Dana Giacchetto, disgraced money manager to the stars, was sentenced Wednesday in U.S. District Court in Manhattan to 57 months in prison, the maximum possible under a plea agreement, for defrauding a bevy of clients of $9.8 million.
Giacchetto apologized to the courtroom and to the prosecution attorneys in a disjointed speech during which he burst into tears and begged for forgiveness from victims, saying, “I am truly sorry. I want to do anything I can to make reparations. I started the Cassandra group to help artists. I’d like to apologize to all of them who are here.”
Bursting into tears, he added, “I also lost one of my best friends who hung himself.” (Jay Maloney, former CAA agent, took his own life in November 1999.)
Continuing to cry, Giacchetto said, “If there’s a message to anyone on Wall Street who thinks this can’t happen, it can.”
In August, Giacchetto pleaded guilty and entered into a plea agreement with the U.S. attorney’s office. He acknowledged misappropriating between $5 million and $10 million from clients of his Cassandra Fund. Under federal sentencing guidelines, he faced between 46 and 57 months in federal prison.
In giving Giacchetto the maximum sentence under the agreement, U.S. District Court judge Robert Patterson Jr. took into account both the size of the fraud along with other factors.
At the hearing, Patterson said he wanted the sentence to send a message to others in a position of trust in the financial community and to act as a deterrent. The judge also expressed displeasure over the fact that Giacchetto had invoked the Fifth Amendment during his recent depositions in the related Securities & Exchange Commission and bankruptcy cases, but said that did not affect the sentence.
Giacchetto will end up serving about three years with credit for time served. Still undetermined is where he will carry out his sentence. His attorney, Ronald Fischetti, requested a minimum-security facility.
“We’re happy it’s over. We were hoping for a lighter sentence, but at least Dana has some closure,” Fischetti said after the hearing.
In a letter submitted by the government as part of the sentencing process, assistant U.S. attorney David Lewis, who handled the case, pointed out that the $9.8 million in losses represented money that was stolen. In addition, several million dollars were misappropriated from client accounts, but later returned.
The government stressed that in most cases, Giacchetto took funds from his celebrity clients’ accounts only temporarily and ultimately reimbursed them.
It was the less well-known, less affluent investors who were left to endure the losses, while the rich and famous continued to get good returns.
Civil suit pending
Still pending is the civil suit by the SEC, which was filed at the same time the feds pressed criminal charges, as well as the bankruptcy case involving Giacchetto’s Cassandra Fund. In July, a court-appointed receiver filed a Chapter 7 proceeding in U.S. Bankruptcy Court in Manhattan. The filing revealed the fund had assets of less than $25,000.
The strange saga began in December 1999, when Giacchetto abruptly lost many of his high-profile clients. Until then, he had managed accounts for, among others, Cameron Diaz, Leonardo DiCaprio, Ben Affleck, Matt Damon and AMG’s Michael Ovitz and Rick Yorn.
In April, Giacchetto was charged by criminal complaint with looting accounts belonging to clients of his Cassandra Fund. The same day, the SEC filed its related action and a court froze Giacchetto’s assets.
While free on bail, Giacchetto was arrested at the Newark, N.J., airport with $44,000 in airline tickets to Tokyo, Singapore, Frankfurt and Rome, plus an altered, expired U.S. passport. He has been incarcerated since his flight attempt.
In August, Giacchetto pleaded guilty to violation of the Investment Advisers Act, one of the five counts in the original indictment.