Martin Scorsese, Company Sued by Kenneth Starr's Receiver to Recover Fees

The receiver for firms once controlled by jailed money manager Kenneth I. Starr sued filmmaker Martin Scorsese and his production company for about $600,000.

The complaint, filed today by receiver Aurora Cassirer in New York state court in Manhattan, said Scorsese’s Sikelia Productions Inc. owes the Starr companies payment for bookkeeping, accounting and other services.

“I want to get the victims made whole,” Cassirer said after a hearing today in Manhattan federal court.

In a related criminal case, Starr, 66, is charged with 20 counts of wire fraud and one each of securities fraud, money laundering and fraud by an investment adviser. He is being held without bail and denies the charges. If convicted of wire fraud, Starr faces as much as 20 years in prison.

He was arrested May 27 and accused of defrauding clients, including heiress Rachel “Bunny” Mellon, in a scheme to buy a $7.5 million Manhattan apartment. Prosecutors expanded the allegations in a subsequent indictment.

“Martin Scorsese’s Sikelia Productions has paid substantial fees to his former business manager’s firm, and if it has been determined that there is anything still outstanding, it will be rectified,” Michelle Benson, a spokeswoman for the Oscar-winning director of “The Departed” and “Goodfellas,” said in an e- mail.

‘Substantial Claims’

Cassirer was appointed as receiver of Starr Investment Advisors and Starr & Co. after the Securities and Exchange Commission filed a lawsuit in May. At today’s hearing, U.S. District Judge Sidney Stein put the regulator’s lawsuit on hold until the conclusion of the criminal case while authorizing Cassirer to pursue assets that may be returned to Starr’s clients.

Neither Starr nor a lawyer for him appeared on his behalf. Attorney Abbe Lowell, who previously said he may represent Starr, sat in the gallery during the proceeding.

In a report to Stein today, Cassirer said Starr’s firms are no longer capable of conducting business and have “few if any assets of significant value.” Still, she said there are “substantial claims” she may pursue.

Cassirer said all of Starr’s clients have ended their relationship with him and that she has recovered about $128,000 in fees that were owed to Starr’s companies, along with other assets. The receiver also disclosed that a Starr-owned company called Pastar LLC made a $1.39 million deposit on the purchase of a $13.9 million apartment on East End Avenue in Manhattan in August 2007.

Second Apartment

“The contract has never closed and Pastar LLC’s right to obtain the return of its deposit is in dispute,” she wrote in her report.

In the Scorsese lawsuit, Cassirer says the director and Sikelia agreed to pay Starr’s companies 5 percent of at least $11.9 million in earned income from 2006 to 2010. Also, Starr’s companies made interest-free loans to Scorsese and Sikelia, the complaint says.

Scorsese’s account manager left Starr’s companies in January and took the director’s business with him, the complaint says. After that, the account manager told Starr that Scorsese wouldn’t pay the $597,958 that Scorsese owed and would pay only $144,300 over two years, the complaint says.

Cassirer said in her report that a few other clients, whom she didn’t identify, have also failed to pay fees owing to Starr’s firms.

The suit is Cassirer v. Sikelia Productions, New York state Supreme Court (Manhattan). The criminal case is U.S. v. Starr, 1:10-cr-520, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in New York at dglovin@bloomberg.net.

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