Home > Financial Adviser to the Stars, charged with operating...

Financial Adviser to the Stars, charged with operating massive Ponzi Scheme

Financial Adviser to the Stars, charged with operating massive Ponzi Scheme

Kenneth Ira Starr, a New York investment adviser with a roster of celebrity clients, was charged by the U.S. government on Thursday of orchestrating a $30 million fraud.

According to the federal complaint, Mr. Starr allegedly used his clients’ money to buy luxury items for himself, including a new $7.5 million apartment in Manhattan. The five-bedroom apartment boasts a 32-foot granite lap pool and a 1,500-square-foot garden.

Starr's clients include Sylvester Stallone, Martin Scorsese, Wesley Snipes, and Uma Thurman, Henry Kissinger, Annie Leibovitz, Jacob Arabov (a.k.a. Jacob the Jeweler), Caroline Kennedy, Goldie Hawn, Candice Bergen, Ron Howard, Diane Sawyer, Al Pacino and Hal Prince

The complaint alleges that Mr. Starr promised victims (who are not mentioned by name in the complaint) that he would invest their money in sure things. Instead, he directed their money to investments in which he had an interest or converted the cash for his own purposes.

According to the complaint, Mr. Starr acted as if he were doing his victims a favor by allowing them to invest with him, and that they would reap five to 10 times their investment.

Mr. Starr did more than handle investments for his 200 clients, the charges show. Part of Mr. Starr's business was a "family office," serving about 200 families with taxes and bill payment. Mr. Starr employed about 70 people at his Starr & Co. LLC in Manhattan. Along with Starr Investment Advisers, the firms handled about 1,500 tax returns a year.

Mr. Starr "used his access to famous and powerful clients to burnish an image of trustworthiness, leading his clients to entrust him with management and control of their financial affairs," according to charges filed in Manhattan by a special criminal agent from the Internal Revenue Service.

Occasionally, he operated as a Ponzi scheme does, prosecutors said today.

"When Starr's clients made demands for payments that Starr could not meet, he transferred funds from one client to another client," Mr. Beranger, the IRS agent, said in his complaint.

For additional information regarding Kenneth I. Starr, please visit our website at www.securitiesarbitrations.com. The Guiliano Law Firm, P.C., practice limited to the representation of investors in claims against stockbrokers and investment advisors for fraud, the sale of unsuitable securities, breach of fiduciary duty, failure to supervise. Matters accepted on a contingent fee basis. Free Consultation. Nicholas J. Guiliano, Esquire (877) SEC-ATTY.

• Starr SEC Complaint (PDF)