Dana Giacchetto Pleads Guilty in Fraud Case

Dana Giacchetto, the boyish investment advisor to the stars entrusted with the money of such hot young actors as Leonardo DiCaprio, Cameron Diaz and Ben Affleck, pleaded guilty Wednesday to one count of investment fraud for misappropriating as much as $10 million from his clients’ accounts.

Under his plea agreement with federal authorities, Giacchetto’s prison sentence will range from 46 to 57 months.

That means his actual sentence will probably come to more than three years in prison because federal laws require felons to serve at least 85% of their sentences. Giacchetto’s lawyer, Ronald P. Fischetti, said that Giacchetto will receive credit for the time he has spent in jail since his arrest April 12.

Headquartered in a trendy New York SoHo loft, Giacchetto, 37, once counted as close friends Hollywood heavyweights ranging from DiCaprio to manager Michael Ovitz. He forged close ties to Hollywood, especially with young stars who also included Courteney Cox Arquette, and he invested money for agents and clients of the powerful Creative Artists Agency in Beverly Hills. He enjoyed close relationships with artists such as George Condo and Ross Bleckner.

Ironically, his selling point was a reputation as a conservative investor.

But in signing his plea agreement, Giacchetto acknowledged that he looted $5 million to $10 million from the accounts, although Fischetti predicted that number will be revised downward once the losses are tallied.

Fischetti added that Giacchetto’s entertainment industry friends have all abandoned him, even ones who made money investing through Giacchetto.

“I guess that’s Hollywood,” he said.

Separately, sources confirmed that two institutions that handled client money for Giacchetto--Boston-based U.S. Trust and Chase Manhattan Bank’s Brown & Co. brokerage--have been quietly settling claims from Giacchetto investors to head off lawsuits in the wake of criticism that they were overly lax in handling the funds.

Lawyers for both institutions declined to comment. But David Comarow, who represents two Giacchetto clients, artists Robert Ginder and Cara Wood Ginder, confirmed that the Ginders reached a confidential settlement with both companies that he described as “fair and equitable.”

In a tearful speech in U.S. District Court in Manhattan, Giacchetto said he started his operation to empower artists financially, but that it grew too large and out of control. He also noted that he was active in charitable causes.

But he also acknowledged that he improperly used client money to pay bills for his company, the Cassandra Group, to replenish funds from clients whose accounts he had previously tapped into and to pay his own bills and expenses.

Authorities had alleged that Giacchetto engaged in an elaborate check-kiting scheme in which he would improperly tap into client accounts, ordering checks from Brown & Co. made out to his clients but delivered to him. He was then able to cash them at Citizens Bank, which has since been bought by U.S. Trust, even though they were made out to others, including such well-known celebrities as Matt Damon, Ben Stiller and the rock group Phish.

Authorities allege that Giacchetto spent money on a wide variety of expenses including loft space, payroll, public relations fees and credit card bills. In previous court filings, authorities accused Giacchetto of squandering client money on such things as $120,000 in hotel bills, including $80,000 for 10 suites at the Chateau Marmont in West Hollywood. Giacchetto also allegedly spent $100,000 on airline tickets, $55,000 in restaurant tabs and $8,000 in helicopter flights, court papers allege.

Giacchetto is scheduled to be sentenced Nov. 3. He also faces a fine of $10,000 to $100,000.

Giacchetto had been facing five criminal counts as well as a civil lawsuit filed by the Securities and Exchange Commission. Sources said the SEC charges will likely be settled as well, now that the criminal plea has been entered.