A New York judge has appointed an interim monitor to oversee firms controlled by a financial adviser accused of stealing $30 million from a roster of celebrity clients.
Federal Judge Sidney H. Stein ruled Tuesday after a Securities and Exchange Commission lawyer said the firms didn't have enough employees to manage a flood of investors' withdrawal requests.
Starr has denied any wrongdoing. He faces charges including wire fraud and money laundering. The SEC has filed a related civil lawsuit.
The judge said a full receiver would "very likely'' be appointed at a later date.
Starr, 66, has served as the Chairman and Chief Executive Officer of the New York-based Starr & Company since its founding in 1989. He has no relation to the Ken Starr who investigated President Bill Clinton in the Monica Lewinsky affair.
Starr's clients have included Wesley Snipes, Sylvester Stallone and Martin Scorsese. There's no indication they were victims of the Ponzi-like scheme.
A source familiar with the case said Starr was able to meet some of his clients through parties thrown by Denise Rich. Rich, a singer, is a philanthropist who is divorced from one-time fugitive billionaire Marc Rich.
One of his clients, jeweler to the stars Jacob Arabov -- known as "Jacob the the Jeweler" -- lost millions under Starr.
His lawyer, Benjamin Brafman issued a statement to NBCNewYork saying "Mr. and Mrs. Arabov unfortunately invested substantial personal assets through several prominent individuals they trusted. It is now clear that they were defrauded."
He said the Arabovs intend to "pursue all legal remedies."
Federal officials say that using his client's money, Starr last month bought a new condominium for $7.5 million on the Upper East Side which featured five bedrooms, a 32 foot indoor pool, a 1,500 square foot garden on the main floor and a wall of floor to ceiling windows. The bulk of that money, $4.2 million, came from a client identified as an "elderly heiress" who is nearly 100 years old. Another victim -- an actress described in the complaint as Client #2 -- discovered that Starr transferred $1 million from her account without her permission but returned it after she confronted him in April, -- but did so using another client's funds.