You will be redirected back to your article in seconds

Giacchetto pleads guilty

Manager apologizes for Cassandra Fund fraud

Dana Giacchetto, disgraced money manager to the stars, pleaded guilty Wednesday in U.S. District Court in Manhattan to fraud charges.

Under the plea agreement, he acknowledged misappropriating between $5 million and $10 million from clients of his Cassandra Fund. He faces a sentence of between 46 and 57 months in federal prison.

Before pleading guilty, Giacchetto, 37, dressed in prison blues, gave a long, tearful apology to a courtroom packed with reporters. He told the court he was an artist and that he had wanted to help other artists because he believed they were so often taken advantage of.

He apologized to his clients, saying things had just gotten crazy and that he also had intended to pay them back.

At one point he said: “This is the most difficult day of my life. I’ve been kept in a box for the past several months.”

He also noted that it was perhaps appropriate that he had named his Cassandra Fund after the Greek prophetess of doom.

Giacchetto’s attorney, Ronald Fischetti, described his client as “absolutely distraught.”

Fischetti told Daily Variety: “What Dana wants to do is work with the SEC and the bankruptcy court to try to locate the true victims and see that they get paid.”

Given Cassandra’s record-keeping, that apparently will be no easy task even with Giacchetto’s cooperation. While acknowledging there were many victims, Fischetti said many of his clients, such as Leonardo DiCaprio and Cameron Diaz, did not lose money.

Fischetti also said that Giacchetto will turn over all his personal assets, including what he described as a “substantial art collection” in an effort to pay his clients.

“What Dana is most concerned about,” said Fischetti, “is that people will forget about his 13 years of solid money management before things imploded.”

Sentence reduction

Technically, Giacchetto pleaded guilty to violation of the Investment Advisers Act, one of the five counts in the original indictment.

Giacchetto was originally looking at a maximum sentence of eight to 10 years, and the plea-bargained reduction reflects the fact that he entered into an agreement well before his scheduled Sept. 6 trial date.

“This is the type of sentence you would expect under the federal guidelines,” said Laurie Levenson, a professor at Loyola Law School in Los Angeles. “It’s not a sweet deal, but they didn’t pile on every factor. It’s the standard sentence you get in a plea deal with this kind of fraud.”

Several factors

The biggest factor in computing the sentence, said Levenson, is the amount of the loss. Other factors include the number of victims, efforts to evade enforcement authorities and conceal the crime, and his role as the key person in the scheme.

Sentencing is to take place Nov. 3 before U.S. District Judge Robert Patterson Jr. It is unusual for a judge to depart from the range agreed on in the plea agreement.

Giacchetto will get credit for the time he already has spent in jail. He will most likely serve his sentence in a minimum-security, campuslike facility, rather than the urban lockups he has been in since attempting to skip bail in April. Under the federal guidelines, he will serve 85% of his sentence.

Fischetti estimates that if Giacchetto is sentenced to the low end of the range, he will wind up serving approximately 2-1/2 years, once the deductions are made for time served and the 15% credit under the guidelines. The prosecutor is Assistant U.S. Attorney David Lewis.

Still pending is a civil suit by the Securities and Exchange Commission, which was filed at the same time the U.S. Attorney filed criminal charges. Fischetti, however, told Daily Variety that Giacchetto will consent to a settlement of that case.

SEC action broader

The SEC action, which is somewhat broader than the criminal case in terms of length of time involved and specific claims, charges Giacchetto with violating securities laws by misusing $20 million of his clients’ money and stealing $4 million. Under any SEC settlement, Giacchetto would most likely be permanently barred from acting as an investment adviser. The SEC’s efforts are headed by senior trial counsel Alex Vasilescu.

Also pending is a bankruptcy case involving Giacchetto’s Cassandra Fund. Last month, a court-appointed receiver filed a Chapter 7 proceeding in U.S. Bankruptcy Court in Manhattan. The filing revealed that the fund had assets of less than $25,000. The bankruptcy should be unaffected by the other cases.

A-list clients

As recently as last year, Giacchetto had a stable of high-profile clients including Diaz, DiCaprio, Ben Affleck, Courteney Cox, Ed Burns, Matt Damon and AMG’s Mike Ovitz and Rick Yorn. He hobnobbed with Damon and DiCaprio and was interviewed by GQ and the New York Times Magazine. But last December, he abruptly lost many of his clients.

On April 3, 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 April 12 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.

More Biz

  • Jussie Smollett Good Morning America

    Jussie Smollett Angrily Denies Complicity in Attack

    Attorneys for “Empire” actor Jussie Smollett issued a statement Saturday denying that he orchestrated his Jan. 29 assault, and saying he is “angered” and “devastated” by recent developments in the case. Chicago police want to interview Smollett, after learning new evidence from two Nigerian brothers who were released on Friday night. Local media outlets have [...]

  • Walt Disney Archives Founder Dave Smith

    Walt Disney Archives Founder Dave Smith Dies at 78

    Walt Disney Archives founder Dave Smith, the historian who spent 40 years cataloging and preserving the company’s legacy of entertainment and innovation, died Friday in Burbank, Calif. He was 78. Smith served as Disney’s chief archivist from 1970 to 2010. He was named a Disney Legend in 2007 and served as a consultant to the [...]

  • Colin Kaepernick Kneel

    Colin Kaepernick, Eric Reid Reach Settlement With NFL

    Colin Kaepernick and Eric Reid, two football players who alleged the National Football League colluded to oust them from the game after they started kneeling in protest of racial inequality during the playing of the national anthem, have reached a settlement in the matter, according to a statement from the sports organization and lawyers representing [...]

  • R. Kelly

    R. Kelly Could Be in ‘Big Trouble’ Over Alleged New Sex Tape, Attorney Says

    Strong allegations of sexual misconduct have followed R. Kelly for 25 years, but the singer has always managed to slip free. Yet reports that a videotape of him sexually assaulting an underage girl, combined with the outcry surrounding the Lifetime documentary “Surviving R. Kelly,” means that public sentiment, at the very least, is definitely not [...]

  • Christian Bale as Dick Cheney in

    New Media Residuals and Feature Films Contribute to Spike in Writers' Pay

    The outlook for members of the Writers Guild of America has brightened — even amid pervasive uncertainty in the entertainment industry. According to the most recent report to WGA West members, earnings surged 2.8% to $1.41 billion in 2017, thanks mostly to gains in feature films and new-media residuals. Total covered earnings for WGA West [...]

  • Joe Dante Gremlins

    Hollywood Execs Seek Licensing Deals at the New York Toy Fair

    On Feb. 16 more than 30,000 studio executives, buyers and toy company reps will gather in Manhattan for the annual Toy Fair New York, all vying for market share and trying to snag the latest hot trend in a fast-changing industry. Those working the film side of the business will focus much of their attention [...]

  • Lady Gaga Bradley Cooper A Star

    Universal Music Group Fuels 11.3% Rise in Vivendi's 2018 Revenues

    Vivendi’s revenues were up 11.3% to €13.93 billion ($15.7 billion) in 2018, powered by Universal Music Group, which delivered such hits as the “A Star Is Born” soundtrack and Drake’s new album. UMG’s revenues climbed by 10% to €6 billion ($6.8 billion) compared to 2017. On top of the “A Star Is Born” soundtrack, the [...]

More From Our Brands

Access exclusive content