All language subtitles for American Greed s06e01 Naked Greed Celebrity Scam Artists Money

In this episode of American Greed,
Kenneth Iris Starr is the money manager

Hollywood's A -list.

Among his past investors, Annie
Leibowitz, Martin Scorsese, Sylvester

Wesley Snipes. You know, the names just
went on and on.

Starr woos potential clients, but he
doesn't stop there.

Ken wanted to be his client, and he used
my mother's money to purchase

influence.

He steals $30 million to buy his way
onto the A -list and live in the lap of

luxury. And it's all in the name of
love.

You know, when your money manager starts
going out with a stripper, that's a

tell.

May 27, 2010.

Dawn breaks on the ultra -cheek Lutz 74
building on Manhattan's Upper East Side.

The elegant building is home to some of
New York's upper crust.

This morning, four armed IRS criminal
investigators are sitting outside.

They're paying a house call to money
manager Kenneth Iris Starr, who

stole $30 million from his high -profile
clients.

They were pretty sure he was in that
apartment the night before and that he

would be there at 6 .30 when we planned
on executing the search warrant.

The doorman rings Starr's $7 .5 million
triplet.

He called Ken Starr. Ken Starr said,
tell him I'm not home and that only my

is home.

The two agents then proceeded to knock
on the door to which nobody answered.

Minute after anxious minute ticks by.

In certain instances, you might take a
door down. In this particular instance,

in a very expensive door and in a very
expensive building, the decision was

not to do such, so we tried to obtain
the keys.

The only way to do that was to get that
from the building manager.

Agent Robert Barringer and his team head
to the lobby to wait for the manager.

After an hour, Starr's fourth wife,
Diane, a 34 -year -old former exotic

finally answers the door.

At first we asked, where is Ken Starr?
Because a significant amount of time was

banging on the door. They had to know we
were there. They had to know we were

looking for Ken Starr. And she first
told us he's not home.

Home for Kenneth Iris Starr hasn't
always been on the Tony Upper East Side.

Reporter Michael Schneerson chronicles
Starr's rise for Vanity Fair magazine.

Ken was a real up from his bootstraps or
his Gucci soles kind of guy. He

grew up in the Bronx. His father was
apparently a public high school

Good grades come easily to the affable
young Mr.

Starr.

Apparently, Ken graduated from high
school at about the age of 15, went

to college, and then got a degree in
accounting, and certainly by 20 or 21

was set up in business.

Starr marries his college sweetheart and
goes to work for his brother's

accounting firm on Long Island.

His ambitions were probably fairly
humble in a way. He just wanted to be

best accountant he could be and then to
extend that by going to New York

University Law School and becoming a tax
attorney, which certainly helped him

get clients. But it was all still on a
very modest level until he met Paul

Mellon.

Paul Mellon, heir to the Mellon Bank
fortune, is the scion of one of

wealthiest families.

Paul and Bunny Mellon were certainly on
the level of Brooke Astor or Jane

Reitzman, not just in the amount of
money they had, but in their social

pedigree. They were as, you know, blue
blood as you can get in 20th century

America.

Mellon and his wife Bunny reportedly
like what they see in Starm.

and they begin introducing him to their
wealthy friends.

Soon, Starr amasses enough clients to
start his own firm, Starr & Company, in

Midtown Manhattan.

Aurora Kassirer, a court -appointed
receiver, says Starr serves as a

concierge for high -profile clients,
providing more than just financial

planning. For certain clients, he would
pay their housekeepers, their drivers,

do their taxes, pay their lawyers.

In other words, essentially he performed
all of the household services in terms

of the accounting services that you and
I would perform for ourselves.

Star and Company is successful.

So successful that Star soon lands in
the Ritchie Hamptons, where he hobnobs

with New York's elite.

Diane Sawyer, Mike Nichols, Peter Stone,
a librettist who did the musical in

1776. All these people knew each other.
And once one of them was charmed into

going along with Ken, so did the others.
They all just fell

like dominoes.

One of those dominoes is auto executive
Arthur Stanton.

Arthur Stanton was a very resourceful
entrepreneur who brought Volkswagen

over from Europe after World War II.

and started various distributorships
here, became very wealthy, had a fortune

perhaps $70 million.

Arthur Stanton is married to actress
Joan Stanton, the first voice of Lois

on the Superman radio show.

Her daughter, Jane Stanton Hitchcock,
recounts her fairytale childhood.

They were such a glamorous couple, and
they had this amazing circle of friends.

I mean, I went to parties with people
like...

Mike Nichols, Neil Simon, William
Styron, Dick Avedon.

Leonard Bernstein conducted Happy
Birthday to me at a party when I was 21.

The Stantons lead a charmed life, and
Ken Starr is desperate to join their

of confidants.

Next on American Greed, see how Starr
gets his hands on the Stanton family

fortune. My mom was the first Lois Lane
on radio. I think she thought Ken Starr

was Superman, and he turned out to be
Lex Luthor.

By 1987, the Glitterati are flocking to
money manager Kenneth Iris Starr.

These artsy people.

were very confident in one sense about
their success, what they'd done in the

arts, but they were very insecure about
money.

And what they really wanted to do was
just hand their money to someone who

say, don't worry, I've got it taken care
of, just, you know, give it to Daddy.

Starr gets lucky when one of his biggest
clients, New York auto executive Arthur

Stanton, dies in 1987 at age 69, leaving
a $70 million estate.

He left it in very secure stocks, bonds,
some real estate, and it was basically

very conservatively invested at that
time. He stipulated in his will that

two people would oversee that.

One was the family lawyer from Milbank
Tweed, and the other was Ken Starr.

Stanton's widow, Joan, pays Starr nearly
$230 ,000 a year to handle her

finances. He became almost like a member
of our family.

She trusted him to that extent.

She didn't have a grasp on money. Like
many, many artistic people, and like

of... Ken's clients, they wanted to do
their own thing and know that everything

was okay.

Jane Stanton Hitchcock, Joan's daughter,
says the family's lawyer assures Mrs.

Stanton that Star is handling her money
properly.

I remember going to meetings with Ken to
financial institutions where they

discussed how they would like to
distribute her portfolios and manage her

money.

And gradually, Ken began to sort of
change in his attitude towards

me, and I was not included on any of
those meetings anymore.

Star diabolically begins to push Jane
out of the picture, and she senses

something sinister about him.

Star knows that Mrs. Stanton is an easy
target.

that he can help himself to the $70
million estate if he can just get her

meddling kids out of the picture.

He began to isolate her from me, saying
we didn't know anything about

money and we were really not to be
trusted in terms of money, that he was

only one who truly cared for her.

And to other A -listers, Starr can do no
wrong.

John Conley, a friend of Starr's and a
Vanity Fair contributor, says that by

1991, Starr cements his reputation as a
conscientious money manager.

When he would meet people, it would be
very hard not to like Ken Starr. If he

came recommended to you as being a good
money manager, well, you'd just embrace

him. Fraud investigators call that like
the halo effect, like this guy's the

guy.

Then, in 1998, the Stanton family
attorney quits, leaving Starr to manage

estate unchecked. And their daughter's
suspicions are about to come true.

When he left, there was one pair of eyes
on that statement, and it was a wolf's

eye.

By 1998, Wall Street is riding high on a
fourth straight year of record gain.

The economy booms.

More celebrities look to Ken Starr for
financial guidance.

Everyone from Vanity Fair photographer
Andy Leibovit to writer Art Buchwald,

Lauren Bacall.

You know, the names just went on and on,
and Ken was very good at working those

networks.

Starr begins to invest in risky startup
companies and funds, which he touts as

sure bets to clients like Mrs. Stanton.

She would often just receive packages
and be told to sign here. And,

of course, she only looked at the bottom
line of all her statements.

Starr surreptitiously takes the Stanton
estate's money and uses it to curry

favor with his high -profile friends.

If he wanted a client and the client
said, oh, I'm thinking of doing this

project or this movie or whatever, Ken
would say, I can get you a million

dollars for that.

Or a half a million. Or two million.

And then he would just use my mother's
money as a piggy bank.

It's a devious pattern that repeats
itself time and again.

Star uses one client's account to fund
another client's project.

One of the most notorious examples is
the faltering restaurant chain Planet

Hollywood, founded by movie producer and
star friend Keith Barish.

and backed by celebrities like Bruce
Willis, Arnold Schwarzenegger, and

Starr client Sylvester Stallone. It was
not a good time to own the stock.

And by trying to keep people in stock,
what you do is you try to support a

artificially. If the price of the stock
is going down, it's going down for a

reason, usually.

And the reason was that the company was
in trouble.

Starr advises Stallone to leave his $10
million investment alone.

But Sly gets wise.

to hang on to all his stock in this
publicly traded Planet Hollywood chain,

while hearing from another side that
Keith Barish was quietly selling all of

stock.

In 2002, Stallone sues Starr for $7 .3
million in damages.

Stallone and Starr ultimately settle out
of court.

But to preserve his reputation, Starr
spins it that Stallone is an

unsophisticated investor.

Starr's position with Stallone was
Stallone just, you know, got in over his

head, and now he's crying foul, but
Stallone wasn't a victim. I think

was victimized by Ken Starr, and it was
an early sign that you should watch this

person, and people don't follow these
warning signs.

By now, Ken Starr, desperate for his own
fame and fortune, is using his client's

money to climb the social ladder.

When American Greed returns,

Starr meets the woman of his dreams, and
he spares no expense to land her.

With Diane, he became something else
again, sort of a slick, slightly cheesy,

older guy with a much younger woman. And
his clients were sort of scratching

their heads saying, who is Ken Starr,
really?

In 2002, Kenneth Iris Starr, money
manager to entertainment A -listers, has

emerged from a highly publicized legal
battle with Sylvester Stallone.

Ken Starr fits the profile of the
quintessential con man. Ken Starr is

cast. If this were a movie, you could
pick Ken Starr with his trappings, put

into the role and not really have to do
much.

While that may be obvious in hindsight,
some clients are only beginning to catch

on to Ken Starr, like widow Joan
Stanton's caretaker, Jim Fennell.

In the summer months, she would do a
seasonal migration to East Hampton, and

took care of her out there. And he would
go for walks with her, and he would

talk to her, and she loved him probably
as much as she loved Ken.

Among his other duties, Fennell also
serves as a trusted confidant, and he

reviews Mrs. Stanton's portfolio.

Jim is noticing that the bottom line is
always the same, no matter what.

And he becomes a little concerned about
that, because if you're making

investments, you know, you're up one
year, down one year, but it's always

basically the same enormous sum.

Mrs. Stanton approaches Starr about
Fennell's suspicions. And he says...

To her, oh, Jim is just a lawn mowing
gardener. What does he know about

What he did not know was that Jim had a
degree in accounting.

Fennell alerts Mrs. Stanton's daughter,
Jane, to the improbable bottom line that

every single year the amount is always
the same.

Finnell's suspicions deepen when he
discovers that Starr had taken out a $5

million line of credit on Joan's $16
million East Hampton house, which Starr

said would be used to invest in the
market.

Jim saw that money Ken had taken from
Joan ostensibly to invest in the

market was simply being used to pay her
taxes and other sort of stopgap

measures. And it was Jim who then said
to Jane,

Something's gone very wrong here. You
better get involved in this.

Now, it turns out that Jane was starting
a new career as a mystery novelist. So

she was the perfect person to start
sleuthing.

I think it's obvious that he really
thought she was prey.

Dar had misappropriated so much of the
estate that he needed the line of credit

just to pay the bills.

Finally, in April 2006, Starr goes in
for the kill.

While she's signing a new will, Starr
has Mrs. Stanton unknowingly sign over

durable power of attorney to him.

When you give an accountant your power
of attorney, you're basically losing all

your control over your money.

He can do what he likes. He is you.

Concerned that her mother is being
fleeced, Mrs. Stanton's daughter Jane

with Star and her mother to review the
estate.

I haven't seen Ken in years, and he is
such a far cry from the kind of nerdy,

gray -suited accountant. He looks like a
ninja accountant.

He's all in black. He's kind of hip.

As Jane recalls, Star works his magic
using his favorite terms like

honestly, candidly, to dazzle Mrs.
Stanton.

So we have this lunch, and then Ken
leaves, and my mother says to me,

when you were out of the room, I asked
Ken if he still handled, and she names

the person, and not only does he handle
him, but he's done a big deal for a

member of his family.

And I happen to have this man's number.

And I handed her the telephone, and I
believe on the other end of the phone he

said, Joan, he's a crook. Get out of
there.

She put down the phone, and she said,
Oh, my God, Janie, are we broke?

And I said, We very well could be.

Well, the first time Jane's suspicions
about Star are confirmed.

And the mystery novelist looks for other
evidence of Starr's trickery.

So I said, show me that will.

And she showed me the will.

And Ken had made himself an executor
with a million -dollar fee right up

And there was a durable power of
attorney.

But things are worse than Jane could
have imagined.

She soon learns that over the years,
Starr has misappropriated more than $20

million of the estate to invest in risky
deals and cover other clients' losses.

Jane Stanton Hitchcock takes the case to
the Manhattan District Attorney.

Jane is totally a heroine of this story
because she sensed early on

that Ken was either misusing or
embezzling her mother's money.

kept on the case for years.

I wrote a book called Social Crimes
about a woman who loses all her money

gets revenge.

Little did I know I would be writing
about my mother.

Meanwhile, Starr's marriage to his third
wife and office manager Marissa begins

to fail.

Marissa was a very spunky and...

sexy woman who was quite a bit younger
than Kent.

Unfortunately, she had what seemed to be
multiple sclerosis.

And when it was confirmed in about 2004,
according to her,

Ken completely freaked out.

It seems Starr has been looking for an
out, and with Marissa's illness, he

finally finds it.

Ken... was really backing off from the
marriage.

Although he said he wanted to remain
married to her, to just have sort of,

know, separate lives, but still both be
parents to their two daughters.

Mr. and Mrs. Starr make the unorthodox
decision to find him an escort.

Together they pay a visit to Scores, a
strip club in Manhattan.

He was apparently a man with a very
strong libido who was really pretty

sex -focused.

And he liked Old Anthony Girl. That was
his fantasy.

The stars meet a 29 -year -old stripper
named Diane Passage, a rising pole

superstar with expensive taste.

Star pursues her with unbridled abandon,
and he pays her $1 ,000 to accompany

him to dinner.

Ken was obsessed with this young woman,
no question about that.

But then again, most 67 -year -old men
are pretty happy to be with 30

-year -old women, especially somebody
who has a history of dancing on a pole.

And she danced quite well on a pole.

It's not long before Star decides he
prefers Diane's company to his sick

And he pushes Marissa out of the
business.

He was crazy enough about Diane to take
her, as his date, to all sorts of very

fancy functions where his glittering
clients would be. And some of them were

pretty taken aback.

As one later said, you know, when your
money manager starts going out with a

stripper, that's a tell.

On Valentine's Day 2007, Starr seals the
deal and slips a massive engagement

ring on Diane's finger, despite still
being married to Marissa.

Ken Starr is a middle -aged, balding
individual who is not a movie star, and

he hangs with movie stars. He travels
with movie stars. This gave him a little

bit of an ashy thought. And I think he
really either loved her or was

with her.

Outwardly, Star seems to be on cloud
nine.

But looks can be deceiving.

Despite no longer managing the company,
Star's wife Marissa is still on the

payroll. And Star has trouble keeping
all his balls in the air.

Marissa was getting $750 ,000 a year
salary.

And also, Ken was paying her $2 ,500 a
week in cash.

Plus their phone bill, plus their credit
cards.

It was when he had to both deal with
Marissa and the expenses

and obligations of separation and
divorce with her, as well as Diane, that

became too much for him.

When American Greed returns, Starr is
about to wed the bombshell of his dream,

while another woman, Jane Statton
Hitchcock, prepares to drop a bomb of

I'm going to get to the bottom of this
mystery and I am going to do something

about it.

In 2007, New Yorker Kenneth Iris Starr
is living large, running a boutique

financial management firm for some of
America's wealthiest celebrities.

Ken Starr ran in the right circles. He
had the right credentials. He had all of

the appearances of rectitude and
propriety, with the exception, perhaps,

marrying a stripper.

Despite a pending divorce from his sick
wife, Marissa, Starr goes to great

lengths to woo his fiancée, polled
answer Diane Passage.

It was when she came into his life...

that he started getting sloppy in his
money management, getting greedy, partly

because she wanted all sorts of
expensive baubles and he wanted to

And there's no doubt that it became
harder for Ken to keep this whole

afloat.

Before long, Starr's financial
carelessness catches up with him. It was

2006,

2007, that...

Ken seemed to go into a higher gear of
financial, let's call it mismanagement.

He started putting clients' money into
truly reckless schemes in which he

often had a financial interest.

By now, it's obvious.

Ken Starr is not a solid, trustworthy
accountant, and trouble in his personal

life is in helping matters.

In May, Starr's divorce from his wife
and office manager Marissa is finalized,

just two weeks before his wedding to
Diane Passage.

And without Marissa to manage Starr and
company, clients' tax returns languish

and statements are delayed.

Mike Nichols and Diane Sawyer left at
that point, and others did too.

But Ken was too enamored of Diane to
apparently notice.

Star and Diane passage Mary at the Wynn
Hotel in Las Vegas on Memorial Day

weekend 2007.

By now, the Stantons have blocked Star's
access to the estate, and in April

2008, they slap him with a lawsuit
accusing him of breach of fiduciary

Desperate, Star needs to find another
source to line his pockets, and he turns

to the charity circuit.

I think Ken Stark trolled.

those events looking for potential
victims.

One of those potential victims is famed
jeweler to the stars Jacob the Jeweler

Ereba.

Criminal defense attorney Benjamin
Braffin represents Ereba.

Jacob came to the United States from
Russia with nothing, very little formal

education.

He and his wife began a small jewelry
company on a bench in someone's booth on

47th Street.

And several years later, he turned it
into one of the most successful high

jewelry companies in the world.

Starr first meets Erebov and his wife
Angela at an event hosted by a wealthy

philanthropist back in 2006.

And the next day or the day after,
Ashley showed up in Jacob's store on

Street and bought a watch for $70 ,000.

Over the next few months, Starr launches
a charm offensive.

wooing Jacob the jeweler like his next
conquest.

He even becomes a regular customer at
Jacob & Company, spending more than $400

,000 on diamond jewelry.

That's another way you can seduce
someone into believing that you're the

deal because you appear to have enough
money to shop in a store like that. You

pay your bills ostensibly, at least at
the beginning.

And then it's another way of seducing
someone into believing you're a

person. But why would Starr go after
Jacob the jeweler, a seemingly

and savvy businessman?

Like so many predators, Starr has a
knack for seeing and exploiting

And he knows that Jacob is in some hot
water of his own.

Jacob had lied to law enforcement during
an investigation into a notorious

narcotics ring.

Now he's about to do time for
obstruction of justice.

Starr knew that Jacob would then be
away, that the business that Jacob was

might suffer in his absence, and Starr
then knew that Angela Erebov would be

alone, if you will, for several months
at the very least, and that's, I think,

part of the modus operandi of Ken Starr.

Erebov wants to ensure that his family
will be taken care of while he's in

prison. And he plays right into Starr's
hand.

There was a promise by Starr that your
wife is going to be very, very wealthy

and your family is going to be very,
very wealthy while you're in prison. Do

worry about it.

Starr begins to talk up a few exclusive
investment opportunities, which he again

claims are sure bets.

According to Ken Starr, you have to
earn.

the right to participate. He had to be
sufficiently impressed with your wealth,

with your success, before he allowed you
into these wonderful deals.

Star tells the Erebovs about the
nightclub chain Martini Park, a Chinese

Internet startup, and a technology
company called Universal Identification

Solutions.

That was a company set up to market
voting machines, primarily to areas...

like Venezuela, Mexico, and countries
like that.

If you did some due diligence into a
company like that, one would think that

didn't need Ken Starr to get Venezuela
voting machines.

I mean, I don't even know whether they
vote in Venezuela. But if they do, why

you need Ken Starr? Well, Ken Starr had
a line of, I guess the word is bulk.

By October 2008, the Ereboffs invest
close to $14 million in Starr's

sure bets.

And when Jacob surrenders to the Bureau
of Prisons on January 20, 2009, Starr

finally gets his chance to pounce.

Next, see how Angela Ereboff falls
victim to Starr's scheme and how he uses

money to live in the lap of luxury.

He went after people who are vulnerable
and said, I'll take care of.

the money and invest it for you and make
sure that everything's okay.

For more details about Star Scheme,
visit AmericanGreed .CNBC .com.

We'll be right back.

In January 2009, money manager Kenneth
Iris Starr is sitting on a gold mine in

the fortune of Jacob the jeweler Erebov
and his wife Angela.

The couple invest nearly $14 million
with Starr so that Angela can live off

returns while Jacob is in prison for the
next year and a half.

Ken Starr was promising five, ten times
your initial investment.

You know, my philosophy is if it sounds
too good to be true, it's generally not

true. The con person's spiel, if you
will, is if it sounds too good to be

someone is going to want to believe that
it is true.

The Erebovs want proof of Starr's
performance.

And at attorney Benjamin Brafman's
direction, Angela requests tax forms

-1s from these private companies.

In certain investments, you would get a
K -1, which is basically a report to you

of the financial operations of the
company. Those are things that should be

given to you on a regular basis at tax
season.

But Starr doesn't deliver the K -1s, nor
does he deliver the promised returns to

Angela Ereboff.

Instead, Starr gives it the runaround.

She continually pressed him, almost on a
weekly basis, to the point where he

then started saying the universal deal,
which was with voting machines, was

about to come due. And there was huge
returns for Starr and all of the

investors.

The excuses became more and more
outrageous, and I ultimately

convinced... Angela Arabov that she had
to record some of her calls with Ken

Starr because otherwise there would be
denial.

From Halloween through Thanksgiving
2009, Angela Arabov records dozens of

with Starr. In those calls, Starr feeds
Angela far -fetched excuses

that her checks are available, but they
can't be deposited.

Or that Starr needs the government's
permission to deposit them.

They sounded unbelievable.

You couldn't understand how somebody
could continue to listen to this type of

stuff without interjecting that this is
crazy.

Without a second thought, Brafman and
the Erebovs take the tapes to the U .S.

Attorney's Office.

The tapes that we provided to the
government were powerful evidence that

locked into lies that he could not
explain.

The expression I used, which I hope
people don't find offensive, is that

a couple of weeks, Ray Charles could
have seen that this was a fraud.

Soon, the heat starts to come down on
Starr.

Securities and Exchange Commission
investigators come knocking.

And Star's blue -blood clients like
Bunny Mellon make a run for the door.

Bunny Mellon's lawyer demanded $4 .3
million back that had been invested, I

think, in Martini Park and some of these
other sort of crazy enterprises.

And the prosecutors allege that in
giving that money back, Ken had to then

money from other clients to keep it all
rolling.

Ken Starr took a lot of that money, and
when you trace it, you find that some of

that money went to pay back investors
whose money he had pilfered, and also

back into buying himself and Diane
Passage a $7 .5 million apartment.

That spectacular apartment is in the
exclusive Lux 74 building on East 74th

Street on Manhattan's Upper East Side.

Realtor Jackie Teplitzky was a listing
agent on the unit.

It was a triflex.

You had a beautiful living room with a
great fireplace. You had a large master

bedroom or guest bedroom. And then you
stepped out to 1 ,500 square feet of

outdoor space that was amazing.

It had an indoor lap pool. It had a 1
,500 square foot atrium that was

surrounded by...

the buildings behind it and to the side
of it, and you were able to look up and

see the stars from this atrium. It was
an extravagant house.

I think he did it because he was afraid
of losing face. He told everybody that I

know that he was moving into this
apartment, and it was Diane's dream

In April 2010, that dream is about to
come true for Starr, who quietly siphons

$7 .5 million in cash from his
unsuspecting clients to buy the

Starr had direct control over the
clients' bank accounts and personal

He basically took money from their
accounts, diverted it to two attorney

accounts to make it look legitimate and
conceal the nature of the fraud that he

was committing.

And then from those two attorney escrow
accounts, he directed that to his

personal benefit.

After only a month -long investigation,
on May 27, 2010, the feds gather

enough evidence to serve an arrest
warrant for Starr.

Four agents arrive at Starr's condo at 6
.30 a .m.

When the doorman calls to announce them,
Starr tells the doorman to say he's not

at home.

Rather than take the door down, agents
call the building manager to get a key,

but it takes him about an hour to get
there.

You lose the element of surprise that
you've knocked on the door, and now an

hour later, somebody could be waiting
inside.

With the key finally in hand, agents
give Starr one last chance to open up

before they bust in.

This time we knocked on the door, fully
announcing that we were law enforcement,

that we were there to arrest Ken Starr,
that somebody had to open up the door.

After a few moments, Diane reluctantly
answers.

When American Greed returns, Diane
Passage has a decision to make.

Lie to the feds or give up her husband
and her cushy lifestyle?

I'm an FBI agent. Tell us how. You ever
watch television?

You ever see if it's a crime to lie to
the FBI?

Now I'm going to ask you again.

See you home?

May 27, 2010.

IRS agents wait impatiently at the door
of embattled money manager Ken Starr's

luxury Manhattan triplex.

Starr's wife, Diane, must decide either
to lie to the feds or give up her

husband, knowing her life will never be
the same.

She is trying to say to the feds, I
don't know where he is. And then the

says... Well, you know, if you don't
tell us, you're an accomplice, and then

points out that he's there.

I mean, love has its limit.

Agent Robert Barringer and his team
burst into the apartment.

We knew our focus was to go upstairs,
especially when we knew he was there.

We circled around once or twice, looking
through closets and things.

We really didn't see him.

Agents try to search every inch of the
massive unit, but it's nearly

And on the first go -around, Star is
nowhere to be found.

There was a second sweep, which appeared
to be a bedroom closet, to which one of

the younger agents noticed shoes with
legs attached to them behind clothing.

When you initially opened the closet,
you couldn't actually notice that area.

You had to open it and look inside to
see the other area that was more hidden.

So at that point, our biggest guy...

pulled them out of the closet, and
placed them under arrest.

Breaking news here for Squawk on the
Street. U .S. Attorney for the Southern

District of New York has busted a
financial advisor for a $30 million

name is Kenneth Starr.

In June 2010, Starr is indicted on 23
counts of fraud and money laundering for

stealing from 11 clients, including
Jacob the Jeweler Erebov.

The government freezes Starr's assets
and appoints Aurora Kassirer as the

receiver. When I came into the business,
there were about 40 employees.

They hadn't been paid in a week or two.

Their health insurance premiums, as it
turned out, had not been paid.

The place was shambled. People really
looked for direction.

In Starr's office, Kassirer finds
celebrity memorabilia and photographs.

And there's something else.

Most commonly, officers have photographs
of children and grandchildren and pets

and other family members.

There were some pictures of other family
members here, too, but there were

poster -sized photographs of his wife
all over the place, which is something I

really haven't seen before.

In September, Starr, who is facing a
maximum 45 years in prison, strikes a

with prosecutors and pleads guilty.

Finally, on March 2, 2011, Starr's wife,
Diane Passage, and his victims,

including the Stantons, walk into a
crowded lower Manhattan courthouse to

his fate.

He was a guy who seemed to lack some
sort of moral compass, not only that led

him into breaking the law, but led him
to just blithely plunder the accounts of

people who had trusted him.

Judge Shira Scheindlin's sentences start
at seven and a half years in prison

with three years supervised release,
well below the recommended guidelines.

He's ordered to pay $30 .1 million of
the $33 million he stole in restitution.

The judge thought that this was not
characteristic of Thaw, that there was

charitable deeds that he did, and she
thought that the marriage to his fourth

wife, was partly responsible for him to
go astray. I believe the term she used

was infatuation.

In the end, Starr desperately moved his
client's cash from one account to

another, making the receiver's job
nearly impossible.

I cannot imagine the pressure he must
have been under, taking from Peter to

Paul, to pay Mary, to pay Joan, to pay
this one. I mean, I don't know how he

it. I think Jacob and Angela will get
back a fair amount of their investment,

not a substantial portion, and they'll
never be made whole, but I think they'll

ultimately get back at least several
million dollars, and they would have

zero back if they did not act.

As for Diane Passage, she files for
divorce from the star in July 2011, and

government seizes their $7 .5 million
condo.

Now the former stripper has downsized to
a Times Square pita tear.

Starr ultimately settles with the
Stanton estate, which was not part of

criminal case.

But to Jane Stanton Hitchcock, the
mystery novelist, Starr's crime and his

motivations remain a mystery.

I wonder if he was always like this, or
if it evolved.

Absolute money corrupts absolutely.

I mean, if the lifestyle of his clients
was so mesmerizing to him, if he wanted

that world so badly and wanted to
impress people so badly that it just

corrupted him, or if he was always like
this.

One dark night on a deserted country
road, three shots ring out.

Who shot the lawyer and murdered his
wife?

This is a murder for money.

American Greed, next on CNBC.

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