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Banker who leaked info to porn star Marylin Star, James McDermott, accused of stealing from mother

from www.nydailynews.com – Once he was a famous banker charged with leaking stock tips to his porn star girlfriend. Now, James McDermott has a new allegation to confront: stealing from his mother.

The one-time top executive at Keefe, Bruyette & Woods was busted in 1999 for whispering insider info to Marylin Star, lead “actress” in porn hits with titles like “Marylin Does Miami.”

McDermott’s family recently filed suit against the one-time Wall Street whiz alleging he cleaned out the family trust while his mom, Mary, is in a nursing home with Alzheimer’s disease.

The suit, filed in Wisconsin, claims that after his dad, James Sr., died in 2003, Junior quietly moved all the funds from the family trust into bank accounts he and his wife controlled.

Now, his family alleges, the money is gone, and McDermott and his wife are hiding in their $7 million Tudor-style Westchester County mansion – a hunting lodge once owned by the Rockefellers.

His three siblings allege the empty trust makes caring for McDermott’s ailing mother all the more difficult.

“Mary’s three other children have been providing additional care and financial support as a result of James’ actions,” said the family lawyer, Bill Neary.

McDermott’s double life roared into the headlines in December 1999 when he was charged with tipping off the 4-foot-11 Star (real name Kathryn Gannon) to upcoming bank mergers.

Star tipped off another boyfriend, who bought stock ahead of the curve and made a killing.

At first, McDermott, 58, denied everything and fought back, but ultimately he pleaded guilty in 2001 to stock fraud and was sentenced to the five months he already served in jail. He agreed to pay $230,000 in restitution and was banned from further association with brokers, dealers and investment advisers.

By then his father had died and, as trustee of the family trust, he began transferring assets to accounts he and his wife controlled, the suit alleges.

For a time, he tried opening a woodworking business with a partner, but the effort collapsed, a family member said. By 2005, he was facing $1 million in tax liens by the IRS, records show.

By September 2006, he’d moved more than $650,000 from the trust into his accounts, court papers charge. Confronted by his siblings, he admitted he “borrowed” $454,000 of the funds and would pay it back once he was back on his feet, the papers said.

In a July 2007 e-mail to his brother Robert, a Catholic priest, McDermott acknowledged that he’d transferred the family’s money to cover his growing personal debts, according to court records.

The former financial guru who gave stock advice on TV now blamed a “personal financial maelstrom” in 2006 and its “aftermath” in 2007, writing, “Absolutely nothing unfolded as I expected during this time.”

The many debts, he wrote, “overwhelmed my ability to respond and fix the situation.”

In the e-mail, he sought to convey contrition, writing, “There is simply not enough apology to cover the hurt that I may have caused Mom and for that I am beside myself.”

But when the family filed suit in July and tried to serve papers, the process server encountered a locked gate at the magnificent Briarcliff Manor home McDermott and his wife call home.

Tuesday McDermott – who has no phone listed – could not be reached for comment.

The suit seeks a return of all the money, plus punitive damages and legal fees.

Neary said he hopes the “trust assets can be restored and Mary’s future health care needs and living expenses will be met.”

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