The SEC today charged Jonathan Bristol, attorney for former financial advisor Kenneth Starr, with aiding and abetting Starr's multi-million dollar fraud by allowing Starr to use his attorney trust accounts as conduits when Starr stole money from advisory clients. Apparently, Bristol's attorney trust accounts were unknown to his international law firm.  

SEC contacts on this case:  George Canellos, Director of NY Regional Office;  Sanjay Wadhwa, Deputy Chief, Market Abuse Unit (Enforcement);  and, Maureen Lewis, Assistant Director, Market Abuse Unit (Enforcement) - all of whom participated in the investigation, along with Timothy Casey.

    SEC Allegations.   It's alleged that over $25 million belonging to Starr's clients flowed through Bristol's attorney trust accounts.  The transfers were done without client authorizations.  Once in the attorney trust accounts, Bristol would transfer the stolen funds to Starr and his 2 companies for personal use.

Bristol allegedly never disclosed the existence of the attorney trust accounts to the prominent international law firm where he worked at the time.  Monthly account statements clearly listing the names of Starr's clients as the source of the incoming transfers were sent directly to Bristol's home address instead of the law firm.  Meanwhile, Bristol touted his relationship with Starr to his colleagues and others, claiming that Starr managed $70 billion in assets.  In fact, Starr managed only a fraction of that amount.

The SEC previously charged Starr, Starr Investment Advisors LLC, and Starr & Company LLC with violating securities laws pertaining to custody of clients' assets and misusing client funds to buy a multi-million dollar luxury condominium on Manhattan's Upper East Side among other things.  The SEC's amended complaint, filed today in federal court in Manhattan, adds Bristol as a defendant, alleging that beginning around November 2008 and continuing until Starr's arrest in May 2010, Bristol repeatedly allowed Starr to use his attorney trust accounts to funnel money stolen from Starr clients.  Notwithstanding his personal role in the scheme, Bristol represented Starr and his companies throughout the SEC's investigation and in an investment advisory examination by SEC staff.

Further, when he was confronted by one of Starr's victims about an unauthorized $1 million transfer from the victim's account, Bristol lied to the victim, saying the funds were being bundled with other clients' funds for an investment with UBS Financial Services.  In fact, Bristol had already used the misappropriated funds to pay a multi-million dollar legal settlement with one of Starr's former clients.  Bristol subsequently sought to represent that same victim after the victim was contacted by SEC staff in its investigation. 

C-I Note:  Talk about chutpah!  In addition to the fact that such representations violated the ethical obligations of lawyers, Bristol's clear intent was to obstruct and undermine the SEC's investigation in order to conceal the wrongdoing.

The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with pre-judgment interest and financial penalties, among other things.  The SEC's litigation effort will be led by Todd Brody.   For further details, refer to:   [SEC Release 10-248, Litigation Rel. 21782, 12/16]