Jacob the Jeweler Allegedly Swindled Out of $14 Million By Kenneth Starr
By Kiratiana Freelon on May 27, 2010 12:45pm |
By Leela de Kretser and Heather Grossmann
MANHATTAN — Jacob Arabov, an infamous Midtown jeweler who provided bling to Jay-Z, Kanye West, Elton John and Rudy Guiliani before he went to federal prison on drug charges, was one of the clients who helped prosecutors build a case against financial advisor Kenneth Starr.
Arabov, known as Jacob the Jeweler in celebrity circles, video games and hip hop songs, was swindled out of nearly $14 million by Starr, according to the criminal complaint and his lawyer Benjamin Brafman.
The duped jeweler's millions were spread across several investments at Starr's direction, including a production company owned by legendary "Scarface" producer Martin Bregman, a "lounge business" called Martini Park and a voting machine company that provides services to third world countries, the complaint said.
"Mr and Mrs Arabov unfortunately invested substantial personal assets through several prominent individuals they trusted," Arabov's attorney, Brafman, said in a statement.
"It is now clear that they were defrauded. Mr and Mrs Arabov intend to pursue all legal remedies the law provides in an effort to recover their investments."
Arabov, who is identified only as "Client No. 6" in the complaint, told prosecutors that he began investing with Starr in 2008 as he headed to prison on narcotics and money laundering charges.
The jeweler was arrested in June 2006 at his Midtown store for conspiracy with several others to distribute hundreds of kilograms of cocaine and for laundering nearly $270 million. Authorities said Arabov and the others indicted were connected to a Detroit drug gang called the "Black Mafia."
The bling dealer was sentenced in 2008 to 2 1/2 years for lying to officials during the investigation, but his sentence was cut seven months short by a judge citing Arabov's charity work.
Arabov said he'd come to see Starr "as a brother" as the financial advisor bought more and more jewelery from his store and the two attended notable charity events together. In preparation for his jail time, Arabov and his wife Angela — identified as Client No. 7 in the complaint — gave Starr the okay to start investing money for them.
The investments the Arabovs made on Starr's advice included $200,000 in March 2008 to "Scarface" producer Martin Bregman for the development of several films, the criminal complaint said. The couple have seen no return on that investment and based on publicly available information, Bregman has not produced a released movie since 2005.
The couple also invested $2 million in a company called "Universal Identification Solutions LLC," according to the complaint, which Starr said was a voting machine company that provides services to several Central American countries.
Starr "offered a series of shifting and far-fetched explanations of why the payments on the could not be made," the complaint said in reference to the Universal Identification Solutions investment. The Arabovs received no return on that $2 million.
The jeweler and his wife also invested $3 million in a "lounge business" called Martini Park, at which Starr's wife worked, the complaint said.
It was only after after Arabov began serving his 30-month sentence that his wife noticed that something was amiss with their finances.
The pair tape recorded Starr in several conversations and handed prosecutors numerous financial documents. They were debriefed by federal prosecutors around May 11.