Bailout

The operations of Annie Leibovitz?s sophisticated advisor

By Felix Salmon

Remember Art Capital Group’s lawsuit against Annie Leibovitz? It took pains to point out the sophistication of her advisors:

Each of the sophisticated parties were represented by able and sophisticated counsel and financial advisors and the likelihood that certain of the collateral would need to be sold to satisfy Defendants’ obligations under the secured loan agreement again was directly discussed with Ms Leibovitz, Leibovitz’ attorneys and Leibovitz’ financial advisors, Starr & Co.

That was enough for Cityfile to decide that Leibovitz cannot have been duped:

Friends of the photographer suggest that Leibovitz had no idea she was giving up so much when she took out the loan; they also seem to be shifting some of the blame to Ken Starr, the financial adviser who took the photographer on as a client in 2007 and who was also responsible for introducing Leibovitz to Art Capital Group. Pinning the blame on Starr, who boasts an insanely long list of celebrity clients, may be a hard argument to make…

Given the list of people who have entrusted their finances to Starr in the past, Leibovitz’s suggestion she wasn’t adequately briefed on the terms of the loan before signing the papers is a tad suspect. Presumably the accountant has dealt with desperate and slightly clueless celebs in the past. And if her plan to somehow extricate herself from the mess by pinning the blame on Starr, she may have an uphill battle ahead.

Now, however, her defense seems a bit more credible, given that Starr has been arrested and charged with five counts of fraud. The complaint gives a good idea of his sales pitch, and of the sophistication of his clients:

Starr’s clearly the kind of person who pushes “secure investments” which at the same time will grow by five to ten times, to clients who believe him. And he’s also Art Capital’s first line of defense against accusations that they were predatory in their loans to Leibovitz. I’m sure they’re very happy, today, that they’ve exited that particular deal.

Full post as published by Macroprudential on May 27, 2010 (boomark / email).