Star Guru’s Firm Headed for Bankruptcy

The former investment company of indicted money manager-to-the-stars Dana Giacchetto will be put into bankruptcy within a month, a court-appointed receiver for the company said Wednesday.

Lawyer Steven Cohen said Giacchetto’s Cassandra Group has only about $50,000 in cash to its name and virtually no other assets. Cohen said he will recommend to a federal judge that the New York-based company be liquidated under Chapter 7 of the U.S. Bankruptcy Code.

The development marks still another chapter in the dramatic free fall of Giacchetto, 37, who is facing five federal criminal counts for allegedly misappropriating at least $9 million, much of that from celebrity clients such as the rock group Phish and actor Leonardo DiCaprio.

Giacchetto, through Cassandra, was a highflying money manager with a client list and social circle of wealthy Hollywood stars and executives that also included actor Ben Affleck, actress Courteney Cox Arquette and talent manager Michael Ovitz. The federal indictment handed up in April alleges that Giacchetto squandered client money on such things as $120,000 in hotel bills, $100,000 in airline tickets, $55,000 in restaurant tabs and $8,000 on helicopter flights.

Figuring out the size of Cassandra’s debts is proving problematic because Giacchetto’s books are so sloppy and, in some cases, questionable, sources said. For example, some assets listed as loans on the books appear to instead be repayments to people from whom Cassandra had instead borrowed money.

U.S. Securities and Exchange Commission lawyer Alexander M. Vasilescu added that complicating matters is that many of Giacchetto’s assets are illiquid, notably investments in private companies.

As a result, it’s hard to figure out exactly how deep into the red Cassandra is, although sources said it could well be in the $10-million-to-$15-million range.

Cassandra has about $9 million in liabilities, they said, and lists assets of $6 million to $7 million. But investigators believe some of those assets are dubious, which would inflate Cassandra’s liabilities.

Last week, Giacchetto, using money from his parents, hired prominent New York defense lawyer Ronald Fischetti after his first lawyer, Andrew Levander, bowed out when Giacchetto was unable to pay him. Fischetti has represented defendants in a number of high-profile cases, such as former New York police Officer Charles Schwarz, convicted of criminal charges in the highly charged case stemming from an assault on Haitian immigrant Abner Louima in a police station.

Fischetti said Giacchetto is innocent and plans to apply to be released on bail. But he acknowledged that it might be difficult because Giacchetto was arrested earlier for violating the terms of his bail. In April, Giacchetto was discovered at an airport carrying a doctored passport, $4,000 in cash and 80 airline tickets worth $44,000.

“It’s never easy once a client has been remanded because the court found he violated bail provisions. But I think we have grounds to show what happened is really a misunderstanding and an overreaction by the government,” Fischetti said.