Sec Charges Top Lawyer With Fraud
Jonathan Bristol, a former partner at two of the largest and best U.S
. law firms, was arraigned in a Manhattan federal court and charged with laundering over $20 million in connection with Kenneth Starr, the now convicted financial advisor to Hollywood celebrities.
In 2008, Bristol became a partner at Winston & Strawn, a prominent New York law firm. He was guaranteed annual income of $1.35 million per year. Unfortunately, Bristol was unable to generate enough money so his pay was quickly reduced by more than 50% and bonuses were tied to performance.
At the same time his pay was being cut, Bristol brought in a new client, Ken Starr. By then (summer of 2009), the SEC was investigating Starr. At least one of Starr's clients began to suspect wrongdoing.
Bristol soon billed Starr over $1 million for legal work. Prosecutors say that Bristol knew by then that Starr was involved in illegal activity. Although every criminal defendant is entitled to legal representation, lawyers are not allowed to conspire with clients to help them commit their crimes. According to prosecutors, Bristol did more than conspire, he helped Starr launder tens of millions of dollars stolen from Starr's clients and in some instances, lied to those clients.
How did the money laundering scheme work? The indictment claims Bristol knowingly used his lawyer's trust accounts to launder money and conceal the thefts from Starr's clients. He also used the trust accounts to pay the law firm large fees.
Starr would move client funds into the trust account and Bristol would then kick back the money to Starr or pay off other victims who were becoming increasingly suspicious.
One of those victims was a 100 year old woman whose money was wrongfully taken and laundered in Bristol's account.
Like all Ponzi schemes, the house of cards falls when there is not enough new money to pay the claims of old investors seeking to cash out. By 2009, some clients were demanding their money back. In early 2010, the feds raided Starr's home and found him hiding under his bed.
For its part, there is no allegation that Bristol's law firm knew that Bristol activities were illegal.
Starr was convicted in September and is currently in jail. Bristol remains free on a $1 million signature bond. Both Starr and Bristol are also facing charges in a separate SEC complaint. According to that complaint, Bristol at one point attempted to represent both Starr and one his victims. Of course, representing conflicting parties is itself unethical.
Prior to Starr's arrest, over $25 million was deposited into Bristol's trust account. There was just $3000 at the time of his arrest.
Where did all the money go? The government says much went to Bristol's law firm and $7.6 million went to purchase a luxury Manhattan apartment for Star and his wife Passage.
(Note: The author attempted to uncover Starr as a fraud during the trial of actor Wesley Snipes in January of 2008. Starr failed to honor a subpoena for documents issued by the author during the Snipes trial. He subsequently lied to the court but was not charged by prosecutors or sanctioned by the court. His lies and criminal conduct would continue for another two years until early 2010. All of the conduct set forth in the Bristol indictment and subsequent losses to the victims in that case might have been prevented had the government acted to the warnings in the Snipes case. Copies of those documents are available on line from the U.S. District Court for the Middle District of Florida Pacer system - case number 5:06-cr-00022, document numbers 378, 378-1, 421 and 426)
by: Brian Mahany
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