The bankruptcy of the Cassandra Group — the investment fund run by disgraced money manager Dana Giacchetto — has ensnared more victims.
Among those sued since Friday by the bankruptcy trustee are Cameron Diaz, Tobey Maguire, Ben Stiller, Tim Roth, Michael Ovitz and the estate of Ted Demme.
The suits filed in U.S. Bankruptcy Court in New York by bankruptcy trustee Robert Geltzer seek the return of money to pay Cassandra’s many creditors.
In the case of Diaz, the trustee is suing for $208,000 and in Maguire’s case it is $350,000. The amounts Stiller and Roth are sued for are $96,000 and $100,000, respectively. Demme’s estate is being sued for $41,000, and the trustee is seeking $48,000 from Ovitz.
The suits, known as fraudulent conveyance or avoidance actions, do not necessarily imply wrongdoing on the part of the recipient of the money.
Robert Wolf of Bryan Cave, who represents the bankruptcy trustee, said of the suits against the celebrities, “There is no allegation that they actively participated in the securities fraud perpetrated by Giacchetto, but lack of actual intent is not a defense where what is termed a fraudulent transfer is involved under the Bankrutpcy Code.”
Diaz, Stiller, Roth, Demme and Ovitz were Cassandra investors. Diaz, along with fellow AMG client Leo DiCaprio, was among Giacchetto’s most high-profile clients.
One explanation for the payments to the A-list personalities the trustee is now suing, is that what Giacchetto told them were returns on their investments were really funds stolen from other clients’ accounts.
Federal prosecutors in the criminal case against Giacchetto charged that when Giacchetto’s fund started losing money, he looted the accounts of his ordinary clients to keep his celebrity clients happy by showing gains in their accounts.
The suits were filed after the trustee examined Cassandra’s books and records.
In cases where there were payments without a reasonable explanation, fraudulent conveyance actions were brought to recover the money.
Monday marked the deadline for when the trustee could file these suits.
Of the more than 100 suits filed since Cassandra went into bankruptcy in July 2000, 95 have been brought in the last week.
CAA president Richard Lovett was sued last week; the first suit was brought against Diaz’s manager, Rick Yorn, who settled last summer.
Also sued this week were Citizens Bank of Massachusetts, where Cassandra kept its account, and Brown & Co., where most Cassandra clients had their brokerage accounts.
In both these cases, the two are implicated in Giacchetto’s scheme to defraud investors.
The trustee alleges that the bank and Brown & Co. deliberately turned a blind eye to Giacchetto’s machinations by letting him endorse checks made out to his clients and then deposit them in Cassandra’s account rather than his clients’ accounts.
Giacchetto’s glittering career as money manager to the stars came to a halt in April 2000 when the U.S. Attorney in New York charged him with securities fraud.
In August 2000, he pleaded guilty to securites fraud and is currently serving a 57-month sentence in federal prison.