While the world continues to reel from the news of Elliot Spitzer's scandal, this was also a big week in Hollywood's high-level legal embarrassment--the Pellicano trial. Private eye to the stars Anthony Pellicano is on trial for fraud, wire tapping, bribing police officers and others, and yes, it's messy.

As I've reported some of the biggest names in Hollywood, clients of Pellicano, are involved. They're not in trouble themselves, but they have been called to the stand as witnesses. And as expected, the stories the testimony has revealed about some of these guys seems like much more a commentary on Pellicano's clients, than on Pellicano himself.

Paramount Pictures Chief Brad Grey isn't on trial, but he was the one who got really slammed yesterday by comedian Gary Shandling as he testified how Pellicano--hired by Grey--made his life miserable. Grey had been Shandling's personal manager, taking a cut of the profits from his 'The Larry Sanders Show," until Shandling filed a $100 million lawsuit against Grey and his firm for "triple dipping," taking fees three times on the show. So Grey hired lawyer Bert Fields and Pellicano to work on defending his case.

The allegations that Pellicano bribed officials to get database searches aren't surprising, but the Shandling's description of Grey's late-night harassing phone calls are. Shandling said: "He threatened me, if I kept going—looking into my own business—that he would make my life miserable." The case did settle in 1999, and Shandling got at least $10 million but Shandling clearly isn't over it still.

So how does the head of a studio in the midst of a turnaround respond? Grey's got a lot at stake. His boss, Tom Freston, was unceremoniously fired by Sumner Redstone, and now he seems to have Paramount's turnaround on track, though things could get messy if Steven Spielberg and David Geffen fail to renew their DreamWorks

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Grey responded with the following carefully-worded statement: "I am extremely saddened by Gary's recollection of events dating back more than a decade. His representation is very different than what I remember and what I know to be true. Garry and I had a long personal and professional relationship, which frankly ended when he hired [Washington DC litigator] David Boies, and sued me and Brillstein Grey [the Hollywood management and production company] for $100 million. His actions forced us to hire our own lawyer -- Bert Fields -- and our friendship was overtaken by a legal process that was directed by lawyers and which ended with an equitable settlement. Even though we haven't spoken since that time, he remains one of the most talented people I have known and I wish him only the best."

That sounds like he's trying to take the high road. Let's see what Grey says when HE takes the witness stand!

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