Kenneth Starr's Clients Can't Access Their Accounts Anytime Soon, Judge Rules
By Shayna Jacobs and Nicole Bode
MUNICIPAL DISTRICT – Kenneth Starr’s former celebrity clients shouldn't expect to get their money back from his alleged $30 million Ponzi scheme anytime soon, a judge ruled on Monday.
But even when the fiscal mess that Starr's companies have devolved into is sorted out, there may not be much money left for them to pick over — an initial assessment of Starr’s company bank accounts found a meager $740,000 left, according to documents filed in US District Court.
Meanwhile, Starr’s companies have fallen into chaos as staffers leave, clients beg for their money and sensitive company documents are left unprotected, according to the woman appointed to clean up the mess.
“There is an immediate need to secure the offices of the Starr Companies, identify and retain key employees, if any, and gain a thorough understanding of the financial position of the Starr Companies, their assets and properties,” lawyer Aurora Cassirer, who was named last week to monitor Starr’s companies, wrote in a letter to the judge dated June 4.
The workers who remain at the companies are no longer covered by corporate health insurance "nor do they know whether they will be compensated for their time," Cassirer wrote. Meanwhile, "Various account managers have left the firm, and others are leaving the firm, and the clients that the managers have serviced are leaving with them."
Only a fraction of Starr's clientele remains.
“It appears that there are 30 or 40 personal management clients left, down from approximately 140 just a month or two ago, and the list of remaining clients has grown smaller each day as clients, or their attorneys or representatives, ask that the clients’ accounts be transferred to new management companies,” Cassirer added.
Judge Stein ruled Monday to expand Cassirer's power over Starr's corporate affairs, and also decreed that no clients would be allowed to take their money back from Starr’s companies until the full extent of the alleged fraud scheme can be determined.
The ruling will likely come as a blow to the “numerous clients” who Cassirer wrote have been “pressing to obtain access to, or copies of their files” since Starr’s arrest.
On May 28, authorities found Starr hiding under a pile of clothes in the closet of the $7.5 million Upper East Side condo he allegedly bought with clients' money, according to the criminal complaint.
Cassirer wrote that Starr’s son, Ron Starr, is officially the second-in-command at Starr Investment Advisors, as the “Chief Compliance Officer, Managing Director and Senior Investment Committee Member of SIA,” yet “he has clearly not assumed the management role performed by his father. In fact, he states that he has very little involvement in, or knowledge of, the day to day operations of the businesses.”
In the federal criminal complaint against Kenneth Starr that led to his arrest, authorities said Starr’s son was a beneficiary of the alleged $30 million Ponzi scheme, as was Starr’s wife, Diane Passage.
Starr still has no lawyer representing him in the SEC case.