| Although there is much to ponder throughout
Reed's appearance before the SEC Commission in Jan/Feb 2000, his comments about
NAA Financial, the Swiss bank where he claimed to have stashed the money
belonging to his "investor friends" stands out. Since later evidence has revealed that the bank Reed praises as "effective" and "safe" does not have offices at its purported address of record, nor does the principal, Michael Axiall, with whom Reed claims to have a 'personal relationship' appear to exist, these extracts from the deposition suggest that Reed is either the victim of a massive con game, or a liar. We leave it to the readers to determine which is the case. |
|
| This page is comprised of outtakes from the Reed Slatkin SEC
deposition that took place on January 21, 2000, a year before Reed finally
filed for bankruptcy. These outtakes focus on the alleged financial 'institution'
NAA Financial. The original scans from the deposition can be found
here. (Questions from the SEC lawyers, and Reed's lawyer, Gerald Boltz, are paraphrased. Reed's quotes are quoted directly from the transcript. The numeric codes correspondend to the page and line of the January (1) and February transcripts (2).) |
1-81-18
This is the first mention of NAA, and occurs after a conference outside with Boltz; in response to a question on whether the list provided includes any foreign investment accounts.
Reed says:
“I have a foreign account with an investment advisor, NAA Financial, and I do not know if they are a broker dealer.”
Q. How do you categorize the account?
“How do I categorize the account? Don’t understand the question.”
(...)
“It’s a managed account.”
Q. And who is the investment advisor?
“NAA Financial.”
Q. Where are they located?
“Zurich.”
Note - After being downright loquacious when asked about other accounts, Reed seems incoherent (even for him) about NAA.
1-97-19
Back to NAA, the SEC lawyer asks how the account works:
“Specifically?”
…
“I mean, how does it work?”
Q. Well, who manages it? You said it’s managed. Do you have an investment advisor?
“Yes. I mean, I’m - I call the shots in the account, but it’s done through that advisory. So I manage the account through them. “
Q. What do they do?
“They execute.”
Q. Can anyone else trade in that account?
“No.”
Q. Only you?
“Only me.”
Note This is completely contrary to all Reed’s other accounts, which have at least Phyllis Rogers as co-signatory, and sometime Richard Levine or others as well.
Q. So you tell them what stocks to buy, and they do it?
“That’s right.”
Q. They don’t have discretion?
“No, they have no discretion.”
Q. How much money is in that account?
“I’m waiting to receive my current status.”
(…)
“I don’t have the balance. I’m expecting to have it and in your hands hopefully early next week as soon as I get it.”
(The SEC lawyers provide statement from March ’99, and question Reed about what it means.)
“Are you talking about the total value of the account, or how much money?”
Q. Total value.
“It says $187, 376,213.”
Q. Where was this statement sent?
“It was sent to me.”
Q. Was that total value or total cost?
“I believe that was the total cost. I’m sorry, I didn’t read it right. It says total portfolio. I’m sorry, you’re right -- $217, 155, 720.”
Q. Does anyone else see these statements?
“No.”
Note - Not Phyllis Rogers, not Jean Janu? How can they do their jobs without seeing the statements? Just doesn’t sound plausible. Reed could be flustered, or being evasive, or both.
Q. How do you put money in the account?
“There has been money in this account for over fifteen years.”
(Boltz notes that this wasn’t the question, and asks how the money originally got there.)
“I believe it was originally bank wired in there, I believe.”
Q. From where?
“It was originally done - let’s see, I’m trying to remember. It was probably from -- I don’t recall exactly where it came from originally.”
Note - This is extremely vague, particularly since, according to his previous answers, Reed is the only person who controls this account. According to his version of events as articulated thus far, he is the only person who can trade through this account, which means that he would be the only person who would know the specifics of how it was opened, and the origin of the money.
Q. When was it opened?
“It was opened in 1987.”
Q. Why?
“It was opened to segregate monies that I was receiving from my friends. That’s the my idea at the time was that I wanted to make sure that anything that was going on with me over here that might -- that might result in some claim against myself would not affect monies that I had for other people.”
Note - What could Reed have been speculating as ‘going on with me over here’ that could result in a claim? Is he trying to protect himself, the friends’ money, or something else?
Q. So that’s why you opened the account?
“Yes.”
Q. These people who were giving you money to invest, where were you maintaining their stocks before?
“I don’t exactly recall. It was not very much. I could find out that answer for you.”
Q. Can you recall about how much it was?
“I think it was mid-seven figures, let’s say.”
Q. So approximately seven figures?
”Uh huh. Seven or eight million.”
Note - Seven or eight million is not ‘not very much’ to many people, even in Reed’s income bracket. It seems most peculiar that he is unable to answer even a simple question like the previous location of the funds. 1-105 discusses whether this was the money that originally went into the account 1-105-23
Q. So prior to opening that account, this seven or eight million of your friends’ money was in a separate bank account?
“I don’t recall the way it was held exactly.”
Note - Again -- obfuscation or genuine lack of knowledge on the part of the only person who was aware of the details surrounding the creation of the account.
Q. And this was around 1987?
“Around yes, the early part of 1987.”
Q. Did these people know you were moving the money?
“No.”
Note - Why not? It seems like it would be normal procedure to make his clients -- or rather, "friends" -- aware of where their money was being kept, particularly if it was, as he claims, for their protection.
Q. Did you discuss it with anybody?
“Did I discuss it with anybody?”
Q. Yes.
“Anybody. Yes.”
Note - This response is downright odd, considering how chatty Reed has been up till now.
Q. Who were these people?
“A gentleman named Mr. delaMoussaye. Yeah, I can spell it. I’ll write it down first and then I’ll spell it for you.” (spells)
Q. And the first name?
“Roland.”
Q. And who is he?
”He’s an acquaintance of mine that I had met during that timeframe.”
Q. How’d you meet him?
“Mutual acquaintances, people we both knew. I think it was at some kind of party or something.”
Note - Reed doesn’t bother to tell his investor friends that he plans to move their money to Switzerland, but he tells some guy he met at a party? Who, by the way, does not seem to exist according to available data sources.
Q. And why did you tell him?
“Because I had discussed this with him -- we had discussed this idea. He’s the one that suggested this idea to me.”
Q. The idea -
“Of having money over there.”
Note - What exactly did he discuss; his plan to move the money abroad, his concerns about liability, or what?
Q. Describe the discussion -- why would it be beneficial?
“Well, I was concerned about the concept of my own potential liabilities, as I said before. And why don’t you put money overseas to resolve that issue? I have a good contact for you. I’m just giving you the context -- I can’t remember the exact words. And he became the person that I talked to about it, to answer your question.”
Note - Very conspicuous wording. Reed is obviously nervous.
Q. Other than him, did you talk to anyone else?
“You’re talking about at the time?”
Q. Yes
“I’m just trying to, you know, recall. By discuss, I’m just trying to clarify, a discussion of the actual activity itself, not of the theory. I mean, I had interviewed several lawyers at the time about what were the ramifications that might be effective on myself if -- or on my friends’ funds -- if I were to get into some kind of a situation where if I were to die, or something like that. So I did discuss it with at least two or three different attorneys at the time.”
Q. Do you recall their names?
“I can come up with that information. I just want to see if I can remember it. One gentleman was a family friend in Michigan, and I’m trying to remember what his name was. One of the people was James Fisher. He’s an attorney here in Los Angeles. And then this other gentleman, his name is escaping me now. I want to remember it. Do you want to give me a second to come up with it here?”
Note James Fisher, is, of course, James Q. Fisher, noted Scientology attorney, Scientologist and former partner of Norton Karno, the architect of many creative incorporation schemes designed to protect money and enshroud its origins. Which I’m sure is just a coincidence.
Q. Sure.
“I can picture his face but I can’t think of his name right now. I have it, I have it, I just have to go get it for you. He’s a friend of my father’s in Detroit. In fact, he was my father’s attorney at that time. I can’t think of his name right now. Those are the two. And there was another gentleman in New York whose I believe his last name was Sheinfeld or Sheinberg -- Richard Sheinfeld, Richard Sheinberg, who was a -- who presented himself as a -- I was given his name as an expert in these matters.”
Q. Who gave you his name?
“I don’t remember.”
Q. Was it Roland?
“No.”
Note- Reed is definitely hinky throughout this line of questioning. Read his wording carefully; he seems to be trying very hard not to say anything he doesn’t want to say, in contrast to earlier, when he was just yammering on at length.
Q. So other than the three attorneys, did you tell anyone else about the transfer?
“Well, I’m sure I informed wherever the money came from. They were aware the money was going there.”
Q. Referring to -
“The institution that sent money over there.”
Boltz I assume you also informed someone at NAA
“Yeah, no, I met them, I met those people.”
Note - He met people who, apparently, don’t exist.
Q. You’re referring to NAA and the bank that sent the money to NAA?
“Right.”
Q. Anyone else?
“I’m trying to remember if there’s anybody else I talked to at that time. I remember talking to the attorneys and setting it up, and talking to the people there, and talked to Mr. delaMoussaye. It seems to me there was - I’m drawing a blank. That’s all I got right now.”
Boltz If you can’t remember, you can’t remember.
“That’s it. That’s all I got right now.”
Boltz If you think there were others, but you can’t remember their names, you can say that.
“I think there might have been a couple of other people I talked to about it. I’m just recalling someone in a bank, and it might have been at Chase or something in New York, and I was referred to that person. But I don’t remember if I - at that time, I was doing some investigation of this idea, and I’m just trying to think of anyone I would have talked to. I assume you’re asking anybody I was - about this whole idea. And I received material. I must have - there was a firm. I’m sorry.”
Note Suddenly, he’s chatting with bankers in New York about the deal, and he ‘received material’? Something is clearly amiss with Reed’s version of events here.
Q. Since its inception in 1987, have you informed anyone else about this account?
“My attorney, Mr. Cohen.”
Q. Anyone else?
“I would say that I Mr. Levine would have some knowledge. I mean, I just - if you would ask him, he would say he knew something about this.”
Q Why do you say that?
“I think I’m just - I’m trying to be thorough in answering your question. I’m just - I’m sure I told him about this account.”
Q. Do you recall what you told him?
”That it existed.”
Q. Anything else?
“That it was being used for the friends’ money.”
Q. Anything else?
“Maybe. I don’t know. What else is there to say?”
Note Actually, quite a lot.
Q. When the account was opened, you said it had seven or eight million dollars in friends’ money. How many friends was this?
“Boy, I don’t know for sure. I’m going to - I mean, can I guess, I mean, a range?”
Boltz Don’t guess, but if you have an estimate -
“Okay, I would say there were - ”
Boltz Range?
“Yeah, I’d say less than twenty.”
Q. Can you recall their names?
“I can recall some of them for sure.”
Q. Can you give us some of them?
“Sure, yeah, I can start trying to bring up - to come up with them. May I ask a question back, just about this? I could go back and figure out exactly who those twenty people were, and send you the list. Or, I mean, I don’t know how this works. If I don’t have a full answer, can you ask me again later, after - or ask me to go find out exactly and look through any records I might have? Is that possible or is it now or never?”
Note Suddenly, Reed has become concerned that his answers not be seen as definitive. Is it the mention of the early investors that incites this reaction in him?
Q. No, we’re not trying to trap you, if you can’t tell us, give us an approximation or come back later. Or you can send us a list. We’re just trying to get the information truthfully and accurately. We’re not trying to trap you.
“Oh, I don’t feel that way. I just want to make sure that if I don’t have a complete answer, a complete list of something, like those brokerage houses here. I mean, I was thinking that there might be another brokerage still there. You know, that kind of thing. I don’t want to not be complete in my answer.”
Boltz You’re giving an answer right now, to the best of your recollection.
“Okay. My good and best recollections.”
Boltz If you recall names, fine. If you don’t, fine. They just want what you recall. You don’t have to be apologetic about it.
“I’m not trying to. I just wanted to be cooperative.”
Note Methinks the gentleman doth protest too much.
…
“Okay, let me see if I can do this. Many of these people’s names are still on the list that I provided you, and if I had that list and I could look at it, I might be able to do this pretty quickly.”
Q. Which list are you referring to?
“I gave - there’s a list that you have of all that, of what you call the current friends. Do we have a copy of that list we can - or is that against protocol? I don’t know.”
Boltz We do, but it’s up to them.
“I could just take that list.”
(Lawyer hands him list.)
Q. Can you identify this list?
“List of friends of mine that I’m watching over their money. Okay, let’s go back here and see - oh, here’s one, Joan Roswell. Now it’s coming back to me. Anyway, I’m sorry to interrupt you. Schmier, Ronald Schmier, Stevens.”
Q. Which Stevens?
“Joel Stevens. Butcher (spells); Faleen (SEC notation ph); Choder (spells); Jill Choder. I was thinking of the ones that go back that far. That’s what I’m trying to do. Oh, Richard Freedman, Arlo Gordin (spells). How many is that, six or seven?”
….
“Oh yes, Milton Katselas (spells). I’ve closed a lot of accounts. I don’t know, but I’m sure there are more. There are a few that I’m not positive. I’d like to check their the dates when they started. I wouldn’t want to speculate unless I was sure. May we have a short break?”
OTR
SEC lawyer explains we were at the list of the twenty initial investors, Boltz prompts Reed to note that it is approximate.
“I’ve given you the ones to the best of my recollection at this time.”
1-115-9
Interlude - questions about Meyer, the original account who is not on the list
provided to the SEC; then back to NAA:
1-116-5
Q Getting back to NAA, when you want to take money out
of the account, how do you go about it? Describe the process.
"Right. I make a phone call."
Note - Once again, we see Reed of Few Words. Compare
and contrast to his response to non-NAA related questions elsewhere in this deposition.
Q To?
"To the company."
Q NAA?
"NAA."
Q You make the phone call?
"Yes."
Q Has anyone else ever made the phone call?
"No."
Q What do you tell them?
"I tell them the amount and instructions of where to send it."
Q And where do you send it?
"It arrives at Union Bank."
Q Which account?
"In the friends' account."
Q Have you ever wired it anyplace else?
"I think there was an error once where it went into another account by mistake,
probably the bank's error; which it was summarily moved over to the proper account."
Q Other than by error, has it ever been transferred anywhere
else?
"I believe I'm trying to recall. I just wanted just to ask Gerry a quick question."
The parties went off the record for several minutes.
Note - Again, more off the record remarks. It seems
this is an area about which Reed has considerable interest in not being wrongly
interpreted.
"I'm certain that in the early days, before the Union Bank account it was wired
to a brokerage account."
Q From NAA to a brokerage account?
"Yes, to a brokerage account."
Q Before the friends' Union Bank account existed?
"Before it existed, yes."
Q And do you recall the name of that brokerage firm?
"I wouldn't know exactly for sure."
Q Besides that account, is there anywhere else it would
have been wired to?
"No."
Boltz: It all ended up in Union Bank?
"Yes. And in any case, it would end up at the bank, I mean, ultimately."
Note - Ultimately? Interesting choice of words.
Does that mean it might have 'ended up' somewhere else along the way?
Q So you opened the NAA account before the Union Bank
friends account?
"Yes."
Q How long before?
"I think it was pretty close."
Q A year?
"Yeah, within a year, months. This all came together as a concept- "
Q How did you come up with the concept to do this?
"Do this?"
Q I'm sorry, how did you come up with the concept to open
the NAA account and the -
"Segregation -- yes, yes, I shouldn't do that, but I'm trying to get to the freeway."
Boltz You mean the timing of the two?
"My main concern is all about the segregation and the safety issues. That's what
this was about in my mind, all right. Because I could see that it was important
that I was -- that things were kept very safe, and that it was in my best interest
and in the interests of the people that I was helping that these funds were segregated.
That was the key issue. So that's the way it came together."
Q How did you go about opening the NAA account? What is
the process?
"I went to Zurich."
Q You flew to Zurich?
"I flew to Zurich."
Q Let's start earlier you got a contact from Roland?
"Uh-huh."
Q And did you call that contact?
"No, he came -- he and I both went to Zurich together."
Q You and the contact?
"Roland and I went to Zurich to meet -- "
Q the contact?
"The person at NAA that was his friend or his associate."
Note - Pay special attention to this; it might
or might not contradict with later remarks in the same deposition. Again, the
entire process does seem somewhat haphazard for an experienced businessman but
then, perhaps it is not unusual, in the heady world of high finance, to fly to
Switzerland to open a bank account with a gentleman one meets at a party.
Q And then what?
Boltz: To check out the organization?
"I went over to check them out. I mean, I just - I met with the person there,
and I visited them and talked about what I wanted. And we went and got - we started
to do this."
Q So you opened the account when you were in Switzerland?
"Yes."
Q Have you been back there since?
"I have."
Q How many times?
"Well, let's see - how hard do I try to remember how many times I've been to Switzerland
since 1987?"
Boltz: How do you remember?
"How hard do I try to remember exactly how many times?"
Note It's not clear if this is another indication
of Reed's nervousness at having to 'approximate' on the record, or if he's playing
for time.
Q Or a best estimate - less than 20 times?
"Yes, less than twenty times, less than ten times."
Q Less than ten times?
"Less than eight times, okay."
Q What are the purposes of these trips?
"Well, okay, this last summer, I took my son and his friend to the Montreux Jazz
Festival in Montreux, Switzerland, and spent a little time in Zurich while I was
there. That's one example."
Q When was that?
"That was this last summer, I think it was July - June, July. I went down there
in 1997. Primarily went to Paris to visit some friends. Went down to Zurich for
a meeting, stopped in there again. I mean, it's probably six or eight times since
the -- "
Q When you went on these trips, did you ever go by the NAA?
"Yes."
Q What do you do when you go there?
"Well, I've had lunch with the principal person there a few times."
Note - The 'principal' being, apparently,
Mitchell Axiall, a gentleman
who does not appear to exist.
Q Anything else?
"I guess we talk."
Q Do you ever trade stocks while you're there?
"On, oh, yeah, yeah, I've done that. Not much that's occurred."
Q Have you ever withdrawn money while you're there?
"No."
Q Have you ever deposited money while you're there?
"No."
Q Have you deposited money into the account in the last year?
"No."
Q When was the last time you deposited money into the
account?
"It's been at least ten years."
Q Can you recall the last time you deposited money into
the account?
"I can't recall the exact time."
Q Have you withdrawn any in the last ten years?
"Yes."
Q How many times?
Boltz: You might tell what you're doing now.
Note - Boltz interrupts more during this section
than in the rest of the deposition put together. Could he be unsure of the veracity
and/or accuracy of his client's claims?
"Yeah, well, right now, we're in the process of liquidating all these people's
accounts. Are you familiar with that, that that's occurring?"
Q Tell us a bit about it
Interlude in which Reed discusses the liquidation of the
accounts, as a result of the letter he received from the SEC. Not much about NAA,
until page 142
1-142-19
Q You're referring to bringing money back in from the
NAA account?
"Correct."
...
And you'll see in those statements, you'll see money going in, money going out.
It's just right there. Take a look in the statement, you'll see it right there."
Boltz: As soon as we get the most recent statement
from NAA, we'll send it.
"Send it right over to you."
Boltz: It should be shortly.
Q Would we have problem getting authorization to confirm
it directly with NAA?
"Not at all. I mean, I want to -- I don't see why we would have any problem with
that."
Note Reed seems very eager to assure the SEC that
money going in and out of the NAA account, particularly recently, is normal despite
the fact that he earlier averred that he had not deposited, nor withdrawn money
from the account in at least ten years.
SEC lawyer says he would discuss it with Boltz first, Boltz takes over to respond
to the next question after this remark from Reed:
"That would be something that I think Mr. Boltz could take care of with you. He
has a great familiarity with the situation there."
Q Who are the NAA? Who is NAA?
Boltz: It's an organization, it's an institution that, as I understand it, is
made up of a number of individuals. And NAA was originally the last names of certain
individuals.
At this point, Reed resumes answering questions.
Q Do you have a principal contact
over there?
"I do."
Q Who is that?
"His name is Mitchell Axiall." (spells Axiall)
Note - Again, at the risk of being redundant, attempts at verifying the existence
of this individual have so far proved unsuccessful.
Q Is it a bank or is it - what is it?
Boltz: You know, I can't answer that question.
I'm in the process of determining exactly how it's registered in Switzerland.
Note: Interesting potential set-up for the claim
that Reed was scammed by the Valley of the Rogue Swiss Bankers.
Q How do you know they're good for the money?
Boltz Oh, well, he's been dealing with them for
a -- go ahead.
"A very, very long time. In the early days, we dealt with Julius Bear Bank, and
I had a contact there that was very, very good; I felt a lot of confidence. And
I've known these guys a very long time, and in fifteen years I've never - "
Note It's not clear just what Reed means here; earlier,
he specifically noted that it was Roland delaMoussaye who first introduced him
to NAA, now we have this suggestion that Julius Bear Bank somehow played a role
in the decision to use this investment bank.
Boltz In other words, you checked with other banks
in Switzerland?
"Yes."
Boltz To verify the -
"Yes, to verify them, yeah."
Boltz Bonafides, if I can find -
"The Julius Bear people were very, very high on these guys at that time. And that
was my main contact there. But it's been so many years now that I've dealt with
them, it's just so efficient and so -- executions are great, and reliability,
and a feeling of safety."
Note Again, the Julius Bear people are cited as
his 'main contact', rather than the mysterious Roland.
At this point, Reed with no apparent opposition from the SEC lawyers veers off
into a tangent about the funds, and how safe they are, which leads to discussion
of co-mingling and other non-NAA related matters, until the deposition adjourns
until the next session, held in February.