Madoff-Like Celebrity Financial Adviser Scams $30M, Collared Hiding in his Closet
He’s offered financial advice to the likes of Hollywood A-listers including Sylvester Stallone, Uma Thurman, and Martin Scorsese, but Kenneth Starr has now been locked up for charges of stealing $30 million from his celebrity clients.
From the Associated Press:
“Kenneth Starr, 66, was ordered held without bail on charges of wire fraud, investment adviser fraud and money laundering after a prosecutor said Starr hid behind coats in a closet at his home when agents came to arrest him, forcing them to yank him out by the collar…
“…U.S. Attorney Preet Bharara said at a news conference that Starr stole money in a Ponzi-like scheme from January 2008 through April after gaining the trust of wealthy and influential clients and sometimes controlling their finances. ‘He made it a point to seem like it was a very exclusive thing, creating a mystique about what it means to be a client of Mr. Starr,’ Bharara said.
“There’s no indication [Wesley] Snipes, Scorsese or Stallone were victims. An IRS criminal complaint said cheated clients included a former hedge fund manager and well-known philanthropist, an actress who was a longtime friend of Starr’s, a former talent agency executive and his wife, an heiress and a prominent jeweler with a flagship Manhattan store. They were not identified by name.”
It’s unfortunate to see theft in any form. However, it seems possible that celebrities can be more at risk of falling prey to criminals. The stars may have a particular lack of contact with the regular world, and perhaps a less developed ability to see the kinds of ordinary warning signs that might spook a more average investor. To help avoid this sort of predicament in the future, Joshua Brown at The Reformed Broker offers some “free advice to the Hollywood set” today. Here are a few highlights:
“… 2. Your financial advisor is not supposed to play polo or wear designer sunglasses, nor should he ever have a popped up collar under any circumstances. He must never wear shoes without socks or wear a watch with a diamond bezel.
“3. In truth, if an advisor or money manager’s opening shpiel is about all of the other famous people he works with, this should not make you feel comfortable. Its actually a giant red flag indicating that you are dealing with a starf*&%er and a social climber who is more concerned with himself than you.
“4. Even your brother-in-law will rob you if you give up power of attorney. Go ask Billy Joel. Uma Thurman signed over Power of Attorney so that Ken Starr would do her taxes. That’s funny, my CPA never seemed to need signatory authority over my bank account to prepare my tax forms…hmmm.”