NEW YORK — Financial adviser Kenneth Starr was arrested on Thursday on charges he carried out a $30 million Ponzi scheme that targeted several of his celebrity clients, CNN reports.
Federal agents arrested the 66-year-old Starr at his New York City home, where he was found hiding in a closet. Both his wife, Diane Passage, a former Scores strip club dancer, and 12-year-old son were reportedly home at the time and attempted to cover up his whereabouts.
Starr was charged with money laundering, investment adviser fraud and wire fraud. He is being held without bail until a June 10 pretrial hearing.
The alleged Ponzi scheme reportedly bilked millions from the likes of Uma Thurman, Wesley Snipes, Sylvester Stallone, Al Pacino, Neil Simon, Martin Scorsese, Nora Ephron, David Blaine and Annie Leibovitz.
"He [Starr] used his access to famous and powerful clients to burnish an image of trustworthiness, inducing them to entrust him with management and control of their financial affairs," said Preet Bharara, U.S. attorney for the Southern District of New York, at a news conference.
"In some cases, he assumed total control over his clients’ financial lives by collecting their earnings, investing their savings and even paying their bills. But as we allege, much of it was a mirage," Bharara added of Starr, the head of New York-based Starr and Co. and Starr Investment Advisors LLC, an asset management and financial planning company.
The government alleges that Starr used two main schemes to defraud his clients. In one scheme, he solicited money "to invest in what he purported to be sure deals" but diverted all or some of the money to himself or to other investments in which he, his wife and/or close associates held financial interests.
In the second scheme, Starr used direct control over his clients’ assets to transfer funds to himself, his family and/or associates, then transferred money from one client to another when a client requested a payment Starr could not meet, prosecutors said.
Starr’s arrest comes nearly a year after Bernard Madoff was convicted of operating the largest Ponzi scheme in history, defrauding investors such as Steven Spielberg, Larry King and celebrity couple Kevin Bacon and Kyra Sedgwick out of $50 billion.
"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," Bharara warned.
He added, "If a deal sounds too good to be true, it probably is, and if someone is pretending to have the Midas touch, he’s probably just selling you fool’s gold."
