Prosecutors say Madoff lieutenant will face charges
NEW YORK -- Frank DiPascali, a former top financial aide to Ponzi scheme architect Bernard Madoff, will face charges in the massive scam that victimized charities, celebrities and ordinary investors worldwide, federal prosecutors disclosed Friday.
DiPascali will waive his right to have a grand jury consider an indictment, and prosecutors will file a criminal information against him instead, according to a federal court filing by acting U.S. Attorney Lev Dassin's office.
Such procedures often prefigure agreements between defendants and prosecutors on guilty pleas that eliminate the need for a trial. Dassin's office followed a similar procedure with Madoff, who pleaded guilty to securities fraud and other charges in March and is now serving a 150-year prison term.
Federal prosecutors also filed a criminal information last month against former Madoff business accountant David Friehling, the only other person charged in the criminal scheme so far.
Rachel Silverman, a spokeswoman for DiPascali defense attorney Marc Mukasey, declined to comment on the filing. Prosecutors similarly declined to comment, and the filing did not specify the expected charges in the case, which was assigned to U.S. District Judge Richard Sullivan.
DiPascali is among a small circle of Madoff relatives and former senior aides who have remained under investigation. Although Madoff repeatedly claimed he acted alone, prosecutors have been reluctant to accept that the disgraced financier would have been able to run the decades-long scam without assistance.
DiPascali had an active role in calming the concerns of the Fairfield Greenwich Group, a corporate client that invested $7.2 billion with Madoff, according to a complaint filed last spring by the Massachusetts Secretary of State Thomas Galvin's office.
He participated in two due diligence sessions at which Fairfield executives asked questions about Madoff's trading records, investment protocol and other business issues, the complaint says.
DiPascali also issued a protocol that outlined the purported procedure used to vote proxies on securities Madoff listed as being held on Fairfield's behalf, the complaint says. He is also portrayed in the complaint as having alerted Fairfield about some of Madoff's purported stock trading moves.
In an April USA TODAY interview, Galvin said Fairfield executives told his investigators DiPascali appeared to have a key role in what was widely though quietly touted to investors as Madoff's secret trading system.
"DiPascali was the only other person who was doing things to implement Madoff's so-called split strike conversion (trading) strategy. That's the way we read it from what they (Fairfield) told us," Galvin said in the interview.
Madoff, however, didn't make any trades for investors. During his March 12 guilty plea, he admitted he used money from new investment clients to pay earlier ones — the hallmark of a basic Ponzi scheme.