05.29.10

The Ponzi King's Clients Dish

Former clients of accused celebrity scammer Kenneth Starr talk about how he roped in clients with private jets and promises of riches. Plus, saucy new details on his ex-stripper wife.

Her twitter handle was hottubgoddess.

A recent Facebook update read, “White mink, White mink, White mink.” And an update from last year: "Happy father's day to the papa's, the single parents and the really really generous sugar daddies!"

She spent so much time and money at Alexander McQueen that the salesgirls became friends who showed up at pole dancing events she hosted, sources said.

Did Diane Passage, the former Scores stripper, love her husband Kenneth Starr, the well-known celebrity accountant indicted Thursday for $30 million in fraud and embezzlement?

“Ken never liked to say no," according to one former client. "He was a fantastic enabler.”

“He was besotted with her and she loved the lifestyle,” says one friend of the couple’s. “She is exactly who she looks like.”

Consider a few more of Passage's Facebook status updates: Diane Passage "Just got my pink diamond Detroit D from Johnny Dang!!! Amaaaaazing!!!!"

Diane Passage "is thinking about diamonds. pear-shaped."

And Diane Passage is "Shopping today! Zanotti, Madison Ave, Yay!"

Peter Lauria: The Pole Dancer & the Ponzi

Allan Dodds Frank: Madoff vs. Starr

Jacob Bernstein: How Uma Sniffed Out the Ponzi
Those riches were par for the course in Starr and Passage's world. Starr once counted Sylvester Stallone, Warren Beatty, and Annie Leibovitz among his clients—before they all became suspicious of him and pulled out their cash. Uma Thurman is his latest victim; her saga of disappearing money is recounted in the IRS’ criminal complaint against Starr, who has been denied bail and has not yet entered a guilty or not-guilty plea.

Starr’s over-the top personal life matched his history of bold, risky investment choices on behalf of his clients.

Once Starr’s relationship with Passage was out in the open, he took to showing sexy photos of her on his iPhone to friends and business associates. When she and her young son moved in with him, a stripper pole was installed in the apartment, say two sources who visited.

They got married at the Wynn in Vegas—Passage was Starr’s third wife—and returned again and again, frequently by private jet. In fact, say friends who’ve known him for many years, Starr was constantly handing NetJets brochures to his clients and extolling the virtues of flying private.

Efforts to locate Starr and Passage for comment were unsuccessful.

“What Ken was really good at it,” says a former client, “was that he had all these clients who were newly rich and he convinced them that they could buy anything they wanted, that he would find a mortgage for them that was higher than anything they’d ever dreamt of and they’d be able to pay for it because they were so talented, they were bound to make more money. And many of them did. Ken never liked to say no. He was a fantastic enabler.”

My own family has had our taxes and certain basic accounting functions performed by Starr & Co., though they never handled investment advice.

A lot of the advice Starr gave paid off.

Says Marshall Brickman, the well known screenwriter and a former client: "Ken was the guy who said, 'Yes you can do it, you deserve it, and we’ll work it out.’ We bought a house in the Hamptons that Ken worked out. Years later we sold it at a great profit. Had we been dealing with someone a little more conservative we might not have bought the house. Was that luck? If the market had crashed, I might be telling you a very different story. "

Brickman also invested in the road company of Phantom of the Opera, which benefitted Andrew Lloyd Webber, another Starr client.

A more traditional accountant might not have suggested doing so, recognizing that it could be deemed improper, particularly if the investment didn't pan out. But it did—at about four times the cost of the investment, according to Brickman.

Unfortunately, when the economy fell off the cliff, Starr didn’t seem to get that he was supposed to behave a little differently.

Says another former client: "When the Madoff thing happened, I told my husband, 'I think your accountant is just having too much fun. Maybe we should go somewhere more boring.' And we did. We didn’t anticipate that we’d be right. It just seemed a little off.”

There were also rumors circulating that some of his clients had done poorly, that he’d encouraged them to invest in strange things that hadn’t panned out, from telecommunications ventures to Planet Hollywood to flop movies being produced by his other clients.

In 2008, Starr was sued by Joan Alexander, an actress in her 90s who’d been the voice of Lois Lane on the radio show The Adventures of Superman. Alexander was married to Arthur Stanton, a wealthy businessman who left her a fortune worth an estimated $70 million. But a lawsuit filed in New York State Supreme Court alleged that “over the course of many years Mrs. Stanton lost tens of millions of dollars as a result of the misconduct of Mr. Starr and his related companies and colleagues.”

She charged that he’d placed a “substantial portion of her funds in illiquid, speculative, and inappropriate investments,” dropping millions of dollars of her money into “pet projects that he and his friends controlled.”

“Without adequately informing Mrs. Stanton,” the lawsuit continued, “Mr. Starr invested Mrs. Stanton’s funds in numerous enterprises in which Mr. Starr either (1) had an undisclosed interest or management or board position, which permitted him or related or affiliated entities to receive substantial fees and other benefits from the investment entity or (2) had connections to the investments through associates, relatives, friends, or other clients or potential clients. Mr. Starr failed to disclose his relationships to these funds and entities to Mrs. Stanton prior to investing her money in them.”

In the end, sources say, Starr settled with Alexander, who died in 2009, and agreed to pay her daughter, the well known mystery writer Jane Stanton Hitchcock, an undisclosed amount of money in exchange for her silence.

Still, the lawsuit was public, and the entertainment industry is fairly tight-knit. Even as news of Starr’s alleged impropriety faded from public view, many began to see Starr as tainted.

But not him, apparently. Starr continued living large. As a source told the Daily News Saturday, "He bought [Passage] all the latest designer fashion and really expensive jewelery." For a recent birthday of his wife's, he rented out a nightclub and hired the rock band Everclear to perform.

A few weeks ago, Starr moved into his new $7.5 million apartment, the one he’d later be arrested in, and accused of stealing money from Uma Thurman, Jim Wiatt, and Bunny Mellon to buy.

One thing he made sure to install before the feds carted him off to jail, according to a person who made a visit there?

A second stripper pole.

Plus: Check out more of the latest entertainment, fashion, and culture coverage on Sexy Beast—photos, videos, features, and Tweets.

Jacob Bernstein is a senior reporter at The Daily Beast. He has also written for New York magazine, Paper, and The Huffington Post.