Wednesday, August 12, 2009
If DiPascali Sings Like a Bird, Will Madoff Tremble Like a Leaf?
It looks as though Bernie Madoff lied again when he claimed that only he knew all the details of his labyrinthine scam. Business Week has the story.
From the start, few believed Bernard Madoff's claim that he acted alone in creating and managing his $65 billion Ponzi scheme. On Aug. 11, in a Manhattan courtroom, that claim was revealed to be just another of Madoff's lies. Madoff's former chief financial officer, Frank DiPascali, pleaded guilty to 10 criminal charges relating to his involvement in the scam and agreed to cooperate with prosecutors. "I was loyal to him. I ended up being loyal to a terrible, terrible fault," he said in U.S. District Court.
DiPascali's guilty plea is a big victory for prosecutors. As CFO, DiPascali was the face of Madoff's asset management business. When investors had questions, they spoke with DiPascali and it was he who usually explained Madoff's investment strategies to investors. In court, DiPascali said he helped Madoff prepare false documents for investors, accountants, and regulators, shifted money between accounts in New York and London, and otherwise helped make a fictitious business look real. "This guy knows where the bodies are buried," says Robert Lamb, a professor at New York University's Stern School of Business.
DiPascali, 52, said he began working for Madoff in 1975, just after he finished high school, and had joined in Madoff's fraud by the 1980s or early 1990s—when he knew that he and Madoff were promising investors that transactions were being made when they were not....