Who is Ken Starr?
Until Thursday, when the New York money manager grabbed headlines as the alleged center of a $30 million Ponzi scheme, Starr operated in the shadows, despite an A-list client list that included Martin Scorsese, Uma Thurman and Ron Howard.
If anything, the flashiest thing about the 66-year-old Starr was his wife, the ex-stripper Dawn Passage (shown right). Well, Passage ... and the $7.5 million Manhattan condominium with a 32-foot lap pool that Starr purportedly used his clients' money to buy.
Following a long-running investigation by the Internal Revenue Services' criminal investigation division, Starr was arrested at his Upper East Side apartment while hiding in a closet. He is currently charged on three counts -- wire fraud, fraud by an investment advisor and money laundering -- and is being held without bail.
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In 2008, Starr did turn up on a prospecting trip at the Sun Valley Media Conference -- where mega-moguls like Bill Gates, Warren Buffett, Rupert Murdoch, Michael Eisner mingled with the likes of Rachael Ray, Anderson Cooper, Google's Sergey Brin and Larry Page and then-William Morris Agency chief Jim Wiatt, reportedly one of the unnamed clients referenced in the criminal case.
For the most part though, his 70-person company kept its head down, refusing to call attention to itself by maintaining something as pedestrian as, say, a website.
And that's likely just how Starr wanted it.
"For some of these guys, having a public presence would be the kiss of death," said Mitchell Zuckoff, author of "Ponzi's Scheme," a history of the financial fraud's namesake. "The minute they go public, the velvet-rope effect is lost. If he has a website, he's Charles Schwab. It's the same thing that makes clubs in the meatpacking district so popular, where there's no sign on the door and you have to know someone to get in."
The air of exclusivity was key for recent Ponzi schemer Bernie Madoff, who became the envy of Wall Street with consistent returns -- until his $18 billion fraud was revealed. Though certainly not on the same level, if the allegations against Starr prove true, then experts believe he used a similar modus operandi to Madoff and Charles Ponzi.
Like Madoff and Ponzi, the success of Starr's enterprise would have depended on a certain kind of clientele.
"Hollywood investors are an elite type of investor. They have a significant amount of money and they want to protect it," said Ed Ketz, professor of accounting at Pennsylvania State University and the author of "Hidden Financial Risk." "They're looking for a much higher return than the one you or I might get and they think they're smart enough to find someone capable of generating it for them."
