Starr Scheme Rocks NYC

The lives of the rich and famous have once again been rocked by a multimillion-dollar Ponzi scheme, and the situation has some tertiary ties to the music biz.

A New York financial adviser to a lengthy list of “socialites” and business and entertainment “luminaries” was recently arrested for allegedly defrauding his clients out of $30 million, some of which was used to purchase a luxury apartment.

Kenneth Starr, not to be confused with the special prosecutor of Bill Clinton, was charged with wire fraud, investment adviser fraud and money laundering, federal prosecutors announced during a news conference May 27.

Aside from purchasing a $7.6 Manhattan apartment, another of Starr’s pet projects apparently funneled client money to Glassnote Records, where he’d secured a job for wife Diane Passage as an A&R executive, according to the New York Daily News. Glassnote’s roster boasts Phoenix, Justin Nozuka and Mumford & Sons, among others.

Starr, who met wife Passage years earlier while she worked as a dancer at Scores, showered her with lavish gifts, funded her charity for unwed mothers and helped transform her into a purported “producer of films and plays and a philanthropist.”

“She wanted to be someone in the music business … It was a complete farce … it just frittered money away,” a source reportedly close to the matter told the New York Daily News.

His Starr Investment Advisors reportedly counted Martin Scorcese, Goldie Hawn, Uma Thurman, Ron Howard, Henry Kissinger and Caroline Kennedy among its clientele, according to a criminal complaint obtained by the Wall Street Journal.

Starr’s firm provided services including investment advisory, accounting, tax preparation, business management, bill-paying and concierge to roughly 200 clients, with accounts reportedly reaching upwards of $700 million.

IRS Agent Robert Beranger wrote in the complaint that Starr carried out a Ponzi-like scheme from January 2008 through April, persuading clients to make investments with him that were later diverted to risky investments in which he, his wife and close associates held financial interests.

“He used his access to famous and powerful clients to burnish an image of trustworthiness, leading his clients to entrust him with management and control of their financial affairs,” Beranger said. “In some cases, he assumed total control over his clients’ financial lives by collecting their earnings, investing their savings and paying their bills.”