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Americas

Madoff's top aide pleads guilty, promises to tell all

Video by Yuka ROYER

Text by NEWS WIRES

Latest update : 2009-08-12

Disgraced Wall Street financier Bernard Madoff's top aide has pleaded guilty to charges of conspiracy and fraud, and promised to help investigators to identify other conspirators involved in the biggest fraud in US history.

AFP - The man who helped Bernard Madoff pull off Wall Street's biggest fraud pleaded guilty Tuesday and promised to cooperate in the hunt for other conspirators.
  
Frank DiPascali, 52, was denied bail and taken away in handcuffs after pleading guilty to 10 charges of conspiracy and fraud before Judge Richard Sullivan in a Manhattan federal court.
  
Sentencing is not scheduled until at least May next year.
  
DiPascali faces a maximum of 125 years imprisonment and forfeiture of his assets. However ,the pledge to cooperate in the investigation could win him a reduced term.
  
DiPascali's promise to tell everything he knows to the FBI, the Securities and Exchange Commission and tax officials signaled a major break in the struggle to unravel Madoff's multi-billion dollar Ponzi scheme.
  
DiPascali indicated he would name names, telling a Manhattan federal court: "There was a simple fact that Bernie Madoff knew, that I knew and other people knew... it was all fake, it was all fiction."
  
Other than Madoff, who was sentenced in June to 150 years in prison, there are few individuals beyond DiPascali who might have had as intimate knowledge of the operation.
  
DiPascali worked for Madoff since he was 18 and just out of high school, rising to the position of trusted chief financial officer.
  
His vow to devote "all my energy" to helping the authorities likely set off alarm bells for others involved in the decades-long fraud.
  
Madoff stole billions of dollars from thousands of investors, including high-end charities, banks, Hollywood actors and other celebrities, paying them fake profits to maintain the illusion he had properly invested their money.
  
During his sentencing, Madoff indicated he acted alone, something analysts say would have been impossible.
  
In his court statement DiPascali confessed to playing a central role in fooling clients by providing false account statements and by cooking the books at the firm, Bernard L. Madoff Investment Securities.
  
"On a regular basis I added fictitious trade data to account statements," he said. "While this was going on I knew no trades were happening."
  
He also recounted how he deliberately misled the Securities and Exchange Commission when they questioned him under oath about what several independent investigators said was Madoff's suspiciously successful trading record.
  
Asked by Sullivan why he had misled the SEC, DiPascali answered: "To throw them off the track, sir."
  
"Did you sense they were on your track?" Sullivan asked.
  
"Yes," DiPascali answered.
  
Becoming emotional at times, his voice cracking, DiPascali begged forgiveness, saying that he had trusted his mentor Madoff "to a terrible, terrible fault" and had been unable to escape.
  
He claimed he had wrongly believed that Madoff had other, hidden assets to cover clients in case they started withdrawing their capital -- as they did late last year, collapsing the pyramid scheme.
  
"I regret everything I did," he said. "I don't know how I went from an 18-year-old kid who just happened to have a job to standing before you today."
  
He added: "I hope my actions going forward with the government will make a difference."
  
Prosecutors and defense lawyers both asked Sullivan to release DiPascali on bail until sentencing and they clearly expected a positive response.
  
Lawyers and DiPascali were visibly shocked by Sullivan's decision to order immediate detention.
  
"I just can't find that Mr DiPascali doesn't pose a risk of flight," Sullivan said. "I'm going to deny that request. I'm going to remand Mr DiPascali," he said.
  
Sullivan rejected attorneys' arguments that DiPascali had already shown his reformed nature by cooperating with the FBI since Madoff's firm collapsed last December.
  
He noted that DiPascali faced a huge prison sentence and also forfeiture of everything he owns, since court-ordered forfeiture could total 170 billion dollars.
  
In addition to DiPascali and Madoff, only accountant David Friehling has been accused in the vast case.
  
Analysts say prosecutors may eventually target others close to Madoff, such as his brother Peter Madoff, chief compliance officer at the fraudulent firm, as well as his sons Andrew and Mark. They have all declared that Madoff kept them in the dark.
  

Date created : 2009-08-12

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