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.