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August 01, 2010 at 08:00 PM
Back in April, actress Uma Thurman played the heroine in a thriller where a devious financial advisor misappropriated $60 million from clients. In this case, however, the drama was real life and tthe money was hers. The story, which involves many more famous and wealthy clients, is particularly harmful to honest advisors of the affluent since it could raise unwarranted suspicions, especially after the Madoff affair last year. In this case, Thurman knew her advisor well, and many of his other clients considered him a friend.
Where Did the Money Go?
Thurman had a friendly relationship with New York advisor Kenneth Starr, who she relied on for many years for family-office service. Recently, Starr sent her monthly account statements only sporadically. She found them confusing, and wasn’t sure what the advisor was doing on her behalf. Last year, Thurman showed the statements to a friend with a financial background who compared data for a three-month period and found her assets had dropped significantly. During this time, no one from Starr’s office had contacted her. Thurman authorized her friend to instruct Starr to move all of the assets he managed for her into safer investments.
Their concerns didn’t stop, however. Near the beginning of this year, Thurman stopped receiving statements altogether. On April 17, Starr unexpectedly left a series of voice mails stating that he wanted to “check in,” but not specifying any issues. Thurman ignored the calls, since her friend was dealing with the advisor. Then, six days later, her bank called. The representative wanted to find out if she knew why $1 million had been wired from her account to a lawyer associated with Starr on April 13–a few days before the advisor left messages for her. The lawyer was Jonathan Bristol of the prestigious Winston & Strawn firm, one of the top 50 law firms in the country with clients that include Sears, Allstate, American Airlines, Bell Atlantic, Monsanto, Abbott Laboratories, Hyundai, and Black & Decker.
She’s had enough. Neither Thurman nor her friend knew anything about the transaction. On April 26, Thurman and her lawyers marched into Starr’s office. They asked him why the $1 million had been wired to Bristol. He replied that it was for an investment, but the opportunity to invest was missed. He didn’t provide any other details. They then asked him to contact Bristol so the funds could be returned. Starr left the room and returned several times claiming Bristol was unreachable by either phone or email. At one point, Starr sent in an employee who told Thurman and her lawyers that the $1 million purchased a two-week certificate of deposit.
Tapping Client Accounts
Without Starr’s knowledge, Thurman and her lawyers used a Blackberry to go online and search for Bristol and found a number for his law firm. Thurman then used one of Starr’s private conference rooms, called Bristol, and told him that she had a problem since a large portion of her savings was in his account. Bristol replied that he didn’t know that the money was hers and that he thought it belonged to Starr. He got angry at the advisor’s bungling. Bristol promised to send the money back–and also promised not to tell Starr about their conversation. Thurman and Bristol spoke several more times that day, as he updated her on the progress of returning the $1 million, which she eventually received.
However, Thurman’s money had left Bristol’s account prior to her calling him, so the attorney needed another way to pay her. As it turned out, $1 million was transferred from the lawyer’s account to Thurman’s on that day–the problem was its true source. Just prior to Bristol making the transfer, his account received a $1 million deposit from the account of another client of the financial advisor, Jim Wiatt, former CEO of the William Morris talent agency, and his wife.
These unauthorized transfers were just a fraction of Starr’s schemes. The days leading up to April 16, and the day itself, turned out to be central to one of key charges against Starr. On April 16, Colcave, LLC purchased a luxury condo apartment on the Upper East Side of Manhattan for $7.5 million. The online advertisement described …
… what that sum would purchase: five bedrooms, 6.5 baths, 32 ft. indoor lap poll, recreation room, media room, terrace garden, kitchens with commercial-quality appliances and floor-to-ceiling windows, among other high-end amenities. Starr signed on behalf of Colcave, and even sent out home change-of-address notices to some clients. The advisor paid cash for his new home. The source of the purchase was the personal savings of the advisor’s clients.
