Which celebrities have been scammed by financial advisors?
When Americans tuned into the Oscars on March 4, they were paying close attention to all the glitz and glamour of Hollywood. But while it may seem as if these wealthy Americans are living the good life, some of those on the red carpet have been victims of fraud carried out by their financial advisors.
Over the last couple decades, numerous high-profile celebrities such as Steven Spielberg, Leonardo DiCaprio, Ben Affleck and Ben Stiller have been swindled for millions, only finding out about the fraud after it was too late. Here are some of those celebrity-involved financial frauds.
Swindled by Madoff: Bernie Madoff’s Ponzi scheme ensnared a wide net of victims, and with banks, pension funds, hedge funds and investment firms investing billions with the disgraced trader and advisor, many regular Americans did lose money when the $65 billion scheme was revealed in 2008.
However, several celebrities, many of who invested directly with Madoff, felt the effects of his financial negligence more than others. Hollywood power couple Kevin Bacon and Kyra Sedgwick, Academy Award nominee John Malkovich and “Forrest Gump” writer Eric Roth reportedly lost millions.
A charity established by “The Post” director Steven Spielberg was also scammed by Madoff. According to The Wall Street Journal, about 70% of the Wunderkinder Foundation’s interest and dividend income came from Madoff’s firm. In 2009, Madoff was sentenced to 150 years in federal prison.
Representatives for Kevin Bacon, John Malkovich, Eric Roth, Steven Spielberg and Bernie Madoff did not respond to emails requesting comment.
“Stockbroker to the stars” steals: If there’s one piece of advice that celebrities should take to heart, it’s that investing is supposed to be boring. Yet, many actors like investing with hotshot financial advisors — until they get burned. That’s what happened to Oscar-winning celebs Leonardo DiCaprio and Ben Affleck, and other high-profile actors, such as Cameron Diaz and Ben Stiller.
In the 1990s, Dana Giacchetto, once dubbed the “stockbroker to the stars,” was a go-to advisor for many Hollywood A-listers and often partied with his clients, too. He once told Billboard Magazine that DiCaprio was inspired to do the “The Wolf of Wall Street” because of his relationship with Giacchetto. “The sex and the drugs and the decadence in my life was 10 times worse [than Wolf],” he told Billboard in 2014.
Everything came crashing down in 2000, when he was arrested for stealing about $10 million from his clients. He was sentenced to 57 months in prison, but was released early on good behavior, though he never could get back on his feet. In 2014, Giacchetto was charged with wire fraud; two years later he was found dead in his apartment.
Representatives for Leonardo DiCaprio, Ben Affleck, Cameron Diaz and Ben Stiller did not respond to emails requesting comment.
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Former Kardashian husband defrauded: Even members of Kim Kardashian’s circle aren’t immune to fraud. In 2011, just three months after the reality TV star married NBA player Kris Humphries, and nearly two months after she filed for divorce (the marriage lasted 72 days), 27-year-old Andrey Hicks, an advisor and friend of Humphries’, was arrested for five counts of wire fraud.
According to TMZ and the FBI, Hicks, who sat behind the couple at their wedding rehearsal dinner, stole more than $2.5 million from 10 investors, including Humphries. He convinced them to invest in what turned out to be a fake hedge fund. He also made several false claims about his background, including that he graduated from Harvard, that he was a successful hedge fund manager for Barclays Capital and that his hedge fund had $1.2 billion in assets under management.
Hicks, in response to questions from Financial Planning, said that he got caught up in the celebrity lifestyle and that he never intended to do anything illegal.
It started off with Humphries’ father investing in a couple of Hicks’ business, he says. Hicks used that money to pay a salary to himself, thinking he’d end up making it back when the companies took off. “My plan was to draw income from the investment until we could properly set up the companies and generate revenue,” he said.
While he says that when “I’m in a position of being hands on with that amount of money, my trustworthiness diminishes exponentially,” he also blames the celebrity lifestyle. “Getting exposed to the celebrity world at the level of what Kim Kardashian was at was more than I was prepared to handle,etting exposAnd so good intentions devolved into bad.”
Humphries did get some of his money back after a judge ordered Hicks to pay $2.3 million in restitution. Hicks was also sentenced to 40 months in prison, but says he only served 33, including six in isolation. Perhaps worst of all, he had to feel the wrath of the Kardashian clan who, through a lawyer’s statement, called him a “swindling convict and liar.”
Kris Humphries, and representatives for Kim Kardashian did not respond to emails requesting comment.
Oscar winners taken for a ride: The list of celebrities who have been bilked by their trusted financial professionals is an extensive one. In 2010, it was revealed that Hollywood advisor Kenneth Ira Starr (not related to special prosecutor Kenneth Starr) stole money from his clients. Among them were “White Men Can’t Jump” star Wesley Snipes, Sylvester Stallone, Al Pacino, Martin Scorsese and many others.
Starr, dubbed “mini Madoff” by reporters, defrauded clients out of $59 million, with $30 million reportedly going to a large New York condo, complete with an indoor swimming pool and a 1,500-square-foot garden, in the city’s Upper East Side. Preet Bharara, then the U.S. attorney in Manhattan, said at the time that Starr used his access to famous and powerful clients “to burnish an image of trustworthiness, leading his clients to entrust him with management and control of their financial affairs.”
It wasn’t the first time Starr found himself in trouble. In the late 1990s, Sylvester Stallone sued him for fraud, with the action hero saying he was advised by Starr to hang onto his Planet Hollywood shares as the restaurant chain was about to go bankrupt. Meanwhile, one of Starr’s other client’s (Planet Hollywood founder Keith Barish), was selling stock at the same time. The two men settled out of court.
Starr was sentenced to seven-and-a-half years in prison and was instructed to pay back more than $29 million to his clients. He was released in December 2016.
The moral of the story? While the majority of advisors are trying to help people make money and save for retirement, there’s always someone who will try and take advantage of a trusting client, even if it’s an Oscar nominee.
Representatives for Wesley Snipes, Sylvester Stallone, Al Pacino, Martin Scorsese and Kenneth Ira Starr did not respond to emails requesting comment.