From the time he was 13 years until his graduation from Georgetown University, Peter Starr spent his summers working aboard the 62-foot sailing yacht owned by William F. Buckley Jr., the author and television comentator.

As the years passed, the boy and his boss grew closer, and the young man even adopted Buckley's conservative political philosophy.

When Starr graduated from college in 1964 he went to work as a salesman for an Omaha radio station owned by Buckley's National Review magazine. In four months he was promoted to manager of the station.

In 1970, Buckley backed Starr in organizing what rapidly grew into a multimillion-dollar communications conglomerate - Starr Broadcasting Group Inc.

Starr, only 28 at the time, was generally described as brilliant. And Buckley, in one of his books, said of his partner: "I have that special affection (for Peter) I reserve for people who make me a million dollars."

Now, Peter Starr is suing Starr Broadcasting for breach of contract.

And the Securities and Exchange Commission is winding up a nearly 2 year investigation into the business practices of the company and its top executives, including Buckley and Starr.

There is also a private lawsuit pending, which accuses Starr Broadcasting and all its executives at the time of using some $6 million of company assets to prevet personal bankruptcy.

The central issue, according to sources close to the investigation, is whether Buckley, Starr and two associates defrauded the stockholders of Starr Broadcasting by merging a private (and nearly bankrupt) business venture that they had set up with Starr Broadcasting.

Besides Buckley, 51, who was chairman of Starr Broadcasting, and Peter Starr, Starr Broadcasting's former president, the SEC investigation includes Starr's brother, Michael, 37, the company's former executive vice president, and Gordon Ryan, 49, the former company counsel.

The story of the rise and fall of the Buckley-Starr business relationship was reconstructed from court and SEC records as well as through an interview with Bucklay. The other principals were not available.

Not long after Peter Starr's sucess at Buckley's Omaha radio station, Starr proposed - and Buckley agreed - to form a company called KOWH Inc., which bought two more radio stations. Buckley says he put up two thirds of the capital, and financed Peter Starr's one-third stake.

Peter Starr was joined by his brother Michael, a Georgestown University Law School graduate, and by Ryan, who had been outside counsel to the Omaha company.

In 1970, with Buckely's approval, Peter Starr renamed the company Starr Broadcasting which was based in New Orleans before moving to Connecticut. The new company also went public - sold stock to public shareholders - to finance expansion plans. This act put the company under the regulation of the SEC, which oversees publicly owned firms.

In the next four years, the new company enjoyed tremendous success. Annual revenues climbed from $6 million in 1971 to $30 million in 1974. Earnings rose from $360,000 to $1.4 million.

By 1974, Starr Broadcasting owned three network-affiliated TV stations, five FM radio stations and six AM stations. Starr Broadcasting had also diversified. It had acquired Arlhus Publishing Corp., which operates the Conservative Book Club, and another company that markets tape, phonograph records and guitar accessories.

Even as the publicly owned Starr Broadcasting prospered, the principals decided to branch out into other ventures of their own.

In 1972, Buckley, the Starrs and Ryan became partners in a firm called SITCO ("I don't know what it means," said Buckley). Buckley says he invested $50,000 in seed money and the other partners each put up $50,000.

The first venture was the contruction of an office building in Coral Gables, Fla.It was a financial diasaster and, according to several sources, resulted in $1.5 million loss. But since the lending institutions had demanded no collateral and no gurantee in financing the building, the partners were able to walk away and leave the structure to the lenders, Buckley says.

In 1972 and the 1973, SITCO bought 13 drive-in movie theaters in Texas and put them into a company called SB Threatres.

"The idea," said Buckley, "was to buy into some properties on which movie theatres operated whose revenues would be sufficient to service the debt and certain amortization."

Once the property values rose, Buckley said, the partners planned to sell out.

The drive-in acquisition was financed by two loans, each for $3,150,000. One secured with proceeds from another loan of $750,000, plus stock and some of the land.

The second $3,150,000 loan was from Institutional Investors Trust, a New York City real estate investment trust. It had an annual interest rate of 6 percent over the prime rate.

By 1974, the $6.3 million in loans had grown to a debt of $8 million, because the movie theaters failed to cover the payments. Making matters worse, in the summer of 1974, the prime rate climbed to 12 percent, an annual interest rate of 18 percent on one of the loans.

On July 9, 1974 Buckley and the Starr met for dinner in New York City. According to Buckley, he had negotiated a loan of $300,000 from a Connecticut bank on the assumption that a buyer had been found for one of the theaters. Buckley further says that another buyer had put down $60,000 on $10 million offer for all SB Theatres, but he had to give up the down payment when he could not get financing.

The outlook was bleak, and at the meeting, recalls Buckley, "we agreed something had to be done."

The "idea evolved," continues Buckley, "to offer [SB Theatres] to Starr Broadcasting." It was this decision to put their troubled private investment into a publicly owned company, where they were officers, that has led to the government investigation and the private litigation.

The "disinterested directors" of Starr Broadcasting, says Buckley, agreed to take an option on SB Theatres in October. They also put $400,000 to tide the theaters over the winter.

In June 1975, the board agreed to take over the theater chain. In October, Starr Broadcasting filed a mandatory review of its material transaction for its fiscal year, which ended on Aug. 31, ommiting several key ingredients of the SB Theatres deal.

On Dec. 10, 1975, Paul Solomon, a Phoenix, Ariz, stockbroker who did not like the looks of the SB Theatres deal, gave notice to Starr Broadcasting that he was preparing to file a derivative stockholders suit. It was filed in January in Federal court in New Orleans.

In December, Buckley says, he ordered a revised version of the SEC annual filing, called a 10K, to be submitted to the agency.

Says Buckley who was a chairman of the board at the time: "Why didn't I notice the (the first) 10k was insufficient? Answer: I didn't read the 10K. I don't understand the 10K. It deals in a world that is foreign to me."

The revised 10K brought Starr Broadcasting to the attention of the SEC's enforcement division, which has been investigating ever since. Among the developments that concern the government and were also raised in the stockholder suit:

In 1975 when Starr Broadcasting agreed to take over SB Theatres, the company went from a profit of $1.4 million in 1974 to a loss of $2.1 million. The company was having trouble servicing existing debt, company executives have testified in the private suit, yet the directors borrowed $1,125,000 to swing the SB Theatres deal.

On the $1,125,000, $450,000 went to pay off personal debts of the Starr brothers and Ryan. "If they didn't extend the relief," says Buckley, there was a "chance of bankruptcy of the three individuals." Buckley adds that bankruptcy, the Federal Communications Commission could pull the licenses at the company's radio and TV stations.

Among the lenders of the $1,125,000 to the company was Columbia Union National Bank of Kansas City, which was also owed the $450,000 by the three executives.

According to the revised 10K, between 1972 and 1974 SITCO leased Buckley's yacht. Operating cost of the boat exceeded income derived from charter . . . by approximately $70,000," the SEC document states. The private suit says this was part of the debt assumed by Starr Broadcasting. Starr Broadcasting also leased the 62-foot yacht at a loss of $30,000 for six months. Buckley claims that Peter Starr took the amount out of $50,000 owed him, but Buckley is unclear on the details.

According to a report by Peat Marwick Mitchell Co., the appraisal which was the basis of the acquisition of the theatres by Starr Broadcasting overstated the worth of AB Theatres by $3.3 million.

In 1976, SB Theatres, which had become a wholly owned subsidary of Starr Broadcasting, filed for reorganization under the federal bankruptcy laws.

In the spring of that year, Buckley says he forced the resignation of the Starr brothers and Ryan. Buckley himself later resigned as chairman.

Meanwhile, investors with ties to Walt Disney Productions have offered about $24 million for Starr Broadcasting, which still owns two network TV stations (one was sold earlier to generate cash) and 10 radio stations, and of which Buckley still owns 20 percent. The sale awaits FCC approval.