Two days before his arrest for allegedly cheating clients out of $59 million, financial adviser Kenneth Starr presided at one of Harry Ciprianiâ??s coveted front-room tables, with a view of the Plaza and Central Park, and grinned when his wife, Diane, protested, not very seriously, that sheâ??d thought their third-anniversary dinner would be a private affair.
Exclusive documents from Starrâ??s 2007 divorce settlement with his third wife, Marisa Vucci.
Diane Passage, 34, was wearing a black Gucci dress with a scoop neck that kept slipping to expose more of her Brobdingnagian breasts than the designer had intendedâ??only when she got home would she realize she had it on backwardâ??but Starr, 66, was proud of his fourth wifeâ??s provocative figure. He liked to brag about her pole-dancing prowess. Only when she brought up her past employment as a dancer at Scores strip club did he wince. Why, though? she would ask him. She had nothing to hide.
Starr seemed happy that night, or so thought Jim Wiatt, former chairman of the William Morris Agency and a Starr client, who had stopped by for dessert. The two men, longtime friends, agreed to meet the next night for a drink at the Regency Hotelâ??and they did, Starr ordering his customary Diet Coke.
As the story broke, Wiatt would play and replay in his mind the scene at the bar. How could Starr have looked him in the eyeâ??sympathizing, jokingâ??only weeks after allegedly stealing $1 million from the account he and his wife had turned over to the great Ken Starr to manage?
By then, armed federal agents had made a 6:30 A.M. entry into the small lobby of 433 East 74th Street, a new, seven-story, glass-walled, luxury condominium. As one building resident told it, the doormanâ??s eyes widened. â??Madoff?â?
He meant Andrew Madoff, the younger son of epic Ponzi schemer Bernard Madoff. Andrew had moved, not long before, into an apartment upstairs.
â??No,â? one of the agents said. â??Starr.â?
The doorman rang Apartment 1-C, the triplex with the pool and l,500-square-foot garden. Diane says she awoke to hear her husband saying into the phone to the doorman, â??Tell them Iâ??m not home, but my wife is.â?
The agents went away. Diane went downstairs to get breakfast for her 12-year-old son, Jordan. While he ate, she went back up to the bedroom to hear Starr start muttering about legal problems. Diane had never heard him talk like that before. He was always so upbeat.
An hour later there was a banging on the apartment door. Starr looked sick. â??Say Iâ??m not home,â? Diane says he told her.
She opened the door to six federal agents. â??Kenâ??s not home,â? she said dutifully. The agents showed her a warrant and came in anyway.
After the agents asked her a second time if Starr was home, the largest of them, a giant, leaned over and said in a low, serious voice, â??Iâ??m going to ask you one more time.â? Diane recalled how in the movies people got arrested for lying to the F.B.I. That was when she whispered, â??Heâ??s in the bedroom closet,â? and the agents went up to find a telltale pair of shoes protruding from beneath the hanging clothes.
When the agents left with her husband sandwiched between them, Diane called a friend. What should she do? â??Keep your son home from school and donâ??t talk to anyone until you have a lawyer.â? So Jordan stayed home with his mother in the $7.5 million apartment theyâ??d moved into just one month before, its big, boxy rooms still empty enough that their voices echoed, while Starr was hustled downtown to a cell at the Metropolitan Correction Center, on charges of fraud and money-laundering that could bring him a sentence of up to 45 years.
There Starr (no relation to the special prosecutor who tormented President Clinton) remainsâ??a flight risk, his assets frozen, his bail requests deniedâ??while, on a June evening, Diane orders a Bacardi and Coke at Ballatoâ??s, an Italian restaurant on Manhattanâ??s Houston Street, and tries to make sense of it all. She knew nothing about Starrâ??s business, she says. The charges are news to her. â??I hope and pray that this will all be a big mistake that will go away,â? she says.
In sheer numbers, Starrâ??s alleged Ponzi scheme pales beside Madoffâ??s $65 billion, and in person, wearing a black silk shirt or zip-up designer sweats, Starr must have seemed a little cheesy compared with Madoff, who favored Savile Row suits and crisp white shirts. But in one regard, Starr had Madoff beat: his clients were far more dazzling.
A handful of the names have trickled out since Starrâ??s arrest: director Mike Nichols and his news-anchor wife, Diane Sawyer; The Viewâ??s Barbara Walters; writer-director Nora Ephron and her husband, author and scriptwriter Nick Pileggi. But these are just a few in a daisy chain that winds from New York media to Hollywood and back, in which one boldfaced name recommended him to another.
Photographer Annie Leibovitz came in partly because photographer Richard Avedon had been a client. Columnist Liz Smith came aboard in part because Time Warner heiress Courtney Sale Ross was a client. Nichols and Sawyer were part of that circle, as were U.S. State Department heavy Richard Holbrooke and his wife, writer Kati Marton; author Ken Auletta and his wife, literary agent Binky Urban; journalist David Halberstam; and veteran publisher Joe Armstrong. All were or had been Starr clients. Who was the lure for bringing in news anchors Tom Brokaw and Matt Lauer, and the late Walter Cronkite? Or sportscaster Frank Gifford and his wife, television hostess Kathie Lee? Or NBC chief Jeff Zucker and his wife, Karen? Who could say for sure, but what TV heavyweight wouldnâ??t want to join a club that had luminaries like those as members?
On and on it went: from Hollywood producers Scott Rudin and Ron Howard to Broadwayâ??s Neil Simon and Gene Saks. Movie directors Jonathan Demme, Sam Mendes, and Doug Liman, actors Liam Neeson, Al Pacino, Warren Beatty, and Candice Bergen, political satirist Michael Moore, singer-songwriters Paul Simon and Carly Simon, fashion designer Isaac Mizrahiâ??all were clients. Former Citibank chairman Donald Marron and Sony chairman Howard Stringerâ??clients, both of them. Even Caroline Kennedy was a client. Some just had Starr do their taxes and pay their bills. (VANITY FAIR editor in chief Graydon Carter was in this camp.) But many had let Starr talk them into giving him their money to invest.
In the Grill Room at the Four Seasons, Starr would awe a new prospect by dropping two of the weightiest names in his stable: retired Blackstone Group chairman Peter G. Peterson and Bunny Mellon (the nonagenarian widow of philanthropist Paul Mellon), who was in elegant seclusion on her vast Virginia ranch, as close to a queen as might be found in America. â??Just ask Pete about me,â? heâ??d say, and if the prospect took Starr up on that suggestion, Peterson would sing his praises. So, for a long time, would almost any of Starrâ??s other clients, for Starr had done more than name-drop to build his clientele. He was a great accountant and a shrewd investor: a lot of his clients had made a lot of moneyâ??for a while.
â??I had nothing but good relations with him,â? says Sothebyâ??s Jamie Niven. â??I never experienced the side of him that people are talking about.â?
Only now has it become apparent that Starr was allegedly putting millions of dollars of certain clientsâ?? money into high-risk investments, from South American electronic voting machines to lizardy â??lounge clubsâ?â??many of them companies which, according to the indictment, Starr or his associates had financial interests in.
One of Starrâ??s associates was Andrew Stein, the exâ??Manhattan borough president whoâ??d struggled in recent years to make a new career out of his old political connections. While his ex-wife Lynn Forester went off to make more than $100 million in cell-phone licenses and marry a Rothschild, Stein gave intimate soirées for friends like Shirley MacLaine, Barbara Walters, and Warren Beatty and Annette Bening, and hoped that the Wall Streeters he put in the mix might throw him a bone. He came closeâ??almost co-founding a hedge fund, Stein saysâ??but nothing really panned out, the bills piled up, and he fell woefully behind on his taxes. Prosecutors allege Starr paid Stein as a social facilitator through a shell company and Stein failed to declare $2.1 million in earnings to the I.R.S. To a lot of New Yorkers, the news of Steinâ??s arrest, on the same day as Starrâ??s, for tax evasion, was even more shocking. True, Stein had always seemed clueless about his finances: according to the New York Post, his own brother, Jimmy Finkelstein, has sued him for nonpayment of a $100,000 loan. But to end up like this? Astonishing.
Those whoâ??d admired Starrâ??s rough savvy were left to wonder: why steal when, as it was, Starr & Co. managed $1.2 billion, at fees of 1 to 2 percent? Like a Greek chorus, his shocked clients pointed as one to the lavishly endowed Diane, for whom, the indictment notes, Starr purchased more than $400,000 of jewelry from bling jeweler to the rap world Jacob Arabo. â??When your business manager marries a stripper,â? says one rueful client, â??thatâ??s a tell.â?
Diane did like to shop, as many of her Facebook status updates reportedly attest. (â??Just got my pink diamond Detroit D from Johnny Dang!!! Amazing!!!!â?) And her rise from stripper to richly kept wife does largely align with the chronology of crimes detailed in the indictment. But in person Diane comes across as anything but calculating. And the story she tells, as her chicken parmigiana sits untouched before her, is so revealing that it makes her seem guilelessâ??no gold digger would tell it.
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