LOS ANGELES, June 11, 2006

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(CBS) The hottest Hollywood drama this summer has the entertainment capital's movers and shakers on the edge of their seats.

It's the story of tough talking private eye Anthony Pellicano, a real life gum shoe who saw himself as bigger than life and bigger than anything on the big screen, reports CBS Sunday Morning contributor Jerry Bowen.

Pellicano is the kind of private eye Hollywood invented.

"He's like a character, very minor character in 'The Sopranos.' He's a pain in the ass," says Variety editor-in-chief Peter Bart.

Anthony Pellicano first made his name in Los Angeles helping make drug charges against automaker John DeLorean disappear even when the feds had DeLorean on tape with cocaine.

Then, after the overdose death of comedian John Belushi, Pellicano helped lawyers get reduced charges and prison time for the woman who admitted giving the fatal injection.

Playboy lionized the Chicago native as a "wizard," calling Pellicano, "America's most tenacious private detective."

And the high profile cases rolled in.

The first childhood molestation claims against Michael Jackson didn't stick after Jackson's attorney hired Pellicano to snoop around.

Comedienne Roseanne Barr used him to find the daughter she'd given up for adoption.

And comedian Chris Rock's lawyers sought Pellicano's help to fight a paternity claim.

In a town of out-sized egos and incomes, Pellicano was the go-to-guy to take care of life's annoying problems.

"He is a B movie," Bart, one-time studio executive, says. "He's sort of a jerk, really."

Bart explains that people hire Pellicano for the purpose of intimidation. "He became a scary figure," Bart says.

"You could not make the Anthony Pellicano story. Nobody would believe it. Too far, too fictional, makes "The Da Vinci Code" seem absolutely dead on factual," says entertainment attorney Peter Dekom.

Pellicano actually was accused of having a dead fish and a single red rose left in a reporters car, mafia style -- to scare her off a story about a celebrity client. That led cops to find grenades and plastic explosives in his office here on the sunset strip.

And then they hit the jackpot.

According to the federal indictment naming Pellicano and a dozen others on racketeering and wiretap charges, investigators found computers with thousands of hours of illegal recordings.

"The heart of the prosecution case are these 10,000 tapes that they seized from Anthony Pellicano, and initially, they couldn't even listen to the tapes. They were encrypted. They had to enlist the NSA to get the help," Laurie Levenson, a former federal prosecutor, says.

Levenson now teaches at Loyola University Law School in Los Angeles. She adds that the tapes are spearheading charges on other people and show that Pellicano was wiretapping his own clients.

The Pellicano tapes, and what and who may be on them, are making many people in L.A. nervous.

"The reason this is the investigator from hell is that he was tapping everyone," Peter Bart says. "The scary things he could do to people's reputations, is limitless."

Powerhouse Hollywood attorney Bert Fields, with clients like Tom Cruise and Stephen Spielberg, used Pellicano extensively and has admitted he was brought in for questioning.

Also questioned was former super-agent Michael Ovitz, who reportedly hired Pellicano to investigate people badmouthing him.

Among the scores of victims named in the indictment: celebrities Garry Shandling, Keith Carradine and Sylvester Stallone were targets of Pellicano's wiretaps and illegal background checks.

And among Pellicano's alleged accomplices: two cops, a telephone worker, and a computer whiz. Also nailed, but pleading not guilty, is big-shot attorney terry Christensen, who allegedly used Pellicano wiretaps in a multi-million-dollar divorce case. High-profile divorce investigations were a Pellicano specialty.

This is something Jude Green knows well.

"You're going to be followed. You cannot talk on your telephone without wondering who's listening. You cannot speak confidentially to your attorney because your phone is probably listened to, at home, and on your cell," Green, who was embroiled in a messy divorce with her multimillionaire financier husband. "Your personal information is no longer your personal information. "You cannot put your garbage away. You cannot function as a normal human being anymore."

When the marriage failed, the divorce was ugly and Pellicano appeared in the flesh.

Green recalls a day when a stranger pulled up in a Mercedes and cornered her.

"And he gave me this look and folded his arms and stood there," Green says. "The menacing, bullying tactic. The body language said everything."
The real mystery is why intelligent people would risk everything by employing someone who was known for bending, if not breaking the law.

Why are people who are making $10, $15, $20 million a year practicing celebrity law, why would they jeopardize their reputations? Do you realize how profoundly stupid that is?," Bart says, adding, "and that's the big question in my mind. How could these people be that arrogant or that stupid?"

Levenson, the law professor, says it's a classic case of situational ethics.

"I think lawyers want to win too much. And that's what happened here. You have lawyers who wanted to win, and Anthony Pellicano was bringing them the goods, bringing them the information that they could use to win and find out about the other side's case.

"In the Hollywood culture, it's the idea that, you know, we don't really have to play by the same rules. We represent the stars, and whatever the stars need, we're going to get for them, regardless of the rules."

But now there may be Hollywood's version of hell to pay. Divorces, movie deals, celebrity contracts tainted by Pellicano's handiwork may all be undone.

"A lot of people are going to be bankrupt and that's one tip of many icebergs," Dekom says. "Another iceberg that's drifting down by the arctic circle is what happens to those cases that were decided based on evidence that was obtained through illicit means? Are all those cases going to get thrown out, and the answer is maybe."

Pellicano is scheduled to go on trial in October. But with prosecutors saying there will be more indictments, it's looking like a long hot summer in Hollywood.