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December 16, 2010 12:10 PM

SEC, Justice Charge Former Am Law 100 Partner in Fraud Case

Posted by Brian Baxter

UPDATE: 12/16/10, 5:45 p.m. Bristol has been arraigned in federal court in Manhattan and pled not guilty to criminal charges. The New York Law Journal, a sibling publication, has more on the charges against Bristol.

Jonathan Bristol, a former partner at Winston & Strawn and Thelen, has been charged by the SEC with "aiding and abetting" a multimillion-dollar fraud perpetrated by a financial adviser to the stars. Bristol has also been charged criminally by the U.S. attorney's office in Manhattan, which announced the additional charges accusing the lawyer of laundering over $20 million in funds just after noontime on Thursday.

According to the 17-page complaint, the SEC accuses Bristol of allowing Kenneth Starr, a nonpracticing lawyer not to be confused with the current president of Baylor University, with setting up attorney trust accounts used by Starr to steal money from his financial clients. (Click here for the 15-page criminal indictment filed by federal prosecutors.)

Starr pled guilty in early September to charges he misappropriated nearly $30 million in client funds in order to unjustly enrich himself and others. When federal prosecutors first charged Starr in May, The Am Law Daily reported that the case called into question legal work done by an individual identified in court records as "associate-4."

That individual was revealed to be Bristol, who prosecutors said controlled an account used by Starr to funnel money from different client accounts. At the time, sources told The Am Law Daily that Bristol no longer worked at Winston, which he joined after Thelen collapsed in late 2008. The SEC now claims that Bristol never disclosed the existence of the attorney trust accounts "to the prominent international law firm where he worked at the time."

Federal prosecutors claim Bristol lied to Starr clients while he was a "partner at a prominent United States law firm" between November 2008 and May 2010. The criminal indictment against Bristol claims that the lawyer helped Starr defraud clients and concealed Starr's criminal conduct by using two separate attorney trust accounts that were under his control.

When Starr failed to pay "Bristol's law firm for legal fees that Starr incurred," prosecutors allege that in March 2010, the lawyer told the firm's senior management that his client would pay $100,000 of the $750,000 that he owed. The firm, which is not named in the indictment, did receive a $100,000 payment, but it did not come from Starr. Instead the money came from Starr's clients, laundered by Bristol through escrow accounts, according to the indictment.

The SEC alleges that monthly account statements clearly show the names of Starr's clients being the source of fund transfers sent to Bristol's home address instead of the law firm where he was working while advising Starr. Securities regulators also allege that Bristol "touted his relationship with Starr" to colleagues and others, claiming that Starr managed $70 billion in assets when the real total was only a fraction of that amount.

In July, Troutman Sanders partner Aurora Cassirer, a court-appointed receiver seeking to recoup funds for Starr's clients, issued subpoenas to Winston, Thelen, and Bristol for records related to the former financial adviser. (Cassirer also sued filmmaker Martin Scorsese.)

A Winston spokesman issued the following statement to The Am Law Daily: "Mr. Bristol joined Winston & Strawn in December 2008 and is no longer with us. The indictment against him is based on alleged conduct neither authorized by nor known to others at the firm. The firm is cooperating fully with the authorities investigating this matter."

Bristol's lawyer, Gerard Hanlon of Morristown, N.J.-based Hanlon, Dunn & Robertson, did not immediately return a phone call requesting comment.

George Canellos, a former Milbank, Tweed, Hadley & McCloy partner who took over the SEC's New York regional office in June, is overseeing the case against Bristol. Sanjay Wadhwa, Maureen Lewis, Timothy Casey, and Sandeep Satwalekar of the SEC's market abuse unit in New York are conducting the agency's ongoing investigation, while senior trial counsel Todd Brody is in charge of the civil litigation.

U.S. Attorney Preet Bharara is overseeing the government's criminal case against Bristol. Assistant U.S. attorneys William Harrington, Michael Bosworth, and Michael Lockard are in charge of the criminal prosecution. Michael Kitsis, an assistant district attorney with the New York County District Attorney's Office, also provided assistance in the government's criminal investigation.

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