|
 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 Madoff's inner circle actually believed that lie or not has
become central to a trial in federal court in Manhattan in which
DiPascali is the government's star witness. He is expected to take
the stand this week to give an inside look at one of history's
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 DiPascali's credibility,
calling him equal partners in crime with Madoff.
"The evidence will show DiPascali is a pathological liar, and the
government's case relies on you believing DiPascali," Andrew Frisch
said in opening statements. "And now instead of Madoff, DiPascali's
bosses are the government lawyers at this table."
The testimony will represent a turnabout for DiPascali, who kept
Madoff's secrets for decades until he agreed to cooperate with the
FBI in early 2009 following Madoff's arrest in 2008.
Madoff, 75, admitted that accounts he had told investors were worth
nearly $68 billion 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,
N.C.
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
Madoff's family and top employees. Authorities say he withdrew more
than $5 million 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."
[to top of second column] |
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 Madoff's 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 O'Hara 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 Madoff's 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 O'Hara and
Perez demanded a meeting with Madoff. With DiPascali listening from
a couch in Madoff's 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 didn't
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, O'Hara and
Perez demanded — and received — hush money. Another Madoff secretary
has told investigators, "Jerry and George looked smug when they came
out."
[Associated
Press; TOM HAYS]
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