July 27 (Bloomberg) -- Money manager Kenneth I. Starr, facing a criminal trial on charges he defrauded his celebrity clients of at least $59 million, was conditionally granted $10 million bail two months after his arrest.
U.S. District Judge Shira Scheindlin in Manhattan said today that to secure the bond, Starr must post as collateral the homes belonging to his two brothers, a Florida condo, $250,000 in cash and a rare book collection owned by one of the brothers. His wife, Diane Passage, and his brothers must sign the bond, as must a family friend who owns a charter jet business.
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 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. Starr, who also represented actors Sylvester Stallone and Wesley Snipes, has pleaded not guilty and faces a Nov. 1 trial date.
“This case warrants a high bail,” Sheindlin told Starr’s lawyer, Flora Edwards, who proposed the brother’s rare book collection and a Florida condo as security for a $2 million bond.
“People must be willing to risk everything and their entire bank life,” Scheindlin said. “I don’t believe in doing this half-way bargain. Either they’re willing to go to the mat for him or they’re not.”
Edwards said one brother, Warren Starr, a certified public accountant, didn’t want to post his home in Connecticut because he hoped to sell it soon. He was willing to offer a rare book collection worth an estimated $1.7 million, including a 15th Century illuminated manuscript, as part of the bond package, Edwards said.
Stuart Starr, a brother who is an electrical engineer, was unwilling to post as security his home in Falls Church, Virginia, Edwards said. He was willing to post a Miami, Florida, condominium where his mother-in-law resides, the lawyer said.
Edwards said two other people were also willing to sign Starr’s bond, including his Passage and a family friend, Michael Giordano, who she said owns V1 Private Jets.
Scheindlin questioned why the brothers weren’t willing to use their homes as collateral for their brother’s bond.
‘Lack of Trust’
“Either they’re willing to risk posting their property or there’s a lack of trust,” she said. “I’m not quarreling, but if you trust the man with your book, why not post it all and make the $10 million bond? We shouldn’t be struggling.”
The judge asked if the brothers were in the courtroom, “Are they here? Oh, they’re not hearing this? How sad.”
Scheindlin told both Passage and Giordano that if they signed Starr’s bond and he fled, they would face a $10 million judgment against them.
Giordano said he understood, telling the judge, “I am the best private jet guy in the universe, if he decides to go anywhere in the world, I can find him and get him to your house.”
Passage told Scheindlin she understood the ramifications of signing a bond on her husband’s behalf, saying, “He’s not going anywhere.”
Scheindlin said that if Starr’s sisters-in-law were on the mortgages for the two homes, they would also be required to sign his bond. The judge said prosecutors would be permitted to review the equity in the homes and interview all co-signers of the bond.
“There’s no release until this is reviewed,” the judge said. “The government will be looking at deeds and everything.”
The judge set the next court date for Aug. 12.
Assistant Manhattan U.S. Attorney Michael Bosworth declined to comment after court.
“We’re going to try to make this bail package,” Edwards said after court. “This is a very significant package and Mr. Starr will do everything he can to meet these terms and win his release on bail. Certainly the court recognizes that there are conditions under which he can be released. He’ll stay in custody until it’s done.”
The case is U.S. v. Starr, 1:10-cr-00520, U.S. District Court, Southern District of New York (Manhattan).
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