Fox 411: The Dana Giacchetto Story, Part 3

Third of five parts

Dana Giacchetto: Behind the Scenes

Not all of Cassandra Group's employees were idiots. In the spring of 1999, Soledad Bastiancich, a Yale educated lawyer whom Giacchetto had brought in, sniffed trouble, asked for an internal audit and wound up leaving with a $100,000 bonus. Not wanting trouble again from a nosy outsider, Giacchetto replaced her with Donna Wong, a friend from Boston who'd worked at Fidelity Investments there. Giacchetto paid for her weekly commute, her apartment, and all her expenses. Wong, according to staffers, immediately deposed Cassandra workers.

"We told her everything that was going on," said one. "She knows everything. I'm surprised she's not in jail with Dana." (SEC sources only said that they have not necessarily completed their investigation.)

Staffers said that invariably "things would go wrong" on Fridays, the days that Wong was in Boston, "and there'd be a lot of phone calls all day long."

Wong, who has returned to Boston and could be subject to an SEC investigation herself, refused to comment for this article after repeated efforts. She has good reason: In September 1999, when Giacchetto's business was falling apart, he gave her a $30,000 bonus for her loyalty. (And she was loyal to a fault: Wong's name appears on several odd transactions which indicate a total understanding of her boss's complex, illegal dealings.)

What the staff told Wong was that they had witnessed Giacchetto as he unraveled and became obsessed with celebrity. To maintain his lifestyle and the appearance that he could play in the big leagues, Giacchetto had to become a thief. One of his earliest moves came in April 1999, when Giacchetto accepted a check for $556,521 from Rick Yorn, Leonardo DiCaprio's manager, for an investment in Paradise Entertainment Group. Giacchetto was playing with fire since Leo was his best friend, constant guest in his Soho loft, and main bold-faced dropped name. (Dana had also adopted the members of Leo's so called posse: B level actors Kevin Connolly, Vincent LaResca, and Jay Ferguson.) Leo was also Giacchetto's single largest client, with a $10 million investment portfolio. Yorn was also partners with Giacchetto's friend and ally super-agent Michael Ovitz, a business marriage Giacchetto had helped broker.

Giacchetto was a Paradise director and had been remunerated with millions of shares of stock in the company when he joined it in 1999. Unfortunately, Paradise — which is run by Jesse Dylan, Bob's son — was a small enterprise with modest returns. But according to my sources, Dana never put Yorn's money into Paradise. He used it to it pay bills and cover other accounts. For a short time, Yorn — like other clients — was clueless.

By the summer of 1999, the stealing had grown. Some of the clients — even loyal veterans who'd been with him for years — started to ask questions.

On August 12th, for example, casting director Margery Simkin, a longtime client, wrote a letter to Dana asking him to stop investing her money until they could speak again. This was followed by calls from director Ted Demme's wife, Amanda, and Jersey Films exec Stacey Sher. All three women were friends and all of them were being lied to by Giacchetto. A former employee said, "That's when the women started calling, they ganged up on him. Dana didn't even think that all these people knew each other and realized they had different stories from him." Sher in particular posed a problem Giacchetto did not take into account. She had lived with Rick Yorn, and the two remained friendly. It was only a matter of time before some of the dots were connected.

"Dana kept telling Rick he was making him rich," a former employee said, "so finally Rick wanted to see the money."

On September 7, 1999 Giacchetto — under pressure to show Yorn the result of all the bragging — issued Yorn a whopping check: $737,000. On the memo he wrote "Paradise Shares." This would have represented nearly 200,000 shares since Paradise was trading around $4 that week.

Yorn's money, of course, had to come from somewhere. Otherwise, Giacchetto — who was clearly in deep panic mode at this point — would have been revealed as a fraud. 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 non-celeb 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." But Yorn was not Dana's only Leo-related problem. There was also Yorn's partner Ovitz, from whom Dana had accepted $450,000 on August 11th, drawn on Ovitz's Bank of America account for a private placement. Now Ovitz wanted his money back — possibly scared off by Yorn and Sher's experience. By September 16th, Giacchetto had returned the Ovitz money, plus $93,000 — a bonus. Additionally, Giacchetto sent Ovitz a check for $250,000 marked "IPO" on another US Trust account — although it's likely there was no IPO, that this was just Giacchetto showing off to his powerful friend.

Whatever it was, it's clear that Dana was rushing to make Ovitz remain comfortable with someone he once called "a life adviser." He and Yorn represented DiCaprio as well as Cameron Diaz — "Cammie," as Giacchetto called her — and one false move could easily explode their "best friends" status.

DiCaprio, ironically, was the only client whose money Giacchetto could not touch. Even though DiCaprio had placed close to $10 million with him for investments, Leo's account was cleared by Salomon Smith Barney, where Giacchetto had no connections, instead of Brown & Co. When Giacchetto became desperate for money and started shifting money from one account to another, he was unable to touch Leo's Salomon account. Nevertheless, he managed to lose a lot of DiCaprio's money simply through bad investments. "At one point he bought 5,000 shares of AOL at 170," said a former Cassandra employee, "Leo's uncle, who was an accountant, said no more."