Stars’ Money Guru Jailed After Arrest at N.J. Airport

Freedom was fleeting for Dana C. Giacchetto, the money manager to the stars.

Just a week after he was arrested and released on $1 million bond pending trial on charges he looted at least $6 million from his A-list of clients, Giacchetto was seized again early Wednesday getting off a flight from Las Vegas to Newark, N.J., with $4,000 cash stuffed in a pouch, a doctored passport and dozens of first-class airline tickets that could have taken him to the Far East--or his girlfriend and him to Rome, federal prosecutors said.

As the investment guru was ushered off to a federal lockup in New York City, his high-profile client Leonardo DiCaprio, through a spokesman, for the first time confirmed that the actor was among the clients who lost a significant amount of money entrusted to Giacchetto. According to one source, “Leo lost a ton of money, and it was one of the major reasons he terminated Dana” in October. DiCaprio, who had been friends with Giacchetto, invested well over $1 million during the last couple of years and probably lost about 20% of his money despite a booming stock market, another source said.

During a court hearing after Giacchetto’s latest arrest, Assistant U.S. Atty. David Lewis outlined evidence of Giacchetto’s “extraordinary” violations of the terms of his release, including alleged attempts to continue his business and withdraw cash from frozen accounts.

U.S. District Judge James C. Francis IV revoked the bond of the 37-year-old money manager and ordered that he remain in custody.

“I find he presents a substantial risk of flight,” Francis said.

“Significant amounts of cash in small bills is a big indicator of behavior not consistent with a business trip.”

The judge was not impressed with the argument of an attorney for Giacchetto that there was a harmless--even romantic--explanation for the tickets to Rome.

“At some point, he wanted to propose to his girlfriend,” defense attorney Andrew Levander said, “and [he] thought, ‘What would be a great place?’ ”

The tousle-haired Giacchetto looked on in silence, mouth agape at times, as such attempts to explain his actions were belittled by the prosecutor--literally with laughter at one point--and the Wednesday afternoon bail revocation hearing ended with him being escorted to a federal lockup.

Giacchetto faces up to 20 years in prison on three federal counts stemming from his alleged looting of client accounts. Just a few months ago, he was giving investment advice to--and socializing with--stars such as DiCaprio, Ben Affleck, Matt Damon and Cameron Diaz. But many clients late last year began questioning risky investments he made--without their approval, some said--and asking for documentation for large withdrawals shown on their brokerage account statements.

At the hearing Wednesday, Lewis maintained that almost immediately after being charged last week, Giacchetto began flouting both the terms of his release and orders obtained by the Securities and Exchange Commission freezing his corporate and personal accounts and placing his company in the hands of a receiver.

Though “foreign travel [was] under no circumstances permitted,” the prosecutor said, Giacchetto asked right away, “Does that mean I cannot finish what I was doing in Tokyo?”

Giacchetto was on a flight from Tokyo to Los Angeles when the criminal charges were filed last week. He later flew to New York to surrender.

Giacchetto allegedly called the receiver appointed to Cassandra Group, his company, to say “at least one of his clients had indicated her desire to have Mr. Giacchetto continue” managing her funds, and he also “left the impression he had executed trades” for her, Lewis said.

Giacchetto also used a computer password “to look at people’s account balances,” the prosecutor said.

And he allegedly repeated to another client--whom sources identified as “Lolita” screenwriter Stephen Schiff--”a flagrant falsehood” he had used on many victims--that funds taken from their accounts had been used to buy AT&T; bonds. A source close to Schiff said the writer is out $204,000 invested with Giacchetto and had conversations with Giacchetto as recently as Sunday in which Giacchetto assured him that his money is still safely invested in bonds.

On Friday, the prosecutor said, Giacchetto left a message on the answering machine of the court’s pretrial services office and, without speaking to anyone or getting approval, “tells them he is going to be traveling for the next three days. . . . He mentions Houston, Las Vegas, Los Angeles and possibly Washington.”

“From there, it gets dramatically more significant,” Lewis said. “On Saturday, Mr. Giacchetto began to make attempts to withdraw cash.”

Despite his accounts being frozen, he tried first to get $500 and $300 from automated teller machines, then an additional $100 at 2 a.m. Sunday, the prosecutor said. Sunday evening, he allegedly attempted to withdraw $1,000 from another ATM--”on the departure level at LaGuardia Airport.”

Though the attempts to get cash failed, Lewis said, Giacchetto moments later was able to use two credit cards--also supposed to be frozen--to buy international plane tickets: charging $8,500 on a Diners Club card for a seven-coupon first-class ticket that could take him from LaGuardia International Airport to Denver, then Las Vegas, Los Angeles, Honolulu, Tokyo, Singapore and Frankfurt, Germany.

Then at 9:15 p.m. Sunday, “now using American Express, he purchases two more tickets for himself and one for Allegra Brasco, the woman that he lives with,” Lewis told the court.

Brasco previously worked as an assistant to producer Ted Hope at the New York-based independent production company he co-founded, Good Machine. It is believed that Brasco left the company, which produced such films as “The Ice Storm,” close to a year ago. As reported, court documents show that Good Machine had discovered $150,000 missing from the profit-sharing plan that Giacchetto had structured and managed for the company.

The airline tickets would take the pair first class--for $7,600--from Los Angeles to New York’s John F. Kennedy International Airport and then to Rome, all those flights scheduled for Tuesday.

Federal authorities apparently were alerted to Giacchetto’s activities by the credit card companies. Lewis said they immediately informed FBI offices in various cities, “wherever we could find him,” but then were able to contact Brasco “and did learn his whereabouts in Las Vegas.”

After Giacchetto’s attorney was contacted also, he told authorities where the money manager was staying--and apparently convinced him to fly home.

Federal agents were waiting at Newark International Airport and arrested Giacchetto shortly before 2 a.m. Wednesday. There, the prosecutor continued, “what we took from his person was quite extraordinary.” He said Giacchetto had:

* Four thousand dollars in cash in small bills, “largely in fives and tens [and] the bulk of it was in a bag.”

* Both the new seven-city international ticket and the pair of tickets to Rome, and also a collection of other unused airline tickets--80 flight segment coupons in all, still good for travel to their varied destinations, “almost invariably first class . . . all over Asia . . . all over Europe [with a] cash value over $44,000.”

* An old expired passport of Giacchetto’s that had been “mutilated and altered” so the page showing it had lapsed was “ripped out” and a “bogus expiration date”--in October 2002--written in elsewhere.

Summing up the evidence, Lewis said, “this demonstrates there are no conditions that would ensure Mr. Giacchetto’s return.”

Authorities allege that from September 1997 to last month Giacchetto improperly transferred about $20 million in clients’ assets into Cassandra’s accounts, often by calling up the brokerage house that held their money and ordering checks be written to them, then endorsing them himself.

A number of clients got out with their money. But some, such as DiCaprio and Schiff, lost funds. It was previously thought that DiCaprio got his money out as well, as did the “Titanic” star’s manager, Rick Yorn, and Yorn’s partner, Michael Ovitz.

It was at a bond hearing April 4 that another federal judge set the conditions for Giacchetto’s release, including that he surrender his passport and get approval from court officials for any domestic travel, except to his parents’ Massachusetts home, which was pledged as collateral for his bond.

Claudia Eller and James Bates contributed to this story from Los Angeles.