CAA president Richard Lovett received $150,000 from Dana Giacchetto, the disgraced money manager to the stars. But what was it for?
That’s the question raised in a complaint by the bankruptcy trustee for the Cassandra Group, a defunct investment fund run by disgraced money manager to the stars Dana Giacchetto.
In the complaint, filed Monday in U.S. Bankruptcy Court in New York, trustee Robert Geltzer alleges that Lovett received $150,000 from Cassandra without giving anything in return. Geltzer’s suit — called a fraudulent conveyance or avoidance action — seeks return of the money, which would go to pay Cassandra’s many creditors.
A spokesman for CAA declined to comment.
The suit doesn’t necessarily mean that Lovett knew he was getting an illicit payment. But even if there was no wrongdoing, the trustee can retrieve any funds improperly diverted from the company up to four years before the bankruptcy filing. Geltzer’s attorney, Robert Wolf, said in Lovett’s case, a review of Cassandra’s books and records revealed a payment to him without any reasonable explanation. Wolf said Lovett was not contacted before the suit was filed.
While some fraudulent conveyance actions allege that the defendant knew he was not entitled to the money and seek punitive damages, the strongest allegation in the Lovett case is that Cassandra did not give and Lovett did not take the money in good faith.
CAA had close ties with Giacchetto during his heyday. Lovett, as well as several other CAA agents, invested with him. Former CAA clients Ben Affleck and Matt Damon also were clients until they discovered Giacchetto was touting his connection with them. Former CAA agent Jay Moloney provided crucial Hollywood contacts for the money manager. At the time of his suicide in 1999, Moloney was president of Paradise Music & Entertainment, a company controlled by Giacchetto. Moloney’s estate was also sued by Geltzer, who is seeking the return of approximately $800,000.
With the two-year anniversary of the bankruptcy and the deadline for bringing avoidance actions fast approaching, Hollywood can expect a flurry of new lawsuits. Wolf described the $150,000 sought from Lovett as being in the midrange of claims. To date, 22 fraudulent conveyance actions have been filed, although few so far have involved figures in the entertainment industry.
Last year, manager Rick Yorn settled a fraudulent conveyance action by paying $610,000 without admitting any wrongdoing. In that case, the trustee alleged that Yorn knowingly received more than $700,000 in a sham stock transaction. Yorn’s signature clients, Leonardo DiCaprio and Cameron Diaz, as well as his former partner in AMG, Michael Ovitz, also invested with Giacchetto.
Giacchetto’s brilliant career as a celebrity money manager came to an end in April 2000 when he was charged with looting accounts belonging to clients of his Cassandra Fund. In August 2000, he pled guilty to securities fraud and is currently serving a 57-month sentence in federal prison. Cassandra filed for bankruptcy in July 2000.