Original subtitles

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.

Business Intelligence CNBC