SECURITIES EXCHANGE COMMISSION
Litigation Release No. 16693 / September 7, 2000
ECURITIES AND EXCHANGE COMMISSION v. DANA C. GIACCHETTO AND THE CASSANDRA GROUP, INC., 00 Civ. 2502 (LMM)) (SDNY)
The Securities and Exchange Commission announced today that the Honorable Lawrence M. McKenna, United States District Judge for the Southern District of New York, entered a Partial Judgment of Permanent Injunction By Consent Against Dana C. Giacchetto.
In the underlying action, which was filed on April 3, 2000, the Commission alleged that Giacchetto, through his wholly owned investment advisory firm, The Cassandra Group, Inc., from September 1997 until late March 2000, unlawfully gained possession of at least $ 20 million in client funds and diverted more than $4 million to pay Cassandra's operating expenses, fund Giacchetto's own lavish lifestyle, and compensate other clients who had been defrauded earlier in the scheme. Among other things, Giacchetto stole money by directing Brown & Company, a registered broker-dealer, to issue checks payable to particular Cassandra clients, drawing on funds held in those clients' Brown accounts, and to deliver the checks to Cassandra. Giacchetto then endorsed the checks himself, in his own name, and deposited the funds in Cassandra's corporate bank accounts. As Giacchetto paid complaining clients with funds stolen from other clients, Cassandra became a giant "asset-kiting" scheme. To conceal his diversion of funds, Giacchetto made a variety of misrepresentations to his clients.
Giacchetto consented to the partial judgment without admitting or denying the Commission's allegations in its Complaint.
The partial judgment permanently enjoins Giacchetto from violating Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and from violating and/or aiding and abetting violations of Sections 207, 204, 206(1), 206(2), and 206(4) of the Investment Advisers Act and Rules 204-2, 206(4)-2, and 206(4)-4 thereunder. The partial judgment also provides that the determination of the Complaint's request for disgorgement of ill-gotten gains and prejudgment interest, and the payment of civil penalties by Giacchetto, if any, will be determined through future stipulation of the parties, or by determination of the Court.
See also prior Litigation Release No. 16499.