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Ann Brenoff

Celebrity Money Watch: Kenneth I. Starr, Arnie Klein in big money trouble

Welcome to Celebrity Money Watch, where we chronicle the money excesses and financial foibles of the stars.

Call this the "What people will do for beauty" edition, featuring the money woes of an accountant who swindled celebs to win an ex-stripper's heart, and Hollywood's "go-to guy" for Botox injections.

Kenneth I. Starr
Kenneth I. StarrKenneth I. Starr, the accountant to the stars (and not to be confused with Whitewater attorney Ken Starr), who was charged with operating a star-studded Ponzi scheme, has been sentenced to 7-1/2 years in prison for bilking celebrity clients and other investors out of millions of dollars.

He also just filed for Chapter 7 bankruptcy liquidation in what might be his final financial act.

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Paul Simon, Carly Simon, Candice Bergen, Liam Neeson, Al Pacino, Caroline Kennedy, Uma Thurman, Ron Howard, Nora Ephron and David Blaine were reportedly among Starr's clients who, it turns out, foolishly put their money with him. Reports blame some of photographer Anne Liebovitz's financial woes on Starr, too, although others say Ms. Liebovitz's creative prowess just doesn't extend to her finances. In all, Starr's Ponzi scheme bilked an estimated $33 million from his clients.

In a plea agreement struck last year, Starr pleaded guilty to one count of money laundering, which carried a maximum sentence of 12 years imprisonment. But, citing his many years of charitable work, the judge on Wednesday was lenient with the contrite 67-year-old.

"I can't believe I did what I did. I lost my moral compass," Starr told the judge at his sentencing hearing Wednesday, according to the New York Post.

Starr used his clients' money to buy himself a fancy apartment on Manhattan's Upper East Side, in part to impress his young, ex-stripper wife, and to shower his friends with expensive gifts. When federal agents arrested him, they found him hiding in a closet -- a nice touch.

After Starr's arrest, a receiver was appointed to run his firms in connection with an SEC lawsuit filed against him. The receiver authorized the bankruptcy filings.

What happens next? Under Chapter 7, a trustee will oversee the liquidation of Starr's firms' assets and distribute them to the creditors. Starr Investment Advisors claimed just $23,000 in assets against $3.1 million in debts. Starr & Co. reported $154,000 in assets and $3.2 million in debts, according to the Wall Street Journal. And according to CBS New York, American Express is suing Starr for $350,000 in unpaid platinum- and gold-card charges.

Arnie Klein
And then there's Arnie Klein, dermatologist to the stars.

Arnie KleinMichael Jackson's star attraction always eluded me, but I did find it fascinating that he showed up at a Santa Monica book store in 2009 wearing a face mask, dark glasses and shielded by a black umbrella and then feigned surprise when he was recognized.

Equally fascinating was his doctor and longtime confidante, Dr. Arnie Klein. Klein, a dermatologist with a celebrity clientele that includes Cher, Dolly Parton, Elizabeth Taylor and, of course, the late Michael Jackson, has filed for bankruptcy.

The filing says he owes $80,000 to American Express, $127,000 to the IRS, nearly $2.6 million to City National Bank for his mortgage, $50,000 to one of his lawyers, $20,000 to the landlord of his office building and $115,000 to a doctor with whom he shares office space. He also owes nearly $250,000 to medical suppliers.

So how big is Arnie? You know how many claim to have invented the Internet? Well, in Hollywood, just as many claim to have invented Botox. But in Klein's case, it might be more than just the toxins talking. Some say Klein developed the gold standard for minimally invasive injection techniques. In 2006, People magazine called him "The Go-To Guy for Botox."

With all his money worries, Klein may add a wrinkle or two to his brow. Physician, heal thyself?

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