Kenneth Starr Pleads Guilty to $59M Fraud
Kenneth Starr has pleaded guilty to fraud charges in New York. No, not the the special prosecutor who handled the impeachment of President Bill Clinton. This Kenneth Starr was a financial adviser running yet another Ponzi scheme.
Fun fact: "Ponzi scheme" is named after Charles Ponzi, who carried out a unique form of investment fraud in 1919-1920. A Ponzi scheme is a scam in which belief in the success of a fictitious enterprise is created by the payment of significant, fast investment returns to the early investors, using money invested by later investors. By creating the appearance of a hugely successful enterprise, the Ponzi scheme continues to take on more investments but stops paying them out. Eventually the investors find that all of the money has disappeared.
Returning to the story, Starr, 66, created an aura of exclusivity and had a list of celebrity clients including Wesley Snipes, Sylvester Stallone and Martin Scorsese, the Associated Press reports. Starr admitted to stealing tens of millions of dollars from his clients, including the elderly. His attorney called it a "colossal error in judgment." Kenneth Starr will potentially face 10-12 years in prison, though his attorney plans to request an alternate sentence based on Starr's "numerous charitable deeds."
It's another example of the risks involved with exotic investments. We collectively react with shock each time that we hear about the wealthy and successful being taken by con artists. The truth of the matter is, the people who run these scams are talented and they know how to prey on peoples' emotions. No investment is completely without risk, but if you're putting money into an enterprise that you don't understand, you're probably taking on far more risk than you are prepared to tolerate.
P.S. According to the AP article, one of the bank accounts linked to Starr, whose wife was a stripper, was found under the name "Poledance Superstar." It was hard to figure out how to fit that into the story, but it's such a cool name for a bank account, I just couldn't let it slide.
- Ponzi Alert! The Bernie Madoff of South Florida (FindLaw's Blotter)
- Protecting Yourself Against Investment Fraud (FindLaw)
- Starr Pleads Guilty to Fraud Charges (New York Times)
- Stolen Dreams: Nationwide Crackdown On Mortgage Fraud (provided by Greg Smith and Steven Russell, Criminal Law Attorneys)