Court Rulings Are Mixed Bag for Kenneth Starr

You win some, you lose some, and, as Kenneth I. Starr found out yesterday, sometimes you end in a draw.

The former financial adviser who admitted to defrauding stars and other clients out of tens of millions of dollars was sentenced Wednesday to more than seven years in prison for his acts, according to The Wall Street Journal. While the sentence is more than the five-year sentence his attorney, it’s less than the federally recommended maximum of 12 years and seven months.

And in bankruptcy court, filings show, a judge gave Starr more time to defend himself against or otherwise respond to the involuntary bankruptcy petition filed against him in January. However, Starr–whose Starr Investment Advisors LLC and Starr & Co. filed for bankruptcy protection last month–didn’t get the April 18 deadline he wanted. Instead, he has until March 25.

Starr–not the Whitewater prosecutor–sought the extra time in light of his pre-sentencing jail stay, arguing that being behind bars prevented him from accessing his personal financial records. Starr’s jailing, however, was also used by Starr’s opponents to argue why he shouldn’t get more time to respond.

The creditors who filed the involuntary bankruptcy petition against him the first place, JAS Ventures LP and the estate of Joan A. Stanton, argued that Starr was using his time behind bars to strike deals to “dissipate” his assets.

The creditors are concerned about their ability to recover what they’re owed in light of the $29.1 million in restitution Starr has initially agreed to pay his fraud victims. His $7.5 million luxury Manhattan apartment, which Starr admitted to spending client funds on, will be turned over as part of restitution.

“Mr. Starr and his companies owe a great deal of money to many parties,” the creditors wrote. “Mr. Starr’s assets cannot and should not be allocated entirely to his desire to raise funds for restitution.”

The tug-of-war between creditors and crime victims isn’t unique to the Starr case–it’s playing out in bankruptcy and federal court proceedings tied to such notorious fraudsters (and frequent Bankruptcy Beat subjects) Bernard Madoff, Marc Dreier and Scott Rothstein.