|
 Madoff "would very loudly proclaim" that he had made a killing on an
investment in Europe, DiPascali once told the FBI. He 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 has become
central to a trial of five former Madoff employees in federal court
in Manhattan.
DiPascali, the government's star witness, took the stand Monday. He
had started working for Madoff in the mid-1970s, and he began his
testimony, which is expected to last for days, by discussing how
business was done then.
He served as a utility player in the firm, doing menial tasks like
drilling holes and laying wire. Prosecutors showed grainy old photos
from the small, messy office, with smiling employees with bushy
moustaches standing near gigantic computers and typewriters.
"Even though I got yelled at lot, I wandered into the trading room,"
he said Monday. "It was virtually impossible not to know what was
happening."
DiPascali described the trading scene in the late 1970s and early
1980s — when the firm still did legitimate business — as bustling,
busy and fun. But things changed when the Madoffs moved uptown to
fancy new offices in a Third Avenue skyscraper known as the
"lipstick building."
When the stock market crashed in 1987, DiPascali said Madoff asked
him to fabricate some trade numbers. He testified Monday that some
of the employees on trial knew about it, because when trades were
happening, you could hear them — they were loud transactions.
His were scratched out on paper, nothing more.
"If you want to make a trade, you gotta pick up the phone," he said.
"Was it all fake?" asked Assistant U.S. Attorney Josh Zach.
"Yes," he replied.
Part of DiPascali's behind-the-scenes account was previewed 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.
[to top of second column] |
"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."
Madoff, 75, admitted that accounts he had told investors were worth
nearly $68 billion actually held only a few hundred million dollars.
He pleaded guilty to fraud charges and was sentenced to a 150-year
prison term in Butner, N.C.
DiPascali's testimony represents a turnabout for him. He kept
Madoff's secrets for decades until he agreed to cooperate with the
FBI in early 2009.
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.
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.
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.
DiPascali told the FBI that O'Hara and Perez finally 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.
[Associated
Press; COLLEEN LONG and TOM HAYS]
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