(Bloomberg News) Kenneth I. Starr, the money manager who admitted to defrauding his celebrity clients of as much as $50 million, has reached a restitution agreement with the U.S. government, his lawyer said in a letter to a federal judge.
The amount to be repaid to the victims wasn't specified in the February 8 letter from Flora Edwards to U.S. District Judge Shira Scheindlin in Manhattan. Starr, who pleaded guilty in September to wire fraud, money laundering and investment advisor fraud, faces 121 to 151 months in prison when he's sentenced March 2.
Starr, 67, was arrested in May and accused of defrauding clients including heiress Rachel "Bunny" Mellon. Actors Sylvester Stallone and Wesley Snipes were also clients. Edwards and the government agreed, for sentencing purposes, that the amount lost in the fraud totaled from $20 million to $50 million.
"Mr. Starr has been unable to prepare a financial affidavit because the receiver appointed in the SEC case has refused to turn over his personal records," Edwards said in the letter, referring to a civil suit brought against her client by the U.S. Securities and Exchange Commission.
Starr's capacity to compensate his victims is uncertain, according to court papers.
'Pools of Funds'
His efforts to raise money to "create a pool of funds from which restitution could be made" were unsuccessful, Edwards said in a Dec. 22 letter to the judge seeking revocation of his bail.
At a hearing yesterday, Assistant U.S. Attorney William Harrington told Scheindlin that some of Starr's victims are entitled to more than they are promised in the restitution agreement, the New York Post reported. The judge said she would give victims as long as 30 days after the sentencing date to file objections to the deal, the Post said.
According to a December 22 court document, there were nine victims of Starr's fraud, owed $47 million. Three of the victims were repaid a total $11.5 million, leaving a balance of $35.5 million, "much of which is contested."
Edwards didn't immediately return messages seeking comment.