NEWARK (CN) – Former William Morris Agency CEO Jim Wiatt claims financial adviser Kenneth Starr and Winston & Strawn attorney Jonathan Bristol stole $2 million from his trust account to fund Starr’s Ponzi scheme. Starr, once known as “accountant to the stars,” pleaded guilty in September to defrauding clients of $59 million; he faces up to 10 years in prison.
In his federal complaint, Wiatt claims that Starr referred him to Bristol, “whom he described as a good friend and a successful partner at Winston & Strawn,” in October 2009. Wiatt says he was seeking legal advice as he prepared to leave the William Morris Agency. He says that Starr did not disclose to him that he too was represented by Winston & Strawn.
Wiatt says that Bristol also represented him and his wife in dealings with the Securities & Exchange Commission that turned out to be an investigation of wire transfers from the Wiatts’ account into Bristol’s attorney trust account in New Jersey. Bristol was charged this month with helping Starr use $7 million in stolen client funds to buy a luxury condominium and with laundering a $100,000 payment to the firm from Starr’s clients. “Bristol has been charged in an unsealed indictment with laundering in excess of $20 million in connection with Starr’s felonies and has surrendered to law enforcement,” the complaint states. “He has also been named in an amended complaint filed by the SEC.”
The Wiatts say that on March 17 this year Winston & Strawn received a $100,000 payment for legal services “that was purportedly from Starr. However, the $100,000 in fact came from Bristol’s attorney trust account, which Bristol knew belonged to defrauded clients of Starr.”
From August 2003 until May 2010, Starr managed the Wiatts’ personal finances, including “accounting, business management, investment management, investment advice, financial consulting, financial planning, and tax advice,” the complaint states.
The Wiatts say they “placed their complete trust in Starr and gave him access to and control of the majority of their significant financial assets,” and that Starr “cultivated a close personal friendship with Jim Wiatt.” Starr was arrested the day after he met with Wiatt and friends for drinks, according to the complaint.
Bristol, who was hired by Winston & Strawn in November 2008, acquired Starr as a client while a partner at Thelen LLP, according to the complaint. Bristol, who allegedly bragged to colleagues about his relationship with Starr, generated more than $1 million in legal fees for Winston & Strawn in 2009, according to the complaint.
Sometime this year, Bristol and Starr “conspired with one another to steal the Wiatts’ and other Starr clients’ money for the purpose of purchasing lavish extravagances for Starr such as a $7.5 million apartment on the Upper East Side of Manhattan,” the complaint states.
Starr twice “unlawfully and without authorization, transferred $1 million of the Wiatts’ money (for a total of $2 million) from the management account to Bristol’s attorney trust account,” the complaint states.
Bristol allegedly knew that the two $1 million wire transfers were from his client’s account, to whom he owed fiduciary duties, because “the bank records Bristol received indicated that the source of the funds were from Jim and Elizabeth Wiatt,” the Wiatts say.
When Bristol received the stolen funds, the money was then “transferred from the attorney trust account, and then further converted for the Starr defendants’ own use and purposes,” the complaint states. “In particular, these monies were immediately wired back out of the attorney trust account to Starr & Co. and/or other third-parties believed to be Starr clients to perpetuate the Starr defendants’ ongoing scheme to defraud their clients, including the Wiatts.”
After the Wiatts questioned the first $1 million transfer, they say, Starr told them that he was “bundling” the money with other clients’ money for an investment in “UBS, which would yield better rates.”
Although Jim Wiatt “did not understand precisely why his attorneys would be involved in the bundling of investment monies, he did not pursue the matter further because he trusted the Winston & Strawn defendants and the Starr defendants as his fiduciaries, did not know or believe they would be embezzling his money, and assumed that they were acting in his best interests as they should,” the complaint states.
The Wiatts say they did not learn about the second transfer to Bristol until late May this year, when it was mentioned in criminal and civil complaints filed against Starr. According to the criminal indictment, Starr used money from the second transfer to pay another Starr client, “believed to be the actress Uma Thurman, from whom Starr had previously stolen $1 million to pay for a $7.5 million condominium for Starr and his wife.”
Thurman’s bank notified her that Starr was trying to transfer $1 million to Bristol’s attorney trust account, and she and her legal team “confronted Starr in his office and demanded an explanation,” the complaint states. Starr returned the money to Thurman’s account – after taking the money from Wiatt, according to the complaint.
Starr admitted in his Sept. 10 guilty plea that he “transferred a million dollars of one client’s money to the attorney trust account and later used that for money for my own purposes.”
According to the complaint, Winston & Strawn went to “enormous, Herculean efforts to ensure that Bristol could never be tied to the firm” after he was named in the indictment against Starr. The firm allegedly removed references to Bristol from its website and “reworked its Nov. 19, 2008 press release announcing that Bristol was joining the firm as partner to entirely remove his name.”
The Wiatts seek an order that defendants account for all “fees, profits or financial or non-financial benefits arising from or in any way received in connection with the foregoing wrongful and unlawful acts of defendants,” and an order that they return all professional fees.
Defendants include Bristol, Starr, Winston & Strawn, Starr & Co., Starr Investment Advisors, the receiver for Starr & Co., and Arlene Graff, a CPA with Starr & Co.
The Wiatts are represented by David Stone with Stone & Magnanini in Short Hills, N.J.