Financial Advisor To Stars Charged With Fraud

A New York financial adviser to entertainment and sports stars and other wealthy individuals was charged Thursday with running a Ponzi scheme that helped financed his purchase of a luxury $7.5 million Manhattan townhouse condo with a granite lap pool.

The adviser, a lawyer named Kenneth Starr (no, not the one of Clinton fame) was arrested Thursday morning for allegedly defrauding his clients of at least $30 million.

According to a Reuters report, his clients included actress Uma Thurman, director Martin Scorcese and photographer Annie Leibowitz.

The press release from the U.S. Attorney for the southern district of New York, which is based on the criminal complaint, informs us Starr was allegedly shifting money between client accounts to pay them when they became suspicious, a classic Ponzi scheme move.

An excerpt:

STARR defrauded another client — an actress with whom
he had a long-standing and close relationship — by transferring $1 million of her money to Associate-4 (an unnamed individual identifed only as a partner at a national law firm.) When the bank informed the actress of the transfer, the actress became concerned and she and her lawyers demanded to know why the money had been transferred. In response, STARR gave shifting and inconsistent explanations for the transfer. Ultimately, STARR transferred $1 million back into the actress's account — but he did so not by returning the money originally taken out of the actress's account, but rather by taking $1 million from the account of other clients: a former executive of a talent agency and his wife.

Fox Business News had the following report:

Charged along with Starr was the former president of the New York City Council, Andrew Stein, who Starr helped to evade taxes through the creation of a shell company which Stein used in an effort to hide his income and expenses. Stein is also accused of using money from Starr's alleged investment fraud to pay for a property in Bridgehampton, NY.

Reuters reported that it tried but failed to reach lawyers for both Starr and Stein.

An excerpt from U.S. Attorney Preet Bharara's statement:

"Today's charges against Kenneth Starr seem to confirm what has become all too apparent lately — anyone can be a victim of financial fraud. Whether you are an ordinary citizen or a savvy businessman or a sophisticated celebrity, you can be victimized."

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