Ex-Madoff CFO expected to plead guilty to conspiracy charges
NEW YORK -- The top financial aide to Ponzi scheme architect Bernard Madoff is expected to face 10 criminal charges, including conspiracy, securities fraud and perjury, federal prosecutors disclosed Tuesday.
Frank DiPascali, 52, former chief financial officer for Madoff's business, is expected to waive indictment by a federal grand jury and plead guilty to all charges in a Tuesday afternoon hearing before U.S. District Judge Richard Sullivan.
Each of the charges calls for five to 20 years in prison, and fines as high as $5 million.
In a letter to Sullivan regarding bail, prosecutors requested that DiPascali be required to post a $2.5 million personal recognizance bond to be secured by equity in his sister's home and co-signed by three financially responsible individuals.
Assistant U.S. Attorney Marc Litt requested a tentative May 2010 sentencing date — a delay that in some cases signals a defendant will seek leniency by giving prosecutors information about other potential suspects before sentencing.
Federal court procedures in which a defendant waives indictment and prosecutors file criminal information eliminate the need for a trial and typically signal a pre-arranged plea agreement on sentencing.
Acting U.S. Attorney Lev 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.
By pleading guilty, DiPascali would join Madoff's former business accountant, David Friehling, as the only other persons criminally charged in the scam to date.
Both prosecutors and Rachel Silverman, a spokeswoman for DiPascali defense attorney Marc Mukasey, have declined to comment on the case in advance of the plea filing.
DiPascali is among a small circle of Madoff relatives and former senior aides who have remained under investigation for months in the multi-billion dollar scam that victimized thousands of charities, celebrities, financial funds and individual investors worldwide.
Although Madoff repeatedly claimed he acted alone, prosecutors have been reluctant to conclude the disgraced financier would have been capable of running the decades-long scam without assistance.
DiPascali has been of particular interest because he worked for Madoff more than 20 years and most recently held a job in which he theoretically would have detailed knowledge about the former money manager's financial operation.
He 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 Massachusetts Secretary of State Thomas Galvin's office.
DiPascali 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 said. The complaint also portrays him 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, billed among 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 operating hallmark of a basic Ponzi scheme.