So much for Bernard Madoff’s claim that he acted alone. ABC News reported on Tuesday that Frank DiPascali, Madoff’s finance chief, will “tell all and name names” under the terms of his plea deal with prosecutors:
[DiPascali] is expected to provide prosecutors with a road map of those in the Madoff inner circle who were involved in the scheme that swindled investors out of an estimated $64.8 billion.
Separately, Bloomberg said DiPascali “laid out the mechanics” of the fraud, telling the court “it was all fake” and he knew it. Emphasis FT Alphaville’s:
“From the early 1990s until December 2008 I helped Bernie Madoff and others carry out a fraud,” DiPascali told the court.
During that time, no purchases or sales of securities took place, he said.
“It was all fake. It was all fictitious,” he said. “It was wrong, and I knew it was wrong at the time.”.
“I knew no trades were happening,” DiPascali said in court. “I knew I was participating in a fraudulent scheme. I knew everything I did was wrong, and it was criminal, and I did it knowingly and willfully. I accept complete responsibility for what I did. I apologize to every victim and to my family and the government. I am very, very, very sorry.”
And the SEC’s complaint (swiftly settled: DiPascali agreed not to contest the regulators claims, though he didn’t admit or deny wrongdoing) is a must read.
Allegations from the complaint include:
At least as early as the 1980s, DiPascali (together with other employees 6 of BMIS) helped to fabricate various backdated and fictitious trades, often involving options, and to record them in investor account records for the purpose of generating phantom returns, hedges or tax events in those investors’ accounts. DiPascali and others continued to help fabricate trades for this original group ofaccounts until the end ofthe fraudulent scheme in December 2008.
And in another blow to the reputation of global regulators (who clearly weren’t talking to each other), the SEC alleged:
… DiPascali, at Madoffs direction, created a list of counterparties that were unlikely to be approached for verification. On the one hand, when regulators and auditors in the U.S. asked for the infonnation, DiPascali provided a list of European financial institutions. On the other hand, when auditors for European investors asked for the infonnation, DiPascali provided names of U.S. dealers. In addition to providing the list of names, DiPascali directed that fake trade blotters be prepared for only the “special” accounts to reflect fictitious trading with the various counterparties on the relevant list. These records were provided to regulators and auditors.
Related links:
Madoff’s deputy facing 10 criminal charges – FT Alphaville
Madoff scandal – FT Indepth