Appearing as the star prosecution witness, Frank DiPascali, 57, testified he played an essential role in the decades-long scheme that stole more than $17 billion from thousands of charities, celebrities, ordinary investors, financial firms and other entities.
Testifying nearly five years to the date the longest-running Ponzi scheme in financial history finally collapsed, DiPascali did not immediately accuse the five former co-workers of being knowing participants in the scheme — as they stand charged.
But DiPascali — dressed in a light gray suit and speaking with a gravely New York accent — described how he first saw evidence of the scam shortly after joining Madoff's firm in 1975.
Under questioning by Assistant U.S. Attorney John Zach, he described how a Madoff trader provided stock data from newspapers to Madoff executive assistant Annette Bongiorno, the next-door neighbor who helped him get the job. Bongiorno, one of the five co-defendants, used that data to create monthly financial and trading reports for Madoff's customers.
Facing DiPascali in the Manhattan federal courtroom with Bongiorno were: Daniel Bonventre, Madoff's former director of operations; JoAnn Crupi, another ex-assistant; and Jerome O'Hara and George Perez, former Madoff computer programmers.
The five are accused of conspiracy and fraud for allegedly helping Madoff. They have pleaded not guilty and maintained they were hoodwinked by their former boss.
Madoff confessed the scam to his sons in Dec. 2008 as he unsuccessfully tried to cope with investor withdrawal requests prompted in part by the national financial crisis. They notified authorities. The now-75-year-old disgraced financier pleaded guilty in 2009 without standing trial. He's now serving a 150-year prison sentence in a Nor! th Carolina federal facility.
DiPascali testified that he awoke on Dec. 11, 2008 to a cell phone call from Madoff, who told him that FBI agents were in the company's office. "Why are you calling me?" DiPascali testified he responded and then said he "threw the phone across the room."
Asked by Zach what he thought DiPascali said "that I was going to jail, because I knew the nature of the operation and I knew why the firm was busted."
Aware of the impact DiPascali's unsavory central role in the scam could have on jurors, Zach led him through his own 2009 guilty plea to conspiracy, fraud and other charges. DiPascali testified that prosecutors may provide a letter about his cooperation to the judge who could sentence him for up to 125 years in prison. But he said he has been given no promises that will happen.
Defense lawyers will get a chance to cross-examine DiPascali when prosecutors finish their direct examination of the former Madoff lieutenant. They signaled during the trial's opening statements in October that they plan to argue DiPascali would say anything to shorten the 125-year maximum potential prison term he faces.
O'Hara defense lawyer Gordon Mehler argued at that time that recruiting DiPascali to testify against the former co-workers was "the equivalent of the Big Bad Wolf getting on the witness stand and condemning Little Red Riding Hood."
Prosecutors detailed DiPascali's continuing cooperation in a heavily-redacted Nov. 15 letter filed with U.S. District Court Judge Richard Sullivan. The judge scheduled a sentencing update for May 2014.
Asked by Zach what sentence he hoped to receive if he provides truthful testimony in this case and other Madoff investigations, DiPascali said "something substantially less" than the maximum term.
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