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Case 1:10-cr-00520-SAS Document 34 Filed 12/17/10 Page 1 of 15

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA :

-v.- :
10 Cr. 520 (SAS)
KENNETH STARR, :

Defendant. :

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GOVERNMENT’S MOTION FOR REVOCATION OF BAIL


AND OPPOSITION TO THE DEFENDANT’S MOTION TO REDUCE BAIL

PREET BHARARA
United States Attorney for the
Southern District of New York
One St. Andrew’s Plaza
New York, New York 10007

William Harrington
Michael Bosworth
Assistant United States Attorneys
-Of Counsel-
Case 1:10-cr-00520-SAS Document 34 Filed 12/17/10 Page 2 of 15

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA :

-v.- :
10 Cr. 520 (SAS)
KENNETH STARR, :

Defendant. :

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INTRODUCTION

Approximately one month ago, Flora Edwards, counsel for the

defendant, informed the Government that the defendant was about

to satisfy the conditions of bail set by the Court on July 26,

2010. In response, the Government indicated to Ms. Edwards that

it would move to revoke the defendant’s bail in light of the

defendant’s guilty plea and in light of the fact that new

evidence suggested that the defendant’s proposed co-signors

lacked suasion over him. Specifically, the Government obtained

November 2010 emails in which, among other things, the defendant

expressed contempt for the brothers who were set to post the

lion’s share of the security for the defendant’s bond and in

which the defendant expressed a desire to sever all ties with his

brothers and their families post-sentencing. After the

Government informed Ms. Edwards of the existence of these and

other emails and shared them with her, Ms. Edwards informed the

Government that the defendant would no longer persist in his

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efforts to secure his release prior to sentencing. As a result,

and to prevent the defendant’s views of his brothers from being

publicly aired, the Government did not move to revoke the

defendant’s bail.

Subsequently, on December 14, 2010, after notifying the

Government, Ms. Edwards filed a motion to reduce the defendant’s

bail. The Government respectfully submits this memorandum in

opposition to the defendant’s motion and in support of the

Government’s motion to revoke the bail.

As detailed more fully below, the Government submits that

detention – not a reduction in the conditions of bail – is

appropriate. The defendant was a flight risk before he pled

guilty, and he is even more of a flight risk now. Moreover,

precisely because he has pled guilty, it is now his burden to

establish “by clear and convincing evidence” that he is not

likely to flee. He cannot do so for a number of reasons: (1)

under the terms of his plea agreement, the defendant now faces a

substantial term of imprisonment, namely, a stipulated Guidelines

range of 120-151 months’ imprisonment, as well as a substantial

restitution obligation of up to $50 million; (2) the defendant’s

ties to the community are greatly attenuated given that, among

other things, his business is now defunct and his relationship

with his family is even more strained; and (3) the defendant is

currently seeking to obtain, and may already have received,

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substantial funds for reasons that are wholly unclear and that

indicates he has access to funds he could use in order to flee.

Additionally, the existing conditions of release set by the

Court are inadequate to assure his appearance. There are now

significant reasons to doubt whether the defendant’s suretors and

the property that they are posting is sufficient to deter him

from fleeing. Among other things: (1) the defendant has

expressed contempt for, and an intent to cut off communications

with, the two brothers who are posting the lion’s share of the

security for the defendant’s bond, which raises serious concerns

as to whether the security the brothers are posting will in fact

dissuade the defendant from fleeing; (2) Michael Giordano, who

originally told the Court he would sign the defendant’s bond,

subsequently refused to do so, and defense counsel’s proposed

replacement for Mr. Giordano is a woman who is actively

attempting to undermine the defendant’s confidence in and

relationship with Diane Passage, the defendant’s wife and the

fourth suretor required by the Court; and (3) the defendant seeks

to return, pending sentencing, to a home that he has already

agreed to forfeit and that is delinquent on maintenance and

mortgage payments. Since the existing conditions of release are

inadequate to assure the defendant’s appearance for sentencing,

the Government respectfully submits that there is certainly no

justification for further reducing the conditions of release.

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BACKGROUND

On or about May 27, 2010, the defendant was arrested on

criminal complaint 10 Mag. 1135, which charged him with (1) wire

fraud, in violation of Title 18, United States Code, Section

1343, (2) fraud by an investment adviser, in violation Title 15,

United States Code, Sections 80b-6 & 80b-17; and (3) money

laundering, in violation of Title 18, United States Code, Section

1956. After two contested detention hearings, the defendant was

ordered detained by the Honorable Debra C. Freeman, United States

Magistrate Judge, and, on appeal, by the Honorable John G.

Koeltl, United States District Judge sitting in Part I.

Following the defendant’s Indictment in 10 Cr. 520 (SAS),

the defendant moved this Court for an order setting bail. The

defendant proposed a bail package that consisted, inter alia, of

(1) a $2 million bond co-signed by three financially responsible

persons, namely, the defendant’s brothers (Stuart Starr and

Warren Starr) and Michael Giordano, a friend; (2) security in the

form of a rare book collection owned by Warren Starr that was

valued at $1.7 million (“Rare Book Collection”) and a Florida

condominium in which Stuart Starr had an approximately $380,000

interest (“Florida Condominium”); and (3) home detention and

electronic monitoring. The Government sought detention.

On or about July 26, 2010, after receiving submissions from

the parties, the Court heard argument on the defendant’s motion

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for bail. Your Honor directly addressed Mr. Giordano, who

attended the proceedings on July 26, 2010 and who personally

assured the Court that he understood the consequence of signing

the bond and was, in fact, willing to do so. Neither Warren

Starr nor Stuart Starr were in attendance. Ultimately, the Court

orally set conditions of release memorialized in an order dated

July 27, 2010, principally that (1) the defendant would be

released on a $10,000,000 bond secured by the primary residences

of Warren Starr and Stuart Starr, the Florida condominium, and

the rare book collection; (2) the bond would have to be signed by

four sureties (the defendant’s two brothers, his wife, and the

long-time friend, namely, Mr. Giordao); (3) the bond would have

to be signed by any co-owners of the properties posted as

security; (4) the defendant would have to post $250,000 in cash

and (5) the defendant would be subject to home detention with

electronic monitoring. See Order dated July 27, 2010.

Subsequently, on or about September 10, 2010, the defendant

pled guilty before the Honorable Theodore H. Katz, United States

Magistrate Judge, pursuant to a plea agreement, to Counts Nine,

Twenty One, and Twenty Two of the Indictment. Under the terms of

the plea agreement, the defendant stipulated to a Guidelines

range of 121 to 151 months’ imprisonment; the defendant agreed to

forfeit his right, title and interest in 433 East 74th Street,

Unit 1C, New York, NY 10021 (the “Apartment”); and he agreed that

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the Government could seek restitution up to and could forfeit

assets worth up to $50 million, while reserving his right to

challenge any forfeiture or restitution other than that relating

to the Apartment.

The defendant has not satisfied the conditions of release

and remains in custody. Sentencing in this matter is currently

scheduled for February 2, 2011 at 4:30 p.m.

APPLICABLE LAW

Under the Bail Reform Act, where, as here, a person has been

found guilty of an offense and is awaiting imposition of a

sentence for which the applicable Guideline recommends a term of

imprisonment, the person “shall” be detained “unless the judicial

officer finds by clear and convincing evidence that the person is

not likely to flee or pose a danger to the safety of any other

person or the community if released.” 18 U.S.C. § 3143. As

construed by the Second Circuit, this provision of the Bail

Reform Act establishes a “presumption in favor of detention” that

a “defendant must rebut . . . by clear and convincing evidence.”

United States v. Abuhamra, 389 F.3d 309, 319 (2d Cir. 2004).

ARGUMENT

A. Detention Is Appropriate

Circumstances have changed since the Court initially set

conditions of release in this case on July 26, 2010. At that

time, the defendant was presumed innocent and, however strong the

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Government’s proof against him, the defendant’s punishment was

still theoretical. Now, by contrast, the defendant has pled

guilty to three serious crimes: wire fraud, money laundering and

fraud by an investment adviser. As a result of the defendant’s

conviction, there is now a presumption in favor of detention, and

the Government respectfully submits that the defendant cannot

rebut that presumption, let alone by “clear and convincing

evidence.”1

The defendant presents a serious risk of flight for a number

of reasons.

First, the defendant now faces certain and significant

punishment for his crimes. Under the terms of the plea

agreement, the defendant faces a stipulated Guidelines range of

121 months to 151 months’ imprisonment (although of course the

Court retains discretion to impose a sentence lower or higher

consistent with Title 18, United States Code, Section 3553(a)).

Not only does the defendant face a significant term of

imprisonment, he also faces a very substantial restitution

obligation. Although the parties are trying to reach an

agreement about the precise restitution owed in this matter, the

1
The Government notes that even at the initial bail
hearing on July 26, 2010, the Court suggested that the bail
calculus would be altered by a conviction in this case. See
Transcript dated July 27, 2010 at 5 (explaining that the
suretors’ property would be encumbered only through a trial and
stating that “If he were to be acquitted, that is that. If he
were to be convicted, it changes the bail.”).

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Government currently is of the view that the defendant owes

restitution to nine different victims in the total amount of

$47,087,000. Other putative victims claiming losses in the

millions of dollars have also come forward and asked to be

included in the Government’s proposed restitution order in this

case. These significant penalties that the defendant faces

certainly create a serious risk of flight in this case.

Second, the defendant’s ties to the community are greatly

attenuated. The defendant’s businesses are defunct; he has no

permanent home (because he agreed to forfeit the Apartment in

which he previously resided); and his relationships with his

friends and family are strained. It is notable that immediately

after appearing in Court, the defendant’s friend, Michael

Giordano, refused to sign the defendant’s bond, and nearly four

months after the Court set bail in this case, the defendant’s

brothers and their wives have not signed the bond either (as

required by the Court’s July 27, 2010 written order).

Third, evidence suggests that the defendant is seeking to

access, and may already have received, substantial funds for

reasons that are not known to the Government but that raise

questions about his ability and willingness to flee. For

example, on November 15, 2010, when the defendant expected to

satisfy his bail conditions, the defendant sent his son an email

in which he said “i am going to need some funds in the next day

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or two - substantial - will need your help.” See Exhibit A.

Although the defendant’s son informed the defendant he lacked

substantial funds to give to him, other individuals in contact

with the defendant appear to have taken steps to provide funds to

the defendant and/or his wife, Diane Passage. For example, on or

about November 9, 2010, a certain individual (“Friend # 1") told

the defendant “[I] am completing this week moves for her [i.e.,

Ms. Passage’s] financial security for the next forseable [sic]

future and for your bail package.” See Exhibit B. This email is

curious, because the only funds the defendant would need for his

“bail package” was the $250,000 in cash required by the Court,

and defense counsel had informed the Government that this

condition would be satisfied by funds in trust accounts of the

defendant’s two daughters. The defendant’s efforts to acquire

funds raise grave concerns about his ability to flee,

particularly where his incentive to flee is quite strong.

Fourth and finally, the defendant’s conduct on the morning

of his arrest further prevent him from being able to rebut the

presumption that he is a risk of flight. The Government

certainly respects the Court’s view of the defendant’s conduct

that morning and does not wish to belabor the point. The

Government simply repeats the point that, in the Government’s

view, the defendant’s various attempts to evade arrest –

including hiding from law enforcement and having his family

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members lie to law enforcement – are probative of his willingness

to flee.

For these reasons, the Government respectfully submits that

the defendant should be detained on account of risk of flight,

and the defendant cannot rebut, by clear and convincing evidence,

the presumption in favor of detention.

B. The Current Bail Conditions Are Not Sufficient

Even were the Court to find that some conditions of release

could be set, the Government respectfully submits that the

current bail conditions – far from being too onerous - are

inadequate.

First and principally, under the conditions of bail set by

the Court, the lion’s share of the security for the defendant’s

bond will be supplied by property owned by the defendant’s two

brothers, Warren Starr and Stuart Starr. New evidence obtained

by the Government strongly indicates that Warren Starr and Stuart

Starr lack meaningful suasion over the defendant. As a result,

any property posted by the brothers will not deter the defendant

from fleeing. In the two weeks before Ms. Edwards informed the

Government that the defendant was about to satisfy his conditions

of bail in November 2010 -- a period in which defense counsel

represented the brothers were willing to sign the bond and post

their homes -- the defendant expressed extraordinary contempt

for, and an intent to cut off communications with, his two

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brothers. For example, in an email on November 16, 2010, the

defendant stated, with respect to his brothers, “once i am

sentenced i want no contact with them or anyone in their

families.” He further stated “they will need me one day and i

will not lift a finger --they are mean spirited awful human

beings.” And he reiterated “i will have no contact with their

families adrienne and alexandra, mark and wendy - if they need me

- no way.” See Exhibit C (including two emails from the

defendant regarding his brothers). In another email that same

day, the defendant described his brothers as “unfeeling and

duplicitous,” adding that Warren Starr is “awful” and “has been

lying constantly to [defense counsel.]” Id. The defendant has

also received numerous emails from his wife and his children

sharply condemning Warren Starr.

Given the nature of the defendant’s comments about his

brothers, the Government submits that neither property posted by

the defendant’s brothers nor the brothers’ signatures on the

defendant’s bond would meaningfully deter the defendant from

fleeing.2

2
As far as the Government is aware, the defendant’s
brothers – and their wives – are currently unaware of the
disparaging comments he has made about them. It may well be that
after the brothers and their wives learn of the comments the
defendant has made, they will (understandably) be unwilling to
sign the bond or post any security for the bond and, in so doing,
risk their economic well-being for someone who has such little
regard for them. Thus, to the extent, Ms. Edwards suggests that
“the sureties are not concerned that Mr. Starr would flee,” they

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Second, as discussed above, Michael Giordano, the “friend”

initially proffered by the defendant as a suretor, refused to

sign the bond after assuring the Court he would do so. That

development raises questions in and of itself. But in late

October, defense counsel proffered another friend (“Friend # 2")

as a potential suretor, and this individual is entirely

unsuitable as a suretor.

Friend #2, a woman who is allegedly a partner in an online

retail business, has recently been communicating with the

defendant and has clearly been seeking to undermine the

defendant’s confidence in and relationship with his wife, Diane

Passage -- the fourth suretor ordered by the Court. For example,

in an email on November 12, 2010, Friend # 2 informed the

defendant that Ms. Passage had “tweeted” about her birthday but

included “[n]o mention of her loving husband :(”; the friend

asked “[d]oes she even talk to you?” and told the defendant,

“you’re still wasting your time caring -- she’s all about

HERSELF.” See Exhibit D (including two emails from Friend # 2

regarding Ms. Passage). In another email on November 10, 2010,

Friend # 2 joked about finding the defendant a replacement for

Ms. Passage, stating she would “start a search for a pretty, dumb

and mute one.” In that same email, Friend # 2 informed the

may take a different view after reviewing the defendant’s


statements about them.

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defendant she had spoken with one of the defendant’s daughters

and learned that Ms. Passage had not called the daughter to wish

her a happy birthday. Specifically, Friend # 2 stated, “[s]he

told me that your so called ‘loving and caring’ madam didn’t even

call her - NICE! She wasn’t even surprised, and neither am I -

TOLD YOU SO - she doesn’t give a flying s---.” Id.

Given that Ms. Passage is the only individual who is set to

sign the bond who even arguably has any suasion over the

defendant, Friend # 2 -- who is clearly working to undermine the

defendant’s confidence in Ms. Passage -- is totally unsuitable as

a suretor.

Third and finally, defense counsel has informed us that, if

released, the defendant would reside in the Apartment he has

agreed to forfeit. This, too, raises serious concerns for the

Government. The Government submits it is utterly inappropriate to

allow the defendant to serve home detention at a residence that

is not permanent and that is soon-to-be an asset of the

Government (and which the defendant has no interest in treating

in such a manner as to maintain its value). Furthermore, given

that maintenance and mortgage payments for the Apartment are in

arrears, there is a risk that the co-op for the building will

initiate eviction proceedings if sentencing (and forfeiture

proceedings) do not occur soon.

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CONCLUSION

The defendant is due to be sentenced by this Court

approximately six weeks from now and faces a stipulated

Guidelines range of at least 10 years’ imprisonment in connection

with that sentencing. Given that the defendant has pled guilty,

given the substantial penalties he faces, and given the

disparaging and contemptuous comments the defendant has made

about the individuals posting the lion’s share of the security of

the For the reasons set forth above, the Government respectfully

submits that the Court should revoke the defendant’s bail and

order him detained.

Dated: New York, New York


December 17, 2010

Respectfully submitted,

PREET BHARARA
United States Attorney
Southern District of New York

/s/
William Harrington/Michael Bosworth
Assistant United States Attorneys
Tel.: (212) 637-2331/1079

cc: Flora Edwards, Esq. (Via ECF)

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