“Kenneth Lipper, money manager to the stars before his hedge fund collapsed a year ago, will try to persuade a judge today that he can pay his investors back — most of their money, at least. But many of the investors are furious, saying that the plan favors some clients over others,” writes Landon Thomas Jr. in today’s New York Times.

“Among hedge fund failures, his is a memorable one. Mr. Lipper startled the financial industry when he announced last February that his Lipper Convertibles Fund had lost $315 million, or 40 percent of its value. The fund was full of telecommunications and energy bonds that plummeted in value for much of 2001, though he says the real damage was obscured until a couple of his leading managers left early last year.”

“Mr. Lipper cuts an unusual figure for a hedge fund manager. He was a deputy mayor in the administration of Edward I. Koch and a Hollywood figure who advised Oliver Stone on the filming of ‘Wall Street.’ He produced and helped to write the screenplay for ‘City Hall’ in 1996 and, as a co-producer, won an Oscar in 1999 for ‘The Last Days,’ a Holocaust documentary.”

“Early on, he seemed to have an eye for the bright lights. Mr. Lipper was always on the periphery of fame and celebrity, but never quite able to achieve it.”

“He grew up in the South Bronx with Al Pacino in the 1950’s, was a Salomon Brothers partner with Michael R. Bloomberg in the 1970’s and early 80’s, and pitched movie projects to Steven Spielberg in the 1990’s.”

“The clients in his fund included Michael D. Eisner, Julia Roberts and Mortimer B. Zuckerman, and spanned the upper reaches of society in Hollywood and in New York.”

“While their losses may seem like pocket change to celebrities, Mr. Lipper is losing a lot more. His funds have been shut down, his clients have left him and he is expected to be liable for what is sure to be many millions of dollars in legal and restitution payments. Most painful to him, his friends say, is the evisceration of his reputation in Hollywood and on Wall Street.”

“Though there is one investor lawsuit against him, Mr. Lipper is presenting a petition in court today to distribute the remaining money in the fund. Mr. Lipper, not normally camera-shy, is expected to let his lawyers speak for him in court.”