Metro

Investor busted as star cro$$er

A Manhattan money manager to the stars whose celebrity clients have included Uma Thurman, Al Pacino and Wesley Snipes was busted yesterday in a $30 million Ponzi scheme uncovered after authorities investigated former City Council President Andrew Stein for tax crimes.

Kenneth Starr allegedly swindled nearly $14 million from celebrity jeweler Jacob “Jacob the Jeweler” Arabov and his wife, and $16 million from others to fund a lavish lifestyle for him and his stripper spouse that included a $7.5 million Upper East Side triplex boasting a swimming pool in its basement.

About $5.75 million of the cash used to buy that luxe new East 74th Street condo was allegedly looted from accounts belonging to 99-year-old heiress Rachel “Bunny” Mellon, widow of Mellon family scion Paul Mellon.

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Starr, 66, is also accused of trying to use $1 million belonging to an actress-client — whom sources said is “Kill Bill” star Thurman — to buy that home this spring.

Starr replaced the million bucks by allegedly lifting an equal amount from another client after Thurman learned her money had been improperly taken from her account at Starr and Co. and confronted him last month, the feds said.

Also busted yesterday was alleged tax deadbeat Stein, a former Manhattan borough president who once eyed a run for mayor, for lying to the feds about a shell company, Wind River LLC . Starr had set up the company for Stein, allegedly funding it with $1.6 million he swindled from clients.

Stein used that cash to fund his own “extravagant” lifestyle, which included a $150,000 summer rental house in Bridgehampton, prosecutors said.

A source said Stein sat in on Starr’s pitch meetings to potential investors at Starr and Co., along with Marvin Rosen, a corporate lawyer who once served as Democratic National Committee finance chairman.

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The feds said Starr solicited investments from clients by representing “entities or businesses” getting the cash as “sure deals,” but then diverted the money to himself, his wife, close associates or risky ventures in which they had interests. Among those associates were Rosen, Manhattan lawyer Jonathan Bristol and Starr’s son, the indictment and sources said.

“Mr. and Mrs. Arabov unfortunately invested substantial personal assets through several prominent individuals they trusted and it is now clear that they were defrauded,” said their lawyer, Benjamin Brafman, adding the Arabovs will try to recover their investments.

The indictment said that shortly before Jacob Arabov went to prison for making a false statement in 2008, the jeweler had invested $100,000, at Starr’s behest, in a Georgia golf-course company controlled by NBA legend Julius “Dr. J” Erving, a close friend of Starr.

But in a subsequent bankruptcy filing by Erving’s company, Starr’s firm — not Arabov — is listed as a major creditor.

A lawyer for Erving, who is not accused of wrongdoing, had no immediate comment.

Prosecutors said the oft-married Starr was nabbed by agents yesterday morning “cowering” behind coats in a walk-in closet in his home. When the feds showed up, Starr’s pole-dancing expert wife, Diane Passage, said he was not home, prosecutors said at a bail hearing.

But as they searched the home, Passage “pointed upstairs and whispered, ‘He’s upstairs,’ ” the feds said.

Agents started checking closets upstairs and nabbed Starr after they spotted his two shoes sticking out from under a bunch of coats, prosecutors said.

A Manhattan federal court magistrate ordered Starr held without bail after a prosecutor said, “Mr. Starr has the means to flee, the incentive to flee and the willingness to flee.”

Manhattan US Attorney Preet Bharara said the charges against Starr — wire fraud, investment adviser fraud and money laundering — “seem to confirm what has become all-too apparent lately: Anyone can be a victim of financial fraud.”

Starr’s arrest — which coincided with a raid on his company’s East Side offices and a civil action filed against him and Passage by the Securities and Exchange Commission — rocked the New York celebrity and society worlds, which he has long tapped as a client pool.

Starr is known for buying tables at philanthropic functions, attending glittery parties hosted by songwriter and political fund-raiser Denise Rich and others, and schmoozing well-heeled attendees while bragging of his financial wizardry for the likes of filmmaker Martin Scorsese, ABC anchorwoman Diane Sawyer and actor Sylvester Stallone.

On Tuesday, he and his wife — who used to dance at the East Side mammary-mecca Scores under the name Chase — celebrated their third wedding anniversary with a dinner at the Four Seasons restaurant in Midtown.

“He made it seem as if it was a very exclusive thing to invest with his company,” said Bharara.

But Starr has appeared under stress recently as four longtime managers left his company.

At a birthday party at Nello’s restaurant last week for Hampton Sheet publisher Joan Jedell, the normally “outgoing” Starr “seemed a little quiet,” Jedell said.

At Starr’s office — across the street from the Lipstick Building where Bernard Madoff pulled of his $60 billion Ponzi scheme — stunned employees watched yesterday as federal agents hauled off 60 boxes of documents in a rented U-Haul and grilled them about their boss’ practices.

“I’m ready to puke,” one worker said. “This is crazy.”

Others were not so stunned.

Sources told The Post that in recent weeks, word that Thurman’s confrontation with Starr about her missing $1 million spread among celebrity clients.

One of them, “When Harry Met Sally” director Nora Ephron, recently took her money out of Starr’s firm, a source said. Others, including magician David Blain and former William Morris Agency boss James Wiatt, still have money there, sources said.

Anthony Capetola, an attorney who, until recently, represented Starr’s ex-wife, Marisa, said that during pending litigation between her and Starr in Nassau County, “we told his lawyers that he was in trouble and that he was obviously scamming his clients.”

Capetola said Starr — who left the multiple sclerosis-stricken Marisa and their two children several years ago — “was looting the assets” that should have been shared equally with her.

Additional reporting by Liz Sadler, Lachlan Cartwright, Kevin Fasick and Michael Riedel

bruce.golding@nypost.com