Frank DiPascali joined Bernie Madoff’s firm in 1975 when he was 19 years-old. He eventually became the firm’s finance chief.
Yesterday in Court, he described what it took to pull off a Ponzi scheme that spanned decades.
In all honesty, it doesn’t sound like much. Bloomberg has the details.
DiPascali faces 125 years in prison for his part in one of the most infamous financial frauds of the last decade. He’s cooperating with prosecutors, but that means revealing secrets he and his colleagues on trial kept for years in he service of Madoff.
The meat of DiPascali’s testimony had to do with the difference between fake trades and real trades. He alleges that any fool in the office would’ve been able to tell which ones were legitimate and which ones were not.
DiPascali told jurors today there was no way employees at Madoff’s investment advisory unit could have confused fake trades for real ones, because the real trading taking place at Madoff’s broker-dealer involved counterparties, current trading prices and the coordination of several people making simultaneous phone calls “in a very noisy environment.”
By comparison, the fake trading in the investment advisory unit was based on historical prices taken out of newspapers and given to Bongiorno on index cards in a small, metal box about once a month, he said.
“Did you see Ms. Bongiorno looking at real-time prices for stocks?” Assistant U.S. Attorney John Zach asked DiPascali. “No,” DiPascali said. “Can you buy stock looking at yesterday’s prices in the Wall Street Journal?” Zach asked. “No,” DiPascali said.
DiPascali admitted that the knew all of this wrong, he admitted that he lied to clients, and of course he also admitted that he’s hoping for a substantial reduction in his sentence.
We’ll see how this works out for him.
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