Approved, ~~~AM~lf~~J.6~ MICHAEL S. BOSWORTH Assistant United States Attorneys Before: HONORABLE DEBRA FREEMAN United States Magistrate Judge Southern District of New York 10 ----------------- x SEALED COMPLAINT UNITED STATES OF AMERICA 18 U.S.C. §§ 1001, - v. - 1343 & 1956; 15 U.S.C. §§ 80b-6 & KENNETH STARR, and 80b-17; 26 U.S.C. -ANDREW STEIN, §7206(1) Defendants. COUNTY OF OFFENSE: NEW YORK x SOUTHERN DISTRICT OF NEW YORK, ss.: ROBERT BERANGER, being duly sworn, deposes and says that he is a Special Agent with the Internal Revenue Service­ Criminal Investigative Division (the "IRS-CID") and charges as follows: COUNT ONE (Wire Fraud Scheme To Obtain Property) 1. From at least in or about January 2008, through and including in or about April 2010, in the Southern District of New York and elsewhere, KENNETH STARR, the defendant, and others known and unknown, unlawfully, willfully, and knowingly, having devised and intending to devise a scheme and artifice to defraud, and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, did transmit and cause to be transmitted by means of wire, radio, and television communication in interstate and foreign commerce, any writings, signs, signals, pictures, and sounds for the purpose of executing such scheme and artifice, to wit, STARR marketed his services as an accountant and financial adviser to clients, gained control over millions of dollars belonging to his clients, and then misappropriated millions of dollars of his clients' assets for his own personal use, including to purchase himself a new, multi-million dollar residence. (Title 18, United States Code, Section 1343.) COUNT TWO (Fraud By An Investment Advisor) 2. From at least in or about January 2008, through and including in or about April 2010, in the Southern District of New York and elsewhere, KENNETH STARR, the defendant, and others known and unknown, unlawfully, willfully, and knowingly, used the mails and other means and instrumentalities of interstate commerce, directly and indirectly, (1) to employ a device, scheme, and artifice to defraud a client and prospective client; (2) to engage in any transaction, practice, and course of business which operated as a fraud and deceit upon a client and prospective client; (3) to act as principal for his own account, knowingly to sell a security to and purchase a security from a client, and acting as broker for a person other than such client" knowingly to effect a sale and purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he was acting and obtaining the consent of the client to such transaction; and (4) to engage in an act, practice, and course of business which was fraudulent, deceptive, and manipulative, to wit, STARR persuaded clients to invest money with him by promising to invest their monies in safe investments and then diverting the monies both directly to himself and to risky investments in which he, his wife, and his close associates held undisclosed financial interests. (Title 15, United States Code, Sections 80b-6 & 80b-17.) COUNT THREE (Money Laundering) 3. From at least in or about January 2008, through and including in or about April 2010, in the Southern District of New York and elsewhere, KENNETH STARR, the defendant, and others known and unknown, unlawfully and wiilfully, and knowing that the property involved in a financial transaction represented the proceeds of a form of unlawful activity, did conduct and attempt to conduct a financial transaction which in fact involved the proceeds of specified unlawful activity, to wit, wire fraud as charged in Count One of this Complaint, with the intent to promote the carrying on of specified unlawful activity, and knowing that the transaction was designed in whole and in part to 2 conceal and disguise the nature, the location, the source, the ownership, and the control of the proceeds of specified unlawful activity, to wit, before misappropriating his clients' funds, STARR wired those to an attorney's trust account to make it appear as if the funds were being directed to lawful and appropriate investments. (Title 18, United States Code, Section 1956.) COUNT FOUR . (False Statements in an IRS Filing) 4. On or about April 10, 2008, in the Southern District of New York, ANDREW STEIN, the defendant, unlawfully, willfully, and knowingly, made and subscribed a statement and document which contained and was verified by a written declaration that it was made under the penalties of perjury, and which he did not believe to be true and correct as to every material matter, to wit, STEIN signed and submitted an IRS document titled Collection Information Statement for Wage Earners and Self~Employed Individuals (hereinafter, ~Form-433-A") that failed to disclose, in response to questions that called for him to disclose such information, the existence of Wind River, LLC; a bank account for Wind River, LLC; his use of credit cards in the names of third parties; and his rental of a luxury summer home in Bridgehampton, New York. (Title 26, United States Code, Section 7206(1).) COUNT FIVE (False Statements To A Federal Officer) 5. On or about November 9, 2009, in the Southern District of New York, ANDREW STEIN, the defendant, unlawfully, willfully, and knowingly, in a matter within the jurisdiction of the executive branch of the Government of the United States, falsified, concealed, and covered up by trick, scheme, and device material facts, and made materially false, fictitious, and fraudulent statements and representations, to wit, in an interview with a Special ~gent of the Internal Revenue Service and a Criminal Investigator with the U.S. Attorney's Office for the Southern District of New York, STEIN made the following false statements and concealed and covered up facts that were material to the investigation: (1) STEIN falsely denied knowing Wind River, LLC; Associate-2; Associate-8; and Associate-9; and (2) STEIN falsely stated that he was not an officer of Wind River, 3 LLC. (Title 18, United States Code, Section 1001.) The bases for my knowledge and the foregoing charges are in part as follows: 6. I am a Special Agent with IRS-CID. I have worked at the IRS-CID for more than 18 years, and currently serve as a Special Agent in IRS-CID's New York office. Since becoming a Special Agent with IRS-CID, I have conducted investigations involving public corruption, money laundering and fraud, and have conducted or participated in physical surveillance, the interview of witnesses, the surveillance of meetings involving the use of confidential sources, the execution of search warrants, debriefings of sources, the review of taped conversations, and the analysis of bank records. I have participated in the execution of at least 20 search warrants, virtually all of which involved searches for "financial records and related documents, and have frequently seized documents and other financial records as evidence. I have been personally involved in the investigation of this matter. In the course of this investigation, I have spoken with other agents and analysts of IRS-CID, as well as other law enforcement officers, and I base this Affidavit, in part, on those conversations. Because this Affidavit is being submitted for the limited purpose of establishing probable cause to arrest, it does not include all of the facts that I have learned during the course of the investigation. Where the contents of documents and the actions, statements and conversations of others are reported herein, they are reported in substance and in part, except where otherwise indicated.' OVERVIEW OF STARR'S CRIMINAL SCHEMES 7. As set forth below, I believe, based upon the investigation I have conducted to date that there is probable cause to believe that KENNETH STARR, the defendant, has utilized his firm, STARR & COMPANY, LLC, to commit fraud. STARR & COMPANY, LLC purports to be in the business of managing the assets of, and providing financial planning advice to, its high net-worth, celebrity clients. It owns Starr Investment Advisers, LLC, which is a registered investment adviser (collectively, "STARR & CO."). STARR & CO.'s only office is located in Manhattan, New York. The services provided by STARR through these two entities include the preparation of tax filings, bill payment, and assisting wealthy individuals identify suitable investments. Despite his repeated promises to protect his 4 clients' interests, STARR has in fact systematically defrauded his clients. He used his access to famous and powerful clients to burnish an image of trustworthiness, leading his clients to entrust him with management and control of their financial affairs. In some cases, he assumed total control over his clients' financial lives by collecting their earnings, investing their savings, and paying their bills. 8. STARR defrauded many of his clients by engaging in at least two types of schemes. First, on some occasions, STARR solicited investments from his clients in entities or businesses that he represented as sure deals, and then diverted all or some of the investment monies to himself, to his close associates, or to risky investments in which he, his wife, and/or his close associates held undisclosed financial interests. These associates included, among others, his son ("Associate-1"); ANDREW STEIN, the defendant, whose background is described more fully below; a former national official of a major political party ("Associate-3"); and a partner at a prominent national law firm ("Associate-4,,).1 Second, where STARR· exercised direct control over the personal bank accounts of his clients, STARR used that control to make unauthorized transfers of funds to himself and/or his closest associates. Furthermore, when STARR's clients made demands for payments that STARR could not meet, he transferred funds from one client to another client.