Ex-William Morris CEO Wiatt sues law firm, former partner for helping Starr execute Ponzi scheme

A former head of a talent agency has sued Jonathan Bristol, a former law firm partner of Winston & Strawn LLP, and the law firm, and is holding them accountable for the $2 million allegedly misappropriated from his investment account.

Jim Wiatt, the former CEO of the William Morris Agency, and his wife have filed a civil suit in federal court in New Jersey on Monday, alleging that they have lost $2 million earlier this year in improperly transferred funds that went through Bristol's attorney trust accounts.

Half of this amount, the lawsuit alleges, was used by Bristol's client Kenneth I. Starr to reimburse another client, believed to be Hollywood actress Uma Thurman, for $1 million that Starr had previously stolen from her to help pay for a luxury home.

The Wiatts have alleged that Bristol and Winston & Strawn have also improperly offered to represent them in dealing with the Securities & Exchange Commission in what turned out to be its investigation of Starr's and Bristol's misappropriation of funds belonging to Starr's clients, including the Wiatts.

Winston & Strawn was collecting fees from Starr while, at the same time, purporting to represent the Wiatts without disclosing the potential conflicts that were inherent in such representation, the Wiatts' lawyer, David Stone of Stone & Magnanini, said in a statement.

The Wiatts are seeking compensatory and punitive damages from Bristol and Winston & Strawn for malpractice and conversion. Stone told the Wrap that the Wiatts lost $2 million in this scheme so we're seeking five times that amount in punitive.

Starr, financial adviser to Hollywood celebrities and powerful politicians, had pleaded guilty in September to charges that he ran a Ponzi scheme and diverted up to $50 million of his clients' money to fund his own lavish lifestyle. He had pleaded guilty to one count each of wire fraud, money laundering and investment adviser fraud in the US District Court in Manhattan.

Starr, who has advised Hollywood actors like Uma Thurman, Wesley Snipes, Sylvester Stallone and Al Pacino and directors like Martin Scorsese and Ron Howard, was arrested and charged in May with fleecing his clients by operating a complex Ponzi scam. He was indicted in June by a grand jury in New York on 23 counts including wire fraud, securities fraud, money laundering and fraud by an investment adviser.

Bristol was arrested last week and was charged by the Securities and Exchange Commission (SEC) with aiding and abetting Starr's Ponzi scheme by allowing Starr to use his attorney trust accounts as conduits for transferring the funds stolen from Starr's clients to Starr and his two companies for personal use.

In the civil lawsuit filed in federal court in New York last Thursday, the SEC has alleged that more than $25 million belonging to Starr's clients flowed through Bristol's attorney trust accounts. Without his clients' authorization, Starr would transfer their funds into the attorney trust accounts, and then Bristol would transfer the stolen funds to Starr and his two companies for personal use.

According to the SEC, Bristol never disclosed the existence of the attorney trust accounts to the prominent international law firm Winston & Strawn LLP 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, the SEC said in a statement. This took place between November 2008 and May 2010.

Meanwhile, Bristol also 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 said.

The SEC said that once when Bristol was confronted by one of Starr's victims about an unauthorized $1 million transfer from the victim's account, he had lied to the victim that 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, the SEC said, adding that Bristol even subsequently sought to represent that same victim after the victim was contacted by SEC staff in its investigation.

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 said.

The lawsuit runs parallel to a criminal indictment filed by the U.S. Department of Justice on the same day which charges Bristol with laundering over $20 million in connection with Starr's admitted Ponzi scheme.

The SEC and the Southern District U.S. Attorney's Office are seeking the forfeiture of Bristol's property, including $20 million.

Bristol has pleaded not guilty to the charges and his lawyer, Gerard Hanlon, claims his client was fooled by Starr along with a lot of other people.

A call made to Winston & Strawn went unanswered.