“LAWYER FOR KENNETH STARR CHARGED WITH MONEY LAUNDERING”
FROM THE -
JOURNALS of Monte Friesner ~ Friday December 17, 2010 >
Financial Crime Consultant for WANTED SA >
WANTED SA has learned this morning that Federal prosecutors and securities regulators on Thursday charged an attorney for former financial adviser Kenneth Ira Starr for his involvement in Starr's alleged multimillion-dollar fraud.
Lawyer Jonathan Star Bristol allegedly used attorney escrow accounts to launder more than $20 million that Starr took from advisory clients, prosecutors in the Southern District of New York said in a 15-page indictment charging Bristol with one count of money laundering.
Bristol "repeatedly used the escrow accounts to help Kenneth Starr conceal that he was stealing client monies to fund the operating expenses of Starr & Company LLC," prosecutors alleged in the indictment.
Starr, whose celebrity clients included director Martin Scorsese and singer Carly Simon, pleaded guilty in September to wire fraud, money laundering and investment adviser fraud in Manhattan federal court.
The Securities and Exchange Commission's court filing describes Bristol, age 55, as a resident of Chatham, New Jersey, who from November 2008 through June 2010 was a partner with a prominent international law firm. Neither the SEC complaint nor the indictment identifies the law firm.
Winston & Strawn confirmed in an emailed statement that Bristol joined the firm in December 2008 and has since left.
Bristol's attorney Gerard Hanlon of Hanlon, Dunn & Robertson based in Morristown, New Jersey, did not immediately return a message seeking comment.
When Bristol joined the law firm in late 2008, he was guaranteed an annual income of $1.35 million for two years, according to the indictment. But his business-generation faltered, and in August 2009 he and the firm agreed that his compensation would be cut to $500,000 a year.
In July 2009, Bristol brought in client Kenneth Starr and billed more than $1 million for legal work he performed for him, according to the indictment. Bristol was aware that Starr was engaged in illicit activity, prosecutors alleged.
Bristol used his attorney trust accounts as a conduit to transfer client funds to Starr and his two companies for personal use, including the purchase of a luxury apartment for more than $7 million on Manhattan's Upper East Side for Starr and his wife, according to prosecutors.
Bristol also used the trust accounts to pay his law firm, according to the indictment. After facing pressure from the firm to collect legal fees from Starr, Bristol used the trust accounts to issue a $100,000 check to the firm, and to pay other operating expenses of Starr's company. The funds for these payments came entirely from Starr's defrauded clients, according to the indictment.
"The indictment against (Bristol) is based on alleged conduct neither authorized by nor known to others at the firm. The firm is cooperating fully with the authorities investigating this matter," Winston & Strawn said in an emailed statement.
Bristol never disclosed the existence of the attorney trust accounts to any of his colleagues at his law firm, according to the SEC complaint, and all account documentation was delivered to Bristol's home address. Account statements repeatedly listed the names of Starr's clients as the source of the incoming transfers, the SEC complaint alleged.
Both the SEC and prosecutors also claim that Bristol lied in order to help Starr perpetuate his fraudulent scheme, giving Starr's clients false explanations for unauthorized transfers.
Prosecutors are also seeking forfeiture of more than $20 million from Bristol. The SEC is seeking a permanent injunction against Bristol, disgorgement of illegal gains plus prejudgment interest and civil monetary penalties under the Advisers Act.
Despite his alleged role in the misappropriation scheme, Bristol represented the Starr parties throughout the SEC's investigation of the Starr fraud, the SEC alleged. He also attempted to represent at least one victim of the fraud after the victim was contacted by the SEC.
"In addition to the fact that such representations violated the ethical obligations of lawyers, Bristol's clear intent was to obstruct and undermine the Commission's investigation in order to conceal the Starr Parties' - as well as his own - wrongdoing," the SEC said.
In June, Winston & Strawn filed a notice of withdrawal in the SEC's suit against Starr, confirming that it wasn't representing any parties in the case.
Bristol received his law degree from the University of Virginia School of Law and is admitted to practice law in New York and New Jersey, according to the SEC's complaint. He previously served as a member of the New Jersey Supreme Court's Office of Attorney Ethics, the SEC complaint noted.
The SEC case is SEC v. Starr et al, U.S. District Court, Southern District of New York, No. 10-civ-4270. The complaint lists the following attorneys for the SEC: Regional Director George Canellos, Sanjay Wadhwa, Maureen Lewis, Todd Brody, Timothy Casey and Sandeep Satwalekar of the agency's New York Regional Office. Gerard Hanlon of Hanlon, Dunn and Robertson in Morristown, New Jersey, is listed as counsel for Bristol.
The criminal case is U.S. v. Bristol, U.S. District Court, Southern District of New York (Manhattan), No. 10-cr-1239.
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