Money adviser to the stars busted for fraud

LOS ANGELES It's not the same Kenneth Starr known for his role as special prosecutor in President Clinton's Whitewater case. This Kenneth Starr was a trusted money manager with more than 200 clients. Thursday night he's under arrest, but this alleged Ponzi scheme is only beginning to unravel.

Agents with the Internal Revenue Service seized 180 boxes, documents and computer hard drives from the New York offices of Starr Investments Thursday, forcing the firm's employees to watch from the sidewalk.

Prosecutors Starr was a con man who used his connections to Hollywood stars like Uma Thurman and Wesley Snipes to build a $700-million money management empire, an empire he allegedly used to line his own pockets.

"Some of those clients were actually just pawns in a Ponzi sceme," said U.S. Attorney Preet Bharara. "The complaint alleges fraudulent activity to the tune of more than $30 million, but the investigation is still at a very early stage."

In one instance prosecutors say Starr used money from four different investors to buy a $7.5 million Upper East Side apartment, complete with an indoor swimming pool.

According to the criminal complaint, Starr's firm took in millions of dollars, and when Starr's clients made demands for payments that Starr could not meet, he transferred funds from one client to another. Prosecutors say some of the money went to Starr's Associates.

Among them, former New York City Council President Andrew Stein who is not accused of fraud, but was charged with lying to investigators about receiving the money. Among the many investors were some of the biggest names in Hollywood, and others who were not so famous, like Alfred Stern, who considered Starr a close friend.

"He was a good friend of mine, a personal friend. Hard for me to believe that this all happened, but maybe it did," said Stern.

Among Starr's other celebrity clients, former Secretary of State Henry Kissinger, the legendy film director Martin Scorsese, actresses Candice Bergen and Goldie Hawn and photographer Annie Leibovitz. They're all clients, but it's not yet confirmed if all were victims of the Oonzi scheme. Officials say all known victims are cooperating with the investigation.

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