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Associated Press has reported that Frank DiPascali, the former chief financial officer for Bernard Madoff, pleaded guilty Tuesday to conspiracy -- admitting he helped Madoff carry out a massive fraud that cost thousands of people billions of dollars by lying to investors and testifying falsely when it seemed the fraud might be discovered.
U.S. District Judge Richard Sullivan surprised the defendant, prosecutors and a defense lawyer by ordering DiPascali jailed, a rarity for someone in a white-collar case who had pleaded guilty with a cooperation deal.
The judge jailed him despite a request by Assistant U.S. Attorney Marc Litt that he be kept free or under house arrest to assist investigators studying millions of pages of documents and data that he is familiar with. His lawyer, Marc Mukasey, said his client was "completely unprepared for this."
The cooperation deal may still earn him leniency against charges which carry a potential penalty of up to 125 years in prison at a sentencing that will not occur before May 2010. [Madoff was sentenced to 150 years.]
Customers say DiPascali was their main contact with Madoff's firm, a fact he admitted as he confessed to the 10 charges contained in a criminal information charging document. For decades DiPascali answered customers' questions about their accounts with Madoff's firm and helped them if they wanted to add or withdraw money.
DiPascali said he began working for Madoff in 1975 — just after he finished high school — and had joined Madoff in his fraud by the 1980s or early 1990s, when he knew that he and Madoff were promising investors that transactions were being made which were not. DiPascali says the transactions were "all fake. It was all fictitious. It was wrong, and I knew it was wrong at the time."
During his guilty plea in March, Madoff insisted that he acted alone. Until today, only one other person — his accountant — had been charged during the seven-month investigation before the charges were revealed against DiPascali.
The judge said that he did not believe "the quest for truth ends today" and that he expected to learn much more before the 2010 sentencing. The FBI has said it expects more arrests before it concludes the probe.
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