The U.S. Securities and Exchange Commission has slapped former money manager to the stars, Dana Giacchetto and The Cassandra Group, with sanctions for embezzling funds from clients.

Final judgments permanently enjoin Giacchetto and Cassandra from violating the Securities Act, ban them from the industry, and direct Giacchetto to pay disgorgement and interest totaling US$14,376,332 and a civil penalty of US$100,000.

There is no civil penalty or disgorgement against Cassandra, which is in bankruptcy liquidation proceedings, on condition that Cassandra’s assets are fully distributed in accordance with the applicable provisions of the U.S. Bankruptcy Code. Both Giacchetto and Cassandra consented to the order without admitting or denying the commission’s findings.

The commission’s complaint alleged, among other things, that Giacchetto and Cassandra, since at least September 1997 through April 3, 2000, improperly transferred and took custody of at least US$20 million of client assets, of which a substantial portion was misappropriated.

The complaint alleged that the assets were misappropriated chiefly by Giacchetto causing cheques to be issued from clients’ custodial accounts. He then endorsed the checks himself and deposited the funds into Cassandra’s main operating bank account.

The complaint also alleged that Giacchetto and Cassandra used client funds to, among other things, make payments to other clients, some of which Giacchetto and Cassandra previously defrauded, as well as payments for Giacchetto’s living expenses and Cassandra’s operating expenses.

On Aug. 2, 2000, Giacchetto pleaded guilty to one criminal count of fraud under the Advisers Act. He was sentenced to serve 57 months in a U.S. federal prison, and will be subject to post-incarceration supervised release for a term of three years. At one point, Giacchetto was a money manager to the likes of Leonardo Di Caprio, Cameron Diaz and Matt Damon.