Dana Giacchetto, money manager to the stars, was indicted Tuesday in New York on charges of securities fraud and other offenses in connection with his alleged misappropriation of more than $9 million belonging to clients of his Cassandra Fund.
The five-count indictment, filed in U.S. District Court in Manhattan, also charges Giacchetto with fraud under the Investment Advisers Act, lying to the SEC and altering an expired U.S. passport, a reference to Giacchetto’s bizarre flight earlier this month.
The indictment, which was expected, closely tracks the federal criminal complaint filed April 3, but it increases the amount Giacchetto is accused of looting — from $6 million to more than $9 million — a sign that the government investigation is ongoing. He is now charged with misappropriating over $8.3 million from more than 25 clients and an additional $750,000 in July 1998 from an unidentified rock band believed to be Phish.
The indictment also provides far more detail on how Giacchetto spent his clients’ money. In addition to paying rent on his Manhattan loft space, Giacchetto spent money on a host of luxuries including airline tickets totaling more than $100,000; more than $120,000 on hotels, including a single bill of more than $80,000 at one Hollywood hotel; restaurant bills of more than $55,000, including parties with $15,000 pricetags; $8,000 for helicopter travel; and $30,000 for personal merchandise.
Giacchetto is expected to be arraigned May 4. He is being held without bail at the Metropolitan Correctional Center in Manhattan.
His attorney did not return phone calls seeking comment Tuesday.
The SEC also is continuing with it separate civil action against Giacchetto. Said SEC senior trial counsel Alex Vasilescu of Tuesday’s indictment: “Among other things, what is important is that Giacchetto was also charged with criminally lying to the SEC. The injunction continues in place (Giacchetto’s funds are still frozen, and he is enjoined by the court from violating securities laws) and the SEC is continuing its litigation.”
In cases such as this, private civil lawsuits often follow the criminal proceedings, and a number of lawsuits by defrauded investors are believed to be in the works. They include claims against U.S. Trust, the bank that cashed checks made out to Giacchetto’s celebrity clients but endorsed by Giacchetto, and suits against managers who steered their clients to Giacchetto in exchange for alleged secret payments.
The saga of Giacchetto’s downfall began last December when he abruptly lost several high-profile clients from a list that once included Matt Damon, Ben Affleck, Leonardo DiCaprio, Cameron Diaz and AMG’s Mike Ovitz and Rick Yorn.
SEC, criminal charges
On April 3, Giacchetto was charged by criminal complaint with violating securities laws and misappropriating client funds. On the same day, the SEC filed a civil action charging Giacchetto with diverting $20 million from the accounts of his clients and stealing more than $4 million. Giacchetto was out of the country at the time he was charged, but he flew back to New York the following day.
Although he was freed on bail, he was ordered to stay in the United States and surrender his passport. Five days later, he was nabbed in Newark, N.J., with $44,000 worth of airline tickets to Tokyo, Singapore, Frankfurt and Rome plus an inartfully altered expired U.S. passport. A federal judge then revoked his bail.