Bernard Madoff's right hand man in his monumental Ponzi scheme, Frank DiPascali, will "tell all and name names" under the terms of a guilty plea deal announced today in federal court in New York City.
DiPascali apologized for his actions and described the transactions as "all fake. It was all fictitious. It was wrong, and I knew it was wrong at the time."
Dressed in a dark suit, DiPascali entered pleas of guilty to ten counts and the judge rejected a request by prosecutors that he be allowed to post bail. He was immediately ordered to jail and was handcuffed and led out of the courtroom, leaving everyone surprised.
Sentencing in May 2010
His sentencing is set for May 2010. The maximum he faces is 125 years in prison.
In the interim, he 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.
During the hearing, DiPascali read a statement into the record explaining how he was an 18 year-old high school student from Queens, NY when he joined Bernie Madoff in 1975, and he didn't know how he became the person who stood in court today. "I didn't know anything about Wall Street," DiPascali said.
"There was one simple fact that Bernie Madoff knew that I knew: It was all fake, it was all fictitious," he said, adding that he "perpetrated the illusion" that trades were taking place when none actually took place. "I knew no trades were happening," he said.
At the end of his statement, DiPascali's voice cracked as he said, "There is no excuse. I regret everything that I did. I accept complete responsibility for my actions."
DiPascali said he is "very, very sorry" and that while he knows his "apology means almost nothing," he hopes that his "actions going forward do mean something."
The judge at this point said he accepted his guilty plea and then began a long discussion of remand, saying that bail is "dwarfed" by the magnitude of the fraud. He said that while the prosecutors were looking forward at what DiPascali could do to help them, he was looking backwards at what he did for the past decades. "I am unpersuaded," Judge Richard Sullivan said.
DiPascali Cooperating with Investigators
DiPascali's cooperation was deemed crucial because Madoff refused to help the FBI unravel the scheme and maintained he "acted alone." It is a claim investigators say is a "huge lie."
Over 33 years, DiPascali rose to the position of chief financial officer at Madoff's investment advisory business despite his lack of college education or any experience in the financial industry.
DiPascali was one of two people who ran the notorious 17th floor at Madoff's office where thousands of bogus monthly account statements were produced to give investors confidence their money was well invested. In fact, investigators say there is no record that Madoff and DiPascali ever traded any stocks for the clients.
Madoff and DiPascali
Madoff and DiPascali would often meet in a room that had "Do Not Enter" and "Do Not Clean" signs on the door.
In the last years, according to investigators, his salary was close to $3 million and he enjoyed many privileges at the expense of the company.
DiPascali had the use of a corporate Platinum American Express credit card which he used to charge personal expenses, including plane tickets for his son and fraternity brothers to go to the Bahamas over spring break.
In addition, the captain of DiPascali's yacht was paid through funds from the account used for Madoff's investors, according to investigators.
Prosecutors said Madoff had complete trust in DiPascali to keep the secret of the scam operations. He had been recruited to the firm by Madoff's former secretary, Annette Bongiorno who lived next door to DiPascali in the New York borough of Queens.
DiPascali entered guilty pleas to charges of conspiracy, securities fraud, investment advisor fraud, falsifying books, mail fraud, wire fraud, perjury, international money laundering and income tax evasion.
He said he followed Madoff "too loyally since 1975."
Anna Schecter and Asa Eslocker contributed to this report.