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Bernard Madoff

Madoff’s CFO Could Lead Investigators to Co-Conspirators

August 12, 2009 06:00 PM
by Denis Cummings
Frank DiPascali, who oversaw the day-to-day operations of Bernard Madoff’s fraudulent investment business, is reportedly cooperating with federal investigators and may implicate others who participated in the fraud.

DiPascali Pleads Guilty

Frank DiPascali, the former chief financial officer for Bernard L. Madoff Investment Securities, pleaded guilty Tuesday to 10 felony counts of conspiracy, fraud, money laundering and perjury. He admitted to fabricating records of trades and returns, and lying to the Securities and Exchange Commission.

DiPascali’s admission offered a look into how Madoff conducted his Ponzi scheme. But, more importantly, it made clear that Madoff, who has insisted that he acted alone, had co-conspirators. DiPascali, facing a maximum of 125 years in prison, is willing cooperate with the government, and prosecutors hope that he can lead them to others who participated in the fraud.
There have been just three BMIS employees charged thus far: Madoff, DiPascali and Madoff’s accountant, David G. Friehling. The SEC has also charged four people involved in two “feeder funds” that accepted money from investors and passed it along to Madoff.

But the most fertile territory could be the co-workers whose help would have been needed to handle the programming and the mounds of paperwork,” says The Economist. “In court, Mr DiPascali lamented becoming ‘loyal to a terrible, terrible fault.’ In that, he was surely not alone.”

DiPascali could also help investigators determine whether members of the Madoff family—Bernard’s wife Ruth, brother Peter, and sons Andrew and Mark—were complicit in the fraud.

Columbia University professor John Coffee, a securities law expert, told Bloomberg that Peter Madoff is “much more vulnerable than the children. As chief compliance officer, he was regularly making statements to the SEC about Madoff Securities which ultimately proved to be egregiously false. … You would expect Frank DiPascali would have had to have been in a number of conversations with Peter Madoff.”

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