Ex-Madoff CFO Pleads Guilty to Fraud

(AP)  The former chief financial officer for Bernard Madoff pleaded guilty Tuesday to conspiracy, admitting to helping Madoff carry out a massive fraud that cost thousands of people billions of dollars by lying to investors and testifying falsely when it seemed the fraud might be discovered.

"I was loyal to him. I ended up being loyal to a terrible, terrible fault," Frank DiPascali said as he pleaded guilty in U.S. District Court in Manhattan to charges including securities fraud, falsifying records and international money laundering.

The plea to charges which carry a potential penalty of up to 125 years in prison came with a cooperation deal that could earn him leniency at sentencing.

Madoff is serving 150 years in prison for a Ponzi scheme that demolished thousands of people's life savings, wrecked charities and shook confidence in the financial system.

Customers say DiPascali, 52, was their main contact with Madoff's firm, a fact he admitted as he confessed to the 10 charges contained in a criminal information charging document.

He said he began working for Madoff in 1975, just after he finished high school, and had joined Madoff in his fraud by the 1980s or early 1990s, when he knew that he and Madoff were promising investors that transactions were being made that were not.

DiPascali says the transactions were "all fake. It was all fictitious. It was wrong, and I knew it was wrong at the time."

DiPascali said he thought "for a long time" that Madoff had other assets to cover the claims of any investors who might demand their money back.

"That's not an excuse. I knew everything I was doing was wrong and criminal," he said.

He added: "I don't know how I went from an 18-year-old kid who just happened to have a job to someone standing before you today."

Mariam Siegman, who described herself as a 65-year-old Madoff victim, was the only victim to take up Judge Richard Sullivan's invitation to speak at the hearing.

She said she opposed acceptance of the plea because it prevents a trial and "the kind of justice that allows truth to be spoken out loud in a courtroom."

The judge said he did not believe "the quest for truth ends today" and he expected to learn much more before a sentencing not scheduled to take place before May 2010.

"There will be more information and the court will sentence on the basis of additional information," Sullivan said.

The judge did not immediately rule whether DiPascali could remain free on bail before he is sentenced.

Customers say that for decades DiPascali answered their questions about their accounts with Madoff's firm and helped them if they wanted to add or withdraw money.

He and Madoff came from the same part of Queens, and DiPascali's first job was as Madoff's assistant. In the 1980s, DiPascali held titles with Madoff's firm including director of research and director of options trading. Since 1996, he had been the firm's chief financial officer.

During his guilty plea in March, Madoff insisted that he acted alone. Only one other person - his accountant - had been charged during the seven-month investigation before the charges were revealed against DiPascali.

The conspiracy charge against DiPascali and his cooperation deal are likely to increase speculation that investigators might learn who carried out the details of the multi-decade fraud that led thousands of investors who sank at least $13 billion into Madoff's firm to lose all.

Madoff had told investors late last year that their accounts contained nearly $65 billion, when he actually had only several million dollars left of their money.

Since Madoff revealed the fraud to his sons in early December and was arrested by FBI agents, investigators have looked into the actions of his wife Ruth, his brother and two sons, who ran a trading operation under the same roof, and other insiders. No other Madoff family members have been charged.

The FBI has said it expects more arrests before it concludes the probe.

[govtguy]

DiPaascali willingly, knowingly, and deliberately aided and abetted Madoff, therefore, he deserves the same punishment and financial losses that Madoff was given. Regardless of his turning over on Madoff, he perpetrated the long-term fraud. As a minimum, he should clearly acknowledge and identify all the other players, before he even thinks of begging for mercy. Look out Bubba, new meat coming to the Block!

[bradkt1]

This is the guy that the feds needed to flip...and they just did. He not only knows where the bodies are buried...he know the address of the cemetaries. Maddof's entire family and a few others are fixing to go down.

[lloydbest1]

The more this clusterf*** gets investigated the more we realize just what a hit the American economy - not to mention the individual investors - took.
Contributors to other threads say "it's only money, after all; it's not as though he (Madoff) went out and killed someone".
Actually he did. Indirectly, perhaps, but the victim(s) are just as dead. In any case it is about FAR more than just money. He has ruined the lives of untold numbers of people from all economic classes by jeprodizing their ability to secure a decent living through retirement. Many will not be able to retire.
He has blown the balance sheets of several institutional investment funds. These guys are not just accountable for their own fortunes but for those of thousands who invest with them.
The billions he has bilked have no paper trail. We don't know where it all went. Though I won't neccessarily go there, some have said that Israel's more conservative elements such as the Likud party are stylin' and smilin'.
But the biggest tragedy; the most heinious offense is one not necessarily illegal and that is Madoff has called into question the very validity of capitalism itself as a viable economic strategy.

And, as it's becoming increasingly obvious, he didn't do it alone.

[bobnjersey]

[The former chief financial officer for Bernard Madoff says he helped the disgraced financier and others "carry out a fraud that hurt thousands of people." ]

didn't bernie say he executed it all on his own? didn't bernie say that his son's had no knowledge. didn't bernie say his wife was innocent?

when is congress going redefine this crime ... and assess an appropriate sentence to sociopaths like this who don't care who they're adversely affecting or to what degree they're doing it?

there should be whole population of individuals who have all their assets seized and are excluded from being in this business moving forward.

[tincup356]

to bob in jersey,,,,notice how the government has kind of downplayed Bernies ripoff...because they run the BIGGEST ponzi scheme...and don't want the people to compare the two.......the government has ...SOCIAL SECURITY,,,,,it is the VERY same thing...except "We the People" have no choice on investing,,,,,,but it is still being taken out of our checks ,,,,as the books WILL NEVER balance, paying those going out with the money coming in from the younger ones.