Bernard Madoff's long-time deputy, Frank DiPascali, on Tuesday pleaded guilty to financial crimes including helping others carry out Wall Street's biggest investment fraud, but shed little more light in court on the decades-long swindle.
I'm standing here today to tell you that from the early 1990s to 2008 I helped Bernie Madoff and other people carry out a fraud that hurt thousands of people. I am guilty, DiPascali, 52, said in Manhattan federal court in a dark suit and reading from a prepared statement.
U.S. District Judge Richard Sullivan denied DiPascali bail. He was handcuffed and escorted out of court after pleading guilty under a cooperation deal with the government.
DiPascali did not identify the other people, only the disgraced financier, who is incarcerated at a medium-security prison in Butner, North Carolina, after a judge sentenced him on June 29 to an effective life term of 150 years.
Madoff, 71, pleaded guilty in March to orchestrating a worldwide $65 billion Ponzi scheme over 20 years in which early investors are paid with the money of new clients. Madoff said he acted alone in the fraud at Bernard L. Madoff Investment Securities LLC in New York.
He was arrested by the FBI in December after the number of redemption requests in the declining economy overwhelmed his ability to pay.
Unlike his former boss, DiPascali pleaded guilty under a cooperation agreement with the U.S. government but the judge who heard his plea on Tuesday was not convinced he should remain at liberty.
He pleaded guilty to 10 charges by U.S. prosecutors including conspiracy, securities fraud, money laundering and perjury. He faces a maximum possible sentence of 20 years each on some of the charges. Sentencing was scheduled for May 15.
I'm not persuaded he will be here at the time of sentencing given the monumental sentence he's facing, U.S. District Judge Richard Sullivan said.
Both DiPascali's lawyer Marc Mukasey and U.S. prosecutor Marc Litt objected, saying his cooperation was essential to finding out more about the massive fraud and their work would be more efficient if he were not in jail.
DiPascali, who worked for Madoff for 33 years from the age of 18, appeared stunned at the judge's ruling at the end of a two-hour long court hearing.
DiPascali told the court that he recorded securities trades for clients that were all fictitious and that in January 2006, under Bernie Madoff's direction, I lied to the SEC about the activities of the firm.
He admitted wiring money from the Madoff firm's London office to New York and falsifying trading tickets.
I don't how I went from being an 18 year old kid who didn't have a job to standing here in the court today, DiPascali said, his voice breaking with emotion. I didn't know anything about Wall Street.
Public records show DiPascali has a home in Bridgewater, New Jersey, 42 miles southwest of New York.
At the Madoff firm, he worked with separate staff and Bernard Madoff on the 17th floor of the firm's office at the Manhattan building known as the Lipstick Tower.
The firm's stock traders and other staff worked on the 18th and 19th floors, where they were supervised by Madoff's brother, Peter.
Only Madoff, DiPascali and the firm's outside accountant David Friehling have been charged in the massive fraud, but law enforcement sources say the FBI is investigating 10 or more people who could be charged in coming months.
I don't believe the quest for the truth ends today, the judge said after defrauded investor Miriam Siegman asked him to reject the plea deal. Before imposing sentence I would expect to have more information than I have heard today.
Also on Tuesday, the U.S. Securities and Exchange Commission (SEC) filed civil charges against DiPascali. The SEC accused him of creating millions of phony documents and tracking records to conceal fraud from regulators and investors.
The SEC said DiPascali helped Madoff avoid detection of his scheme by designing, developing and overseeing a wide array of fictitious books and records to conceal the scam.
The case is USA v Frank DiPascali in U.S. District Court for the Southern District of New York (Manhattan)
(Reporting by Grant McCool; Additional reporting by Christine Kearney; Editing by Gary Hill)