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June 7, 2010 3:47 PM

A Kenneth Starr Update

Posted by Zach Lowe

The case of Kenneth Starr, the financial adviser to Hollywood's elite now accused of being a sort of mini-Madoff, has all the makings of a story with legs--famous victims, very shady allegations, and a lot of anonymous folks who are sitting in limbo today because of the work they did for Starr. 

At the head of that list is Jonathan Bristol, Starr's go-to outside lawyer identified only as "Associate-4" in court records. Bristol is a Winston & Strawn partner who arrived at the firm from the now-defunct Thelen. Bristol is not charged with any crime and faces no civil charges. But he appears to be gone from Winston, though firm higher-ups and a spokesman will not comment publicly on Bristol's status. Two sources familiar with the matter say Bristol is indeed gone from Winston, though one source close to the case insists that Winston did not terminate Bristol. A secretary who answered the firm's main number Friday told us Bristol's name is no longer in the firm's internal directory, and his old office number does not work. Bristol would not come to the phone when we called his home in New Jersey.

Winston released a statement saying the firm is cooperating with the federal fraud investigation into Starr and conducting its own inquiry. Bristol is cooperating with the Winston investigation, the firm states. 

As we reviewed last week, Starr is alleged to have used an attorney trust account controlled by Bristol to funnel client money around before spending it on personal items or investing it with vehicles linked to his friends. When celebs asked for their money back, Starr allegedly paid them using funds that belonged to other clients. The size of the Ponzi scheme has grown already to $30 million, and authorities say Starr recently misappropriated about $7 million in client money to buy a fancy apartment in Manhattan, according to The New York Times

It's crucial to note that the attorney trust account was linked to Bristol personally and not to Winston, court records show. 

A couple of other legal tidbits:

• Starr, a nonpracticing lawyer, is a long time member of the board of trustees of New York University Law School, according to the NYT. 

• Aurora Cassirer, the managing partner of Troutman Sanders's New York and New Jersey offices, is serving as a court-appointed monitor in the case. She is charged with getting a handle on Starr's finances, understanding Starr's organizational chart, and helping celebrities pay bills even as the government freezes several accounts linked to Starr, court records show. Cassirer submitted an interim report last Friday in which she reveals that Starr only had 30 or 40 clients by the time authorities filed charges, down from 140 just two months ago. She also recommends the court appoint a full-time receiver in the case.

• The SEC, which has its own civil case against Starr, filed motions today asking a judge to freeze all of Starr's assets and those of his wife, Diane Passage, a former stripper whose recent marriage to Starr raised some concern among Starr's client base, the NYT reports.

Contact Zach Lowe at [email protected].

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