Porn star Marylin Star made the front page of the New York Daily News Wednesday with the story about a Wall Street king allegedly slipping her insider stock tips that netted her some $88,000. Unfortunately federal fraud charges come in the wake of Star's bonanza.
Says the News: "The sordid downfall of seemingly strait-laced investment banking powerhouse James McDermott shook the financial world as some industry folks were quaking over porno actress Marylin Star's alleged boast that she knew many 'well-connected Wall Street types.'
According to the News story, McDermott, the former CEO of Keefe Bruyette & Woods and a familiar face on TV financial shows - had an "intimate affair" with the 30-year-old actress. McDermott, however, faces up to 15 years in jail for allegedly tipping off Star about a series of possible banking mergers being handled by his firm - allowing her to make a mini-killing.
Starr allegedly passed along the insider information to her pal, New Jersey businessman Anthony Pomponio, who reaped $86,000 from the illegal trades, authorities said. McDermott and Pomponio appeared yesterday in Manhattan Federal Court on securities fraud and conspiracy charges. McDermott was released on $1 million bond secured with $100,000 cash, while Pomponio was sprung on $50,000 bond.
The whereabouts of the X-rated actress, a native of Canada whose real name is Kathryn Gannon, were not known last night. Sources familiar with the ongoing probe said her lawyers have met with Manhattan U.S. Attorney Mary Jo White to discuss her surrender and possible cooperation with authorities.
McDermott, a married father of two teenage daughters, met the self-employed porn actress and alleged prostitute in June 1997, prosecutors said.
He began writing her certified checks - at one point even wiring $20,000 from a joint account he held with his wife, Darian, the Securities and Exchange Commission alleges.
In April, the SEC began monitoring Star's stock purchases. She refused to answer questions when confronted in June.
McDermott then gave Star, who had no prior experience with the stock market, six hot tips on bank mergers his firm was handling, netting her $88,000, authorities said. In August 1997 McDermott learned Barnett Banks was soliciting a buyer. The next day, Star bought 1,800 shares of Barnett stock - but not before advising Pomponio to do the same, authorities said.
Last June, McDermott suddenly revealed to his peers at Keefe that he had given "advice" to a "friend" about certain banking mergers. He agreed to resign and has not worked since, authorities said.
McDermott's attorney, Denis McInerney, said McDermott was shocked by the charges because though he knew he was under investigation for months, the feds didn't contact him until late Monday. "We will respond to the allegations in due course and are confident that Mr. McDermott will be exonerated when the facts are known," McInerney said.
Pomponio, 45, has declined comment other than to say he's a friend of Star's The fraud charges could put McDermott in jail for up to 15 years and cost him $1.25 million in fines and penalties.
