(Fortune Magazine) -- You can't teach an old fraud new tricks. At least that's what a recent federal lawsuit alleges about Dana Giacchetto. The former investment advisor to stars like Leonardo DiCaprio, Tobey Maguire and Cameron Diaz is tangled in a new scandal after he allegedly set up a shell corporation to hide his cut of a book deal with Simon & Schuster.

The kerfuffle began in the fall of 2001 when Emily White, a Seattle-based writer, visited Giacchetto at the Allenwood Federal Correctional Complex in Pennsylvania. He was looking to set the record straight. He had pled guilty to one count of fraud after prosecutors alleged he had illegally moved money in and out of various clients' accounts to finance his lavish lifestyle and mask his losses in the market. All told, he misappropriated some $10 million.

White was an acquaintance. She had met Giacchetto back in the early 1990s. Her husband, Richard, was the general manager of Sub Pop Records, a label Giacchetto had helped sell to Warner Music for $20 million. (The couple also invested with Giacchetto and subsequently lost $80,000.) White proposed that his saga would make a great book and penned a story for the New York Times Magazine to whet publishers' appetites. Soon after the article came out, she signed a contract with Simon & Schuster.

The only hitch was Giacchetto owed the U.S. Attorney's Office $9.9 million in restitution and another $14.4 million to the SEC. However, his lawyers had a solution.

The week following Giacchetto's release on July 28, 2003, lawyers in the same firm as his criminal defense attorney, Ronald Fischetti, created a company called Legis (Latin for "law"), but the incorporation papers listed no officers. Seven weeks later Legis agreed to license Giacchetto's rights to White for half of the book's proceeds. "Dana wasn't going to do it unless some money went to his lawyer in exchange for access to him, his papers and forfeiting editorial control," White says. "After the money went to Legis, I have no idea what happened to it." Both Giacchetto and Fischetti declined to comment.

Indeed, some of the $25,500 Legis received from White did go to his lawyers. Giacchetto also received $7,500, according to the suit filed by Robert Geltzer, the court-appointed trustee for the Cassandra Group - Giacchetto's former company. Geltzer called the deal a "clandestine scheme intended to hinder, delay or defraud" his creditors. "But when it comes to hiding money," he says, "I've definitely seen it done more creatively." Geltzer concedes it was creative enough to stay under the radar until Page Six, the gossip column in the New York Post, mentioned the book deal. Geltzer filed his suit on Aug. 14 to recover Giacchetto's rights as well as any past or future payments resulting from the deal.

Undaunted, Giacchetto is busy rebranding himself. His modest apartment in Lower Manhattan is upstairs from the headquarters of the Taste Group, a gourmet canned-goods company. Who knows? Wall Street's loss may be the culinary world's gain.

Partners in crime - I-bankers, insider trades, moles, strippers - this story was fit for the big screen.

When good executives do bad things - No one is immune from obsession and short-term thinking, two root causes of unethical behavior.