Advisor to Stars Charged With Stealing Millions

Dana Giacchetto, the boyish New York City money manager renowned for his ability to ingratiate himself with such young stars as Leonardo DiCaprio, Matt Damon and Ben Affleck and Hollywood power broker Michael Ovitz, was charged Monday with three criminal counts for allegedly stealing at least $6 million of his clients’ funds.

“Wholesale looting” is how authorities described the way Giacchetto allegedly shuffled more than $20 million belonging to such clients as Damon, Affleck, Ovitz, actors Ben Stiller and Courteney Cox Arquette and the rock group Phish into his own account. Giacchetto, who is expected to surrender to the FBI in New York today, faces a maximum of 20 years in prison, as well millions of dollars in fines, if convicted.

Andrew Levander, Giacchetto’s lawyer, did not return calls.

Hollywood celebrities have a long history of being hustled by confidence men who take advantage of their bank accounts by exploiting their personal insecurities and ignorance of their own financial affairs. Despite scores of stories of business managers stealing from their star clients, Giacchetto was allegedly successful in pulling off a garden-variety scam.

Giacchetto, 37, allegedly used the stolen money to fund a lavish lifestyle. Some of his star clients were eventually paid off with money taken from other clients’ accounts, court papers allege.

A Boston native, Giacchetto is president of the investment firm the Cassandra Group, housed in his trendy loft in New York’s SoHo district. DiCaprio and other A-list clients often stayed in the loft. Giacchetto sold himself to Hollywood as a savvy, conservative investor, becoming “Hollywood’s Gen-X money manager.” He was especially close to agents at Creative Artists Agency, including the late Jay Moloney, who committed suicide last year after struggling with drug addition. Giacchetto also charmed his way into New York’s art world, befriending and advising such artists as George Condo, David Salle and Ross Bleckner.

Not Just a Money Man but a ‘Life Advisor’

Blond and slender with wire-rim glasses, Giacchetto grew up middle-class outside Boston in Medford, Mass., the son of a radio writer and a nurse. At one time, he was an aspiring rock keyboard player and vocalist.

Giacchetto the money manager relished hanging out with stars, visiting DiCaprio on film sets and dropping the names of Hollywood figures whenever a reporter was within earshot. In a New York Times Magazine story, Giacchetto is quoted as yelling commands to an out-of-sight assistant to “Get me Leo!” as in DiCaprio, and “Get me Michael!” as in Ovitz.

Giacchetto became especially close to Ovitz and Rick Yorn, Ovitz’s partner in Artists Management Group who represents such stars as Cameron Diaz and DiCaprio. In an interview last year with Manhattan File magazine, Ovitz called Giacchetto “a life advisor. He’s very full of ideas and very connected to a lot of people who I find stimulating.”

But Giacchetto’s operation began unraveling late last year. In December, The Times reported that droves of clients were leaving, including Damon and Affleck, complaining that they were unable to get answers to questions about their investments, that financial statements were slow to come and that Giacchetto had made risky moves with their money.

The criminal complaint, involving securities fraud, investment advisory fraud and lying to the U.S. Securities and Exchange Commission, was filed by the U.S. attorney’s office in New York, supplemented by a civil suit filed by the SEC that resulted in a freezing of Giacchetto’s funds and the appointment of a receiver for his operation.

Giacchetto’s alleged lies to the SEC include statements that he graduated in 1984 from the University of Massachusetts and did two years of graduate course work at Harvard University. The SEC says he only took undergraduate extension courses at Harvard that he applied toward his bachelor’s degree at Massachusetts, which he finally earned in 1990.

Among the allegations is that through Cassandra, Giacchetto engaged in an elaborate check kiting routine similar to a Ponzi scheme in which he reimbursed money taken from the accounts of some clients with money from the accounts of others.

As an example, Giacchetto allegedly took $250,000 from Gordon Baird to help cover a $251,033 check he had already written to “Erin Brockovich” producer Stacy Sher. In another case, Giacchetto allegedly took $75,000 from Margaret Martin to cover a $39,275 payment he had made to Stiller, using most of the remaining money to pay credit card bills.

Court papers also state that starting in June 1997, and continuing until as recently as two weeks ago--even after authorities served him with a search warrant--Giacchetto ordered 58 checks from his clients’ accounts at the investment firm Brown & Co. without their permission. Giacchetto allegedly did so even though his promotional literature claimed that he did not have custody of any of his clients’ money “for maximum safety” which “assures the client security of his or her account.”

Giacchetto allegedly had the checks sent to him personally via Federal Express, endorsing them without authorization. As an example, Giacchetto allegedly had $100,000 taken out of the account of Damon, star of such films as “The Talented Mr. Ripley” and “Good Will Hunting.”

Giacchetto told authorities from the SEC who later questioned him that Damon had endorsed the checks, and that the money went into an investment. But the check bears only Giacchetto’s signature, and was deposited into a Cassandra bank account, court papers show.

Court papers allege that Giacchetto frequently told clients that the missing money had been used to purchase conservative investments such as AT&T; bonds. The New York production company Good Machine, producers of such films as “The Ice Storm,” discovered $150,000 missing from the profit-sharing plan Giacchetto structured and managed for the company. Giacchetto said it was used to invest in AT&T; bonds, going so far as to show co-founder Ted Hope what authorities allege was a phony purchase order.

In fact, the SEC alleges, the Good Machine money had helped pay off other clients whose money Giacchetto had taken.

Good Machine was then paid back with money taken from the account of the band Phish, authorities said. According to the SEC, Giacchetto “maintained his charade by writing ‘AT&T; 7.125%’ ” on the check issued to Good Machine to make it appear as if it had been used to buy bonds.

Phish Allegedly Lost Millions

Phish’s account appears to be one of the largest tapped by Giacchetto, according to court papers.

After the group’s accountant discovered the withdrawals and demanded the money back, Giacchetto told him he was sending replacement checks that never arrived. Instead, the SEC alleges, Giacchetto withdrew even more money from Phish, bringing the total to $3 million. After band members complained, Giacchetto agreed in writing to pay the group and the group’s manager $4.7 million he had taken from them, admitting in writing that Cassandra had misappropriated the money, SEC documents show.

Far from being an investment success, court papers now show that Giacchetto’s operation was hemorrhaging red ink since 1997 and was insolvent by late last year. Giacchetto is known to have invested money in such risky investments as Iridium, which is liquidating, and Paradise Music & Entertainment, whose stock sank after he bought it for clients.

One of the more risky ventures Giacchetto put his clients’ money into was the Pickens Capital Fund, headed by Tom Pickens, son of corporate raider T. Boone Pickens Jr. Giacchetto had apparently promised Tom Pickens that he would raise as much as $80 million for the fund, which bought up small water utility companies in the South under the holding company Great Southern Water Works.

Sources said Giacchetto wound up raising only $5 million.

While it is unclear how many of his clients invested in Great Southern, one investor estimates it may be a group of 15 to 20.

Moloney, for one, invested hundreds of thousands of dollars in the fund.

According to the accountant for the Jay Moloney Trust, Moloney invested $346,000 in the fund. When the accountant questioned Giacchetto about the original amount and current status of Moloney’s investment, “Dana wasn’t sure.” He told him he thought Moloney had invested about $340,000 and it was now worth $600,000. “If I send you $600,000 would you stop digging around?” the accountant recalled Giacchetto asking him. “He sent me a rounded off, clean $600,000.”

The Moloney Trust accountant said that all told, Giacchetto had managed around $2 million of the former agent’s money, which was invested in various other ventures.

Daniel Duval, the outside corporate counsel for Great Southern Water Works, said, “The company is cooperating with the SEC and U.S. attorney’s office. We are trying to access whether or not this has had any impact on the company and it’s too early to tell.”