In a somewhat surprising twist, the bankruptcy receiver overseeing jailed money manager Dana Giacchetto's case has sued Leonardo DiCaprio's talent agent, Rick Yorn, for 10 counts of fraud. The receiver claims that Yorn participated in a scam stock transaction with Giacchetto in September 1999 valued at more than $700,000.
Yorn — whose office says he's out of the country and cannot be reached — is a partner with uberagent Michael Ovitz in Artists Management Group and has represented Leonardo DiCaprio for many years. Giacchetto, DiCaprio's former money manager/best friend/housemate, was sentenced on Feb. 7 to 57 months in federal prison for bilking his former clients and stealing roughly $10 million by creating his own Ponzi scheme.
The issue is over a transaction in which Yorn appeared to be buying stock in Paradise Entertainment through Giacchetto. Yorn — as I reported in this column in a series of stories about Giachetto in mid-January — received a check drawn on Giacchetto's Cassandra Group account for $737,000 on Sept. 7, 2000. On the check memo Giacchetto wrote "Paradise Shares." But Paradise was trading at around $4 a share at that time, meaning Yorn would have had nearly 200,000 shares. He had none, however.
The receiver — attorney Robert Geltzer, who is represented by attorney Robert Wolf — charges that Yorn knew that Giacchetto had not purchased any shares of Paradise for him. The receiver also charges that Yorn knew the Cassandra Group was insolvent when the payment was made to him. Yorn is also accused of receiving $606,521 in August and September 1998 as loans and advances toward the purchase of a new home.
Yorn is at the center of a cluster of inter-related clients who did business with Giacchetto including Yorn's former lover, movie executive Stacey Sher, casting director Margery Simkin, and director Ted Demme as well as AMG client Cameron Diaz. As with many Cassandra Group clients, all were invested in Paradise, a foundering commercial production company which was headed up two Giacchetto appointees — Jesse Dylan, son of rocker Bob, and the late talent agent Jay Moloney.
Before the summer of 1999, Paradise's stock was almost without value. But during a short period in which Giacchetto joined its board, the stock spiked up to 8. Giacchetto's clients, according to my sources, started asking for their profits.
"And Dana was telling everyone he was a genius," one insider said.
But Giacchetto panicked. Needing cash, he started selling off Paradise, and triggered an avalanche along the way.
"He was selling it by the handfuls," said one investor. Over a six-day period between Aug. 25-31 he made at least 90 transactions — all sales of Paradise stock, hundreds of thousands of shares. For the week of Aug. 23-30, the volume in trading of Paradise shares spiked from an average of about 20,000 to 1,841,600.
In one week the price of the stock opened at 4.625, peaked at 9.75, then fell back to 4.50. It closed at 5.3. In one week, Giacchetto had ravaged the company in a bid to save himself. And on Sept. 7, 1999, Paradise closed the day at 4.8 with a volume of 233,000. The run was over.
"Look at the volume," said one insider. "Dana caused the stock to spike and then took it down. Day traders looking at the stock jumped in and then followed suit."
On the same day — Sept. 7 — Giacchetto realized he needed to cover the Yorn check of $737,000 since he had nothing in his bank accounts. To cover Yorn's check he called Brown & Co. and had checks issued from a number of accounts, which he then endorsed over to his own Cassandra Group account so that Yorn's check would clear.
Among the victims he stole money from: Courtney Cox ($500,000); Ben Stiller (250,000); Tobey Maguire ($150,000); Brill's Content editor David Kuhn ($250,000); actress Lauren Holly ($100,000) and Lara Harris, a nonceleb client ($500,000).
"I remember that day," said one Cassandra office worker. "A Fedex envelope came from Brown and Co and Dana just ripped it out of our hands. He wouldn't let us see it. But we knew what was happening."
If Yorn — as the receiver alleges — did participate with Giacchetto in defrauding Cassandra clients, issues are certain to arise concerning Artists Management Group clients whom Yorn still represents who invested with Giacchetto.