Flashy Purchases Were Ken Starr’s Undoing

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Photo: Djamilla Rosa Cochran/WireImage for Niche Media, LLC

Once upon a time, according to an old business partner, money manager turned accused Ponzi schemer Kenneth Starr lived by a line taught to him by philanthropist Paul Mellon: "If you have a bigger yacht than your clients, they won't trust you." As he amassed a client roster of boldfaced names, he cultivated a trustworthy appearance: He lived simply, wore nondescript suits, and had been married to the same woman for sixteen years. Then, in 2005, according to Bloomberg Businessweek, he met Diane Passage, a single mom and Scores dancer, and all of that changed.

He suddenly discovered he had a taste for shiny things.

Starr's behavior outside the office also turned erratic after taking up with Passage in 2005. He began to forsake his own counsel about modest appearances, spending more than $400,000 on jewelry from Jacob & Co., aka Jacob the Jeweler, during the span of several months in 2006, according to the criminal complaint.


Eventually, two years later, he decided it would be better if he went ahead and got a divorce, so that he could marry Passage. Awkwardly, he failed to inform his wife that this was what he was doing.

He did so by filing court documents without her knowledge that claimed she agreed to end 16 years of marriage, according to her 2009 lawsuit. Starr’s fourth wife was a flashy, jarring presence in Manhattan society -- tattooed, provocatively dressed and a pole dancer. ... Starr was proud of her, too, showing iPhone pictures of her gyrating on a pole to fellow attendees at a Tribeca Film Festival function in 2008, according to people who were there.


He went from giving Jacob the Jeweler money for jewelry to taking it from him, in order to afford his new wife ever bigger, shinier presents.

In early 2008, Starr recruited Jacob the Jeweler, whose real name is Jacob Arabo, as an investment client .... Prosecutors said Passage wanted to make the film version of “The Desert Rose,” Larry McMurtry’s novel about an aging Las Vegas showgirl. The two doomed ventures represented $2.7 million of the $13 million of which Arabo was defrauded by Starr, according to the complaint.


And it was all downhill from there.

The same network that made Starr rich quickly undid him, as stories of losses and strange behavior spread. Clients left the firm, including Mike Nichols and his broadcaster wife, Diane Sawyer, according to a person familiar with the matter.


And then, of course, he was accused by the SEC of conducting a multi-million-dollar Ponzi scheme, and arrested by the FBI, who found him hiding in his closet. (Ken really hates confrontation, apparently.) If he ever gets out of prison, we expect that Starr will be passing on a revised version of Mellon's adage: "If you have a wife with bigger boobs than your clients, they won't trust you."

Celebrity Adviser Starr Used Name-Dropping in His Alleged Fraud [Bloomberg]