American Greed

The Greed Report: Stars — They Get Scammed Just Like Us!

Hollywood sign
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Claudio Osorio collected celebrities much the way he collected fancy homes and cars: with plenty of fanfare and a whole lot of fraud.

He attracted investors including NBA stars Carlos Boozer, Alonzo Mourning and Dwight Howard. Former Florida Gov. Jeb Bush joined his board of directors. He courted both Hillary Clinton and Barack Obama in 2008, and invited top supporters of both candidates to bury the hatchet at his home following their bruising primary battle.

Now, Osorio is serving a 12-year federal prison sentence after pleading guilty in a $40 million fraud. His home building company InnoVida, such a magnet for celebrity cash, turned out to be little more than a house of cards.

Jeb Bush and the Democratic National Committee were forced to return tens of thousands of dollars. And Osorio's celebrity entourage joined the long line of the rich and famous victimized by scams.

Let's roll out the red carpet and see who else got taken in some of the biggest celebrity rip-offs of all time:

Holy Terror

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Raffaello Follieri, whose $2 million scam was the subject of a 2010 episode of CNBC's "American Greed," is best known as the ex-boyfriend of Oscar-winning actress Anne Hathaway.

Hathaway returned tens of thousands of dollars worth of jewelry given to her by Follieri, and while there was never any indication she knew about her ex's crimes, she suffered plenty of humiliation as the case unfolded. But Hathaway wasn't the only high-profile person taken in by the suave Italian.

Follieri invoked the Vatican in his real estate scam, even claiming to be the chief financial officer for the Holy See as he bought and sold church-related properties. That was how he managed to scam billionaire supermarket mogul Ron Burkle, who in turn introduced Follieri to his close friend Bill Clinton.

The scam blew up when Burkle sued Follieri for more than $1 million over the sham real estate deals. Criminal charges soon followed.

Follieri eventually pleaded guilty and agreed to forfeit $2.4 million. A reported $50 million donation pledged to the Clinton Global Initiative naturally never materialized.

Upon Follieri's release from prison in 2012, the U.S. government deported him to his native Italy. There, he began working to resume his business career.

A Scandal for the Ages

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Think celebrity financial scandals are a recent phenomenon? Travel with us back to the 1930s — the dawn of the Great Depression and the twilight of legendary Hollywood "It Girl" Clara Bow's career.

Bow was Hollywood's original sex symbol and the star of "Wings," the first film to win the Academy Award for best picture. Famously exploited for years by Hollywood studios, blackmailing publishers and ne'er-do-well relatives alike, Bow found a trusted friend in her personal secretary, Daisy DeVoe. She also found love in her boyfriend and eventual husband, Rex Bell. And Bell and DeVoe despised each other.

As author David Stenn recounts in his 1988 book "Clara Bow: Runnin' Wild," DeVoe took care of Bow's finances and appeared to do a good job, turning a $16,000 bank balance into $249,000 — or nearly $4 million today.

But Bell was deeply suspicious about DeVoe's "unorthodox" bookkeeping, and DeVoe was convinced Bell was scheming to invest $10,000 of Bow's money in a "get-rich-quick counterfeit racket." So DeVoe moved to block Bell's access to Bow's finances, and the rivalry grew into open warfare.

At Bell's urging, Bow pressed embezzlement charges against her former confidante, alleging DeVoe had been diverting the star's funds for her own use. A grand jury indicted DeVoe on 37 counts of grand theft. A sensational trial ensued, with Bow and DeVoe taking the stand and lobbing scurrilous allegations at one another.

While the prosecution's case has since been widely discredited, one of the counts — involving an $825 check — stuck. DeVoe was sentenced to 18 months in prison, Bow's career never recovered, and the idea that movie stars were prime targets for scam artists was cemented in Hollywood lore.

A Starr is Born

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Financial fraud has grown infinitely more complicated since the days of silent pictures, but the key to ripping off the stars is still basic: Gain control of their finances. That was the M.O. of Kenneth Ira Starr, whose $30 million fraud was the subject of a 2012 episode of "American Greed."

An accountant from the Bronx who got his big break when he met banking heir Paul Mellon and his wife, Bunny, Starr parlayed that connection into his role as financial advisor to the stars. Annie Liebowitz, Martin Scorcese, Wesley Snipes and Sylvester Stallone were among the many A-listers who trusted Starr with their money — and more.

"He would pay their housekeepers, their drivers, do their taxes, pay their lawyers," Aurora Cassirer, a receiver appointed by the court to unwind the scam, told "American Greed." "In other words, he essentially performed all of the household services in terms of the accounting services that you and I would perform for ourselves."

The arrangement allowed Starr unfettered access to tens of millions of dollars — plenty of which he kept for himself — as well as the ability to use one star's money to fund the pet projects of another.

Stallone sued Starr for $7.2 million in 2002 alleging Starr misled him over his investment in the Planet Hollywood restaurant chain. The case was settled out of court, and Starr's scams continued until his arrest in 2010.

Starr eventually pleaded guilty to three criminal counts and was ordered to pay $30 million in restitution. He's serving a seven-year sentence at a federal prison in upstate New York. With time off for good behavior, he could be out next year.

You Talkin’ to Me?

View of the sculpture 'Pensive Woman' (1913/14) by German sculptor Wilhelm Lehmbruck during a press preview of the ImEx (Impressionism, Expressionism) exhibition at Berlin's Alte Nationalgalerie (Old National Gallery) on May 20, 2015.
John Macdougall | AFP | Getty Images
View of the sculpture 'Pensive Woman' (1913/14) by German sculptor Wilhelm Lehmbruck during a press preview of the ImEx (Impressionism, Expressionism) exhibition at Berlin's Alte Nationalgalerie (Old National Gallery) on May 20, 2015.

Less well known than Robert De Niro's vast array of films — from "Godfather II" and "Taxi Driver" to "Meet the Fockers" and "Analyze This" is the fact that he was among the high-profile victims of a $120 million art scam uncovered in 2009.

Lawrence Salander, once the owner of one of New York's most famous art galleries, pleaded guilty to 29 counts including grand larceny after admitting selling paintings he didn't own. They included several by De Niro's father, Robert DeNiro Sr., bilking the estate out of approximately $1 million.

Also a victim: tennis great John McEnroe, who had paid Salander more than $2 million for a 50 percent stake in a pair of abstract paintings only to find they were not Salander's to sell.

Prosecutors likened Salander's scam to the fictional one involving a Broadway musical in Mel Brooks' "The Producers."

"Why sell (a painting) once when you can sell it three times," then-Manhattan District Attorney Robert Morgenthau said in unveiling the charges in 2009.

Salander, once dubbed "the art world's Bernie Madoff," is in New York's Riker's Island prison.

Ponzi to the Stars

Bernie Madoff
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Bernie Madoff

And then there is the real Bernie Madoff. Not only did he pull off the biggest and most notorious investment scam in history, he also became the most prolific celebrity con artist.

It is not as if Madoff courted the rich and famous. In fact, there is evidence he was turning some people away as the scam grew. But with his carefully crafted reputation as a wizard of Wall Street, he had a way of attracting money. And what better source than the stars?

Among the high-profile clients who lost money in the Madoff scam: Director Steven Spielberg, producer Jeffrey Katzenberg, Hall of Fame pitcher Sandy Koufax, and the family of former New York Governor Eliot Spitzer. Ripped off movie stars included Zsa Zsa Gabor and John Malkovich, as well as Kyra Sedgwick and her husband Kevin Bacon, who was separated from his money by far more than six degrees.

What can we mere mortals learn from this celebrity Walk of Shame? The rules of smart investing apply to all of us, no matter how high and mighty. Check out any investment advisor with a reputable, independent third party. Beware of alternative investments and promises of quick riches or improbably high returns. And if it sounds too good to be true, well, you know how that movie ends.

Watch "American Greed," Thursdays at 10p ET/PT on CNBC Prime.