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Madoff's "CFO" Pleads Guilty, Admits It Was "All Fake"
By
Jen Chung
Published Aug 12, 2009
Modified Aug 12, 2009
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By
Jen Chung
Published Aug 12, 2009
Modified Aug 12, 2009
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As expected, Frank DiPascali, who acted as the chief financial officer for Madoff Investment Securities, pleaded guilty to helping Bernard Madoff (pictured) pull off a $65 billion Ponzi scheme. DiPascali, a self-described "kid from Queens" who landed a job with Madoff, said, "No purchases or sales of securities were actually taking place in their accounts. It was all fake. It was all fictitious. It was wrong, and I knew it was wrong at the time... I don't know how I went from being an 18-year-old kid who just happened to have a job to standing here in court. I regret everything I did. I hope my actions going forward with the government will make a difference."
How did they do it? Well, Bloomberg News reports Madoff used a "random-number generator, old stationery, a 'phantom' trading platform and an aging computer" to perpetuate the too-good-to-be-true scam where investors were getting crazy returns: "Under DiPascali’s supervision, Madoff’s programmers organized accounts on a single IBM AS/400 computer, which would automatically allocate fictitious trades to individual accounts, the SEC said. DiPascali had his staff check trades to make sure the reported prices weren’t too high or low for the day. To keep regulators at bay, he helped create a random-number generator to make it look like trades of various sizes and prices were being carried out in different time zones."
The NY Times also notes that DiPascali admitted they were "using historical stock data from the Internet to create fake trade blotters, sending out fraudulent account statements to clients and arranging wire transfers between Mr. Madoff’s London and New York offices to create the impression that the firm was earning commissions from stock trades."
DiPascali pleaded guilty to 10 charges, which add up to 125 years in prison, but it's believed his cooperation will buy him time. However, even though prosecutors said he should be freed, a judge declared the Bridgewater, NJ was a flight risk and sent him to the Metropolitan Correctional Center, where Madoff was held before he was sent to federal prison.
Tagged
Bernard Madoff
frank dipascali
fraud
investment fraud
ponzi scheme
scam
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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