Guru charged with defrauding celebrities

US prosecutors have charged a New York financial adviser with perpetrating a multimillion-dollar pyramid scheme involving prominent figures from the legal, political and entertainment worlds.

Kenneth Starr, chief executive officer of Starr Investment Advisors, was charged with having “engaged in fraudulent activity involving at least $US30 million ($36.5 million)”.

Victims included a “former hedge-fund manager and well-known philanthropist” and an actress, the 37-page criminal complaint said.

Mr Starr’s business partner, Andrew Stein, was charged with attempting a cover-up of the scheme which allegedly consisted of luring top-drawer clients into false investments and in making unauthorised transfers from their accounts into that of Mr Starr’s.

When Mr Starr’s clients asked for payments on their supposed investments, “he transferred funds from one client to another client”, the complaint says, creating a pyramid or Ponzi scheme.

Associates in the scheme who have not been charged – and therefore did not necessarily know what was happening – include “a former national official of a major political party” and a “partner at a prominent national law firm”.

US media reported Mr Starr’s client list included photographer-to-the-stars Annie Leibovitz, actor Uma Thurman, and director Martin Scorsese.

The complaint also refers to victims as varied as an elderly heiress and a Manhattan jeweller who was jailed in a narcotics conspiracy and whom Mr Starr befriended as a “brother”.

Mr Starr himself is described as a trained lawyer, while Mr Stein is a former New York State legislator and former president of the New York City Council.

The complaint describes how Mr Starr’s alleged ill-gotten gains fuelled expensive spending habits.

He bought a $US7.5 million ($9.1 million), five-bedroom condominium in Manhattan and had a penchant for fine jewelry, which he bought from the Manhattan jeweller, referred to as Client-6.

Those purchases included a $US32,215 ($39,200) diamond wedding ring, a $US32,000 ($38,900) emerald necklace, and a $US70,227 ($85,400) diamond bracelet.

To cover his alleged theft of what clients thought was money handed over for investment, Mr Starr is said to have concocted elaborate – verging on preposterous – stories.

Pursued by the alleged victim known as Client-7 for a promised “multimillion-dollar” payment, Mr Starr blamed the delay on everything from banks being unable to process such a large cheque to dealings with Venezuelan ministers and a brigadier-general.

Mr Starr is not the same person as the man who became famous in the 1990s as the prosecutor probing then president former president Bill Clinton’s affair with his White House intern Monica Lewinsky.

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