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Kenneth Starr Proves He Still Doesn't Get It


Learning nothing from Bernie Madoff, Starr sets himself up to die in jail.

As an indicator of the latest prosecutorial thinking, the case of Kenneth Ira Starr -- erstwhile financial advisor for a $700 million portfolio of celebrity money -- suggests the golden era of financial crime may be close to finished.

One glance at Starr's situation should start the sweating for all those white-collar crooks praying they don't get caught. In the good old days, a grand weasel could shrug off the prospect of jail and boast: "If you can't do the time, don't do the crime."

Less than a decade ago, a white-collar crook could make a reasonable risk/reward assessment that took into account doing a few years in a minimum-security federal penitentiary in exchange for stealing millions of dollars and hiding at least some of it.

When he got out, there would be still some money, cars, girls, and Viagra, and memories of the good life before he got caught. Now, since last June, when Judge Denny Chin sentenced 71-year-old Bernard Madoff to 150 years in prison on a guilty plea to 11 counts, the de facto rules of white-collar criminal defense are all changed.

"It's terrible," one prominent white-collar defense attorney tells Minyanville. "Bernie has become the Gold Standard… . That guy in Florida [Scott Rothstein] just got 50 years."

What's happened is a sea change in jurisprudence. With the weight of the biggest Ponzi scheme ever behind his sentence, Judge Chin essentially ended the nationwide practice of limiting jail time for white-collar criminals.

It used to be that the longest time on any single count -- say 20 years for mail fraud -- was all the time a con would serve, regardless of how many counts were involved. Judges -- sometimes noting that violence wasn't involved -- stuck to the practice of handing down concurrent sentences, where time on each count was served simultaneously with the others. Judge Chin made the Madoff counts "consecutive," and in reality, synonymous with a life sentence.

You'd think that a guy like Kenneth I. Starr would be a student of the Madoff case, but, by all appearances, that assumption would be wrong.

When 66-year-old celebrity financial advisor Kenneth Starr was charged May 27 with wire fraud, investment advisor fraud, and money laundering, he faced 45 years in prison on three counts for stealing $30 million. Unlike Madoff, Starr didn't plead guilty and instead unsuccessfully tried to convince the judge to let him out on bail.

Fast-forward to June 10. Fed by an influx of complaints from victims and Starr's failure to plead guilty, prosecutors unveiled a 23-count indictment. It doubled the amount of money Starr allegedly stole to "at least $59 million." More important, the 20 additional charges multiplied Starr's potential exposure to prison by nearly a factor of 10. His theoretical maximum possible sentence is now 440 years.

So for now, Starr hangs tough. Maybe he's deluded that a jury trial might help him as celebrity after celebrity testified against him. Or that he could convince a juror of his innocence, despite what appears to be an extremely detailed case, with voluminous evidence of paper trails, dozens of victims willing to testify, and a co-defendant poised to turn against him on the witness stand.

Remember that guy in Florida -- 41-year-old Scott Rothstein, a non-practicing lawyer just like Starr. He pleaded guilty to a $1.3 billion Ponzi scheme and cooperated (unlike Madoff) so much that prosecutors recommended that he only get 40 years. The judge didn't buy it.

So what's a guy like Starr to do now? If he insists on a trial and is found guilty, there's no doubt the judge will give him what amounts to a life sentence. On the other hand, if he pleads guilty, he may still get what amounts to a life sentence. Or he could hope the Madoff sentence gets overturned. Only problem with that is: Bernie isn't appealing. So it's not going to happen.
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