Bernard Madoffs right-hand man to testify against former coworkers Longtime Madoff employee Frank DiPascali, the governments star witness, expected to give inside look at Ponzi scheme Associated Press in New York theguardian, Monday 2 December 2013 09.48 EST Jump to comments (1) Madoff trial JoAnn Crupi, a former account manager who stands accused of enabling Madoffs Ponzi scheme, arrives in federal court. Photograph: Seth Wenig/AP The way Frank DiPascali tells it, Bernard Madoff planted the seeds of deception for his $17bn Ponzi scheme back in the 1970s, when his firm was in a small office at 110 Wall Street. Madoff would very loudly proclaim that he had made a killing on an investment in Europe, DiPascali recalled. DiPascali, a longtime Madoff employee, later began to suspect the words were calculated to give the impression the business was somehow backed up by his deals and investments overseas. Whether Madoffs inner circle actually believed that lie or not has become central to a trial in federal court in Manhattan in which DiPascali is the governments star witness. He is expected to take the stand this week to give an inside look at one of historys biggest securities fraud while testifying against five of his former co-workers at Bernard L Madoff Investment Securities. Part of that behind-the-scenes account was revealed last year in sections of FBI reports that were turned over to the defense. The reports, based on initial interviews of DiPascali, at times appear to support the contention that the defendants were unwitting dupes led astray by a devious boss. But the reports also suggest the five had doubts about Madoff and his investment wizardry. DiPascali says two became convinced it was all a scam — and even confronted Madoff about it — but ultimately did nothing to stop it. Defense attorneys have already attacked DiPascalis credibility, calling him equal partners in crime with Madoff. The evidence will show DiPascali is a pathological liar, and the governments case relies on you believing DiPascali, Andrew Frisch said in opening statements. And now instead of Madoff, DiPascalis bosses are the government lawyers at this table. The testimony will represent a turnabout for DiPascali, who kept Madoffs secrets for decades until he agreed to cooperate with the FBI in early 2009 following Madoffs arrest in 2008. Madoff, 75, admitted that accounts he had told investors were worth nearly $68bn only days earlier actually held only a few hundred million dollars. He pleaded guilty to fraud charges a few months later and was sentenced to a 150-year prison term in Butner, North Carolina. DiPascali, 57, who is out on bail but facing substantial prison time, carries his own baggage as the beneficiary of a bank account filled with investors money that amounted to a slush fund for Madoffs family and top employees. Authorities say he withdrew more than $5m from the account between 2002 and 2008 to fund personal expenses, including the purchase of a new boat. In a guilty plea in 2009, DiPascali described himself as unsophisticated kid from Queens who began working for Madoff in 1975 and stayed until the bitter end. I was loyal to him, DiPascali said. I ended up being loyal to a terrible, terrible fault. In the late 1980s and early 1990s, DiPascali said he realized investments that Madoff was making for thousands of clients were fake. But he claimed he, like others, believed Madoff had other assets that would cover claims by investors who wanted their money back. Prosecutors have accused Madoffs secretary, Annette Bongiorno, and JoAnn Crupi, an account manager, of using old stock tables to fabricate account statements so they would show steady returns even during economic downturns. They say Daniel Bonventre, his director for operations, cooked the books to throw off regulators. According to the FBI reports, when Bongiorno first began working at the firm, DiPascali heard Madoff feed her his cover story about deals he had going on Europe. He believed Crupi had likewise convinced herself over the years that Madoff had a vast array of assets all over the world. He also surmised that Madoff was probably telling Bonventre the same lies as the others. While others kept quiet, the remaining defendants — computer programmers Jerome OHara and George Perez — grew increasingly restless during the mid-2000s after they were tasked with maintaining programs that helped conceal the fraud, DiPascali told the FBI. During a boozy dinner at a Greek restaurant in Manhattan, the pair asked him whether Madoffs business was legitimate — a suggestion he laughed off but privately wondered why it took them so long to ask, the reports say. DiPascali told the FBI the situation reached a head when OHara and Perez demanded a meeting with Madoff. With DiPascali listening from a couch in Madoffs office, they told their boss that his business was illegal and that he should shut it down. Madoff at first listened politely, reminding the men that he had been a successful investor for 40 years and that they didnt understand he was making his money overseas. Then, according to DiPascali, he blew up. You are not going to tell me how to run my business, Madoff said. Prosecutors allege that at a later closed-door meeting, OHara and Perez demanded — and received — hush money. Another Madoff secretary has told investigators, Jerry and George looked smug when they came out. theguardian/business/2013/dec/02/madoff-frank-dipascali-trial-former-coworkers?guni=Network%20front:network-front%20main-3%20Main%20trailblock:Network%20front%20-%20main%20trailblock:Position8
Posted on: Mon, 02 Dec 2013 18:24:31 +0000
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