 Dec 2002 14:34:21 -0800
Message-ID: <71d327bb.0212071434.44f97f69@posting.google.com>
From Impact, Issue 7 (July 1986), page 16:
YOUR HAT AS A SCIENTOLOGIST
A FIELD AUDITOR
Tony Hitchman, a Lifetime Member of the Association, known to many because he made the last filmed interview with Ron, has been a field auditor for fifteen years. He has been a Scientologist since 1957, starting in Africa. He was one of the first Clears made at Saint Hill in 1967 and he has been working full time as a Scientologist ever since. He is now a Class VIII Auditor and New OT VII Completion. Prior to becoming a field auditor, Tony was involved in missions and starting missions.
Tony describes his activities as a Field Auditor. "I take a new person right from the beginning of the The Bridge gradation and awareness chart, through the Purification Rundown and on up to Clear. Then I send them to a Scientology Organization. I consider my valuable final product to be a well audited person now moving on to services, auditing and training at an org.
"I have a lot of people referred to me by friends, existing preclears, from all sorts of places. When they come, I sit them down and talk to them to bring out what they are there for. I use LRH's Dissemination Formula. I do that either by putting them on an E-Meter or having them do a personality test. I give short talks about Scientology philosophy and get them to read books.
"A lot of people come in with their ruin very obvious, and I just pull that string. I'm quite successful in this area, and I believe in using the E-Meter. I follow LRH's dissemination advice which is to be causative when you are talking to new people. I get them to read books so they can get it straight from Source.
"It is important to audit the person in front of you and not overwhelm him with too much data. Just give them what is real to them in the area of their ruin. That will be what they are aware of.
"As a field auditor you don't audit all the time. The reason for that is that you are wearing all the hats of dissemination and enlightenment as well as delivering actual auditing. What you are doing is getting people to a point where they really know that Scientology technology works. It takes a while sometimes to make a Scientologist. I work in conjunction with Scientology churches. People come to me sometimes who want training, so I direct them to the Church.
"I've talked to many people over the years. I've given talks to groups of people, married couples and individuals. I've audited preclears aged from eight to eighty.
"One does really change conditions for people using LRH technology.
And one can take this for granted when in fact the wins are quite miraculous.
"There is no question that a Scientologist has a hat. I regard being a Scientologist as a profession. In my profession of auditor, I do dissemination and get people up the lower reaches of The Bridge chart so that they are fully hatted as preclears and will move on to OT states.
"I also consider the numerous other things I do as a Scientologist are my hat:
"I give talks at the org. I salvage people who have fallen off The Bridge. I am a Field Staff Member. All those things and more come under that hat of being a Field Auditor and a Scientologist. A Field Auditor is one of Ron's representatives in the outer reaches, and I regard it as an honor to be able to wear that hat and I am very happy to have been able to do that over all these years."
From Impact, Issue 20 (November 1988), page 4:
"If auditing is occurring in the field orgs will boom." L. Ron Hubbard, LRH ED 54 INT, 10 Dec 69 - Become a Field Auditor
Tony Hitchman, a successful field auditor for many years, says:
"Anyone can make it as a field auditor if they work hard, are on purpose and apply Standard Tech. If more auditors apply Standard Scientology Technology in the field, we will expand more quickly into society."
Contact I HELP - International Hubbard Ecclesiastic League of Pastors, 1340 N. Berendo St., Los Angeles, CA 90027 USA, Phone (213) 668-2678
Go Back
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