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Starr Said ‘Not That Much’ to Theft-Size Accusation

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June 21 (Bloomberg) -- Kenneth I. Starr replied “not that much” to an investigator who accused him of stealing $30 million, a prosecutor said in court -- a statement the government said it may try to use against the accused investment adviser.

Assistant U.S. Attorney William Harrington today told District Judge Shira Scheindlin in New York that prosecutors are deciding whether to use the statement Starr made May 27 after he was found hiding in a closet in his home.

“At the time he was handcuffed, the agent made some comment about, ‘This is your time to get things straight. You’re at the crossroads. You stole $30 million,’” Harrington said. “The defendant responded, saying, ‘Not that much.’ This occurred after he was in custody, after being handcuffed.”

Starr, 66, was indicted June 11 for 20 counts of wire fraud and one each of securities fraud, money laundering and fraud by an investment adviser. He stole at least $59 million, almost twice the first estimate, according to the indictment. He is being held without bail.

Scheindlin asked Harrington if the government was certain of Starr’s exact words and whether the alleged comment made was made after he’d been advised of his constitutional right not to incriminate himself.

Harrington said that the government would put together a report from the agent’s notes to determine the exact timing of the comment and if the U.S. would seek to use them against him at a trial.

Facing 20 Years

Starr, who pleaded not guilty, faces as long as 20 years in prison if convicted of wire fraud, prosecutors in the Manhattan office of U.S. Attorney Preet Bharara said.

Harrington today told Scheindlin the government last week turned over more than 800,000 pages of documents compiled as evidence in the case from Starr’s computer and his company.

Peggy Cross, a public defender appointed by the court to represent Starr, told Scheindlin she is determining whether her client can obtain funds to pay a private lawyer. As part of the government’s case, the U.S. Securities and Exchange Commission froze his bank accounts.

Scheindlin granted Cross’s request for a two-week adjournment delay. The next hearing is set for July 7.

Starr once managed more than $700 million for about 175 wealthy clients, including heiress Rachel “Bunny” Mellon and actors Sylvester Stallone and Wesley Snipes.

The civil suit is SEC v. Starr, 1:10-cv-04270, and the criminal case is U.S. v. Starr, 1:10-mj-01135, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net.

To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net.

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