MANHATTAN (CN) – A woman claims basketball great Julius Erving conspired with disgraced investment adviser Kenneth Starr to cheat her of more than $420,000. Mary Gilbert claims Erving, who held himself out as an experienced investment advisor, worked with Starr cheat her of her fair portion of distributions from a financial vehicle called Commonwealth Investors.
Gilbert says she met Starr in 1988, and that Starr “held himself out as an attorney, accountant, CPA, business manager, investment manager, investment adviser, financial consultant, tax preparer and tax adviser.”
She says Starr encouraged her to retain him and his companies, Starr & Co. LLC and Starr Investment Advisors “to take care of her business and financial needs.”
Until he was arrested and charged with running a $59 million Ponzi scheme with his clients’ money, Starr was known as the Accountant to the Stars. He had many Hollywood celebrities among his clients, including Sylvester Stallone, Carly Simon and Wesley Snipes. He pleaded guilty to criminal charges in September 2010 and faces 10 or more years in prison.
Starr is a different man than the Ken Starr who led the investigation of former President Clinton’s sex life.
“In or about 1990, Starr introduced Gilbert to Erving, who was an existing client of Starr & Co. and who also held himself out as an investment adviser,” according to Gilbert’s federal complaint.
It continues: “In or about 1994, Starr and Erving encouraged Gilbert to invest in a limited partnership vehicle called Commonwealth Investors L.P. (the ‘partnership’). In particular, Starr and Erving told Gilbert that Erving was a limited partner in the partnership and that it was a lucrative investment. Starr and Erving also told Gilbert that Erving was facing a capital call from the partnership and that if Gilbert would finance a portion of this capital call Erving would assign to her a percentage of his interest in the partnership.”
Gilbert says she advanced Erving more than $256,537 for his capital call, in return for which he assigned to her a 30 percent interest in the partnership.
She says the deal was that she was to get one-third of all the distributions that Dr. J received from the partnership until she had recouped her $256,537, and after that she would get 30 percent of all the distributions Erving received from it.
She claims that between 1995 and 2010, “Erving received distributions from the partnership totaling in excess of $2.9 million.”
“During this same period, however, Erving and Starr concealed the true amount of partnership distributions that Erving received from the partnership and falsely reported to Gilbert the share of partnership distributions to which she was entitled under the agreement. Erving, with the assistance of Starr, converted a share of the partnership distributions that should have been paid over to Gilbert.
“Upon information and believe, Gilbert is owed at least $420,000 in additional partnership distributions issued to Erving.”
Gilbert says she terminated her relationship with Starr after she learned of his indictment on multiple counts of wire fraud, money laundering and investment adviser fraud. Then she hired an attorney to investigate what had happened with her money.
“This investigation revealed among other things, that Erving and Starr falsely reported the amount of partnership distributions that Gilbert is entitled to receive under the agreement and that Gilbert is owed a further share of Erving’s distributions from the partnership totaling in excess of $420,000,” the complaint states.
Gilbert seeks damages for breach of contract, breach of fiduciary duty, aiding and abetting breach of fiduciary duty and conversion. She is represented by Brooke Alexander with Boies, Schiller & Flexner of Armonk, N.Y.