Madoff employees trial tells of the final days

2013-12-12 09:50
Bernard Madoff. (Stuart Ramson, AP)

Bernard Madoff. (Stuart Ramson, AP)

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New York - Bernard Madoff's former right-hand man summed up his boss's arrest exactly five years ago with two words: "Madoff Implodes".

The words in Frank DiPascali's diary entry for 11 December 2008, were shown to jurors on Wednesday on the fifth anniversary of Madoff's fall. The jurors are hearing evidence in the trial of five of Madoff's former employees, who say the New York financier duped them all.

Weeks of testimony in the only criminal trial to result from the collapse of Madoff's once high-flying business culminated in the government's star witness describing the final days of an epic fraud that cost thousands of investors nearly $20bn.

On Tuesday, DiPascali told jurors that Madoff was crying when he revealed he was out of money more than a week before federal authorities and the rest of the world learned the truth.

On Wednesday, DiPascali said Madoff followed up his 3 December 2011, meeting with him by asking him to collect boxes of documents to shred.


DiPascali said he put together more than two dozen boxes of documents as Madoff "very meticulously" went over a client list to identify employees and family members to whom he planned to disburse the nearly $300m that remained.

DiPascali said he realised Madoff had digressed from his careful plan to notify immediate family only after consulting his attorney and destroying documents when his wife, Ruth, who appeared stunned as she passed out gifts at the offices on the day of the company's Christmas party, on10 December.

"She looked catatonic," he said. "She looked horrible, like she was crying all day. Immediately, I thought he told her."

DiPascali said he skipped the party and was home the next morning when his cellphone rang. Madoff was on the line.

"Frank, the FBI is in the office with my brother," he recalled Madoff telling him.

'Scream out'

DiPascali said he asked why Madoff was calling him and promptly "threw the phone across the room".

DiPascali said he expected to be arrested and began destroying more evidence, including smashing computer flash drives on the floor of his Bridgewater, New Jersey, home. He said he also tossed a gun he owned in a nearby waterway.

When he went to the office later in the day, DiPascali said, "I was shaking." He said "all sorts of regulators and federal authorities" were there, along with Madoff's brother, and he testified that he lied to them.

Later in the day, the announcement of Madoff's arrest came across one of the television monitors, and DiPascali said he heard somebody at Madoff's firm "scream out" when news of his arrest first broke on a financial television programme on one of the company's monitors.

After meeting with his lawyer over the following weekend, DiPascali said, he decided to co-operate and tell the truth. He pleaded guilty to criminal charges in August 2009 that carry the potential for as many as 125 years in prison.

He said he must wear an electronic ankle bracelet and cannot leave his residence without an FBI agent along. He said he surrendered his assets, including his home and car.

His testimony may have helped some defendants, since he conceded on cross-examination that he went to great lengths to shield employees from knowing about the fraud.

'Stick to my story'

He said he made up a story just days before the fraud was revealed to get information he needed from one defendant, Madoff's former long-time secretary Annette Bongiorno because he feared she would "jump out the window when she found out Bernie was out of money".

And his credibility was questioned as he admitted that he perjured himself repeatedly in 2006 testimony to the Securities and Exchange Commission and told countless lies to investors, fellow employees and government regulators since 1975, when he joined the firm.

But his effort to get leniency at sentencing may have gained ground with his testimony that he revealed the fraud to defendant JoAnn Crupi, one of Madoff's account managers, on 4 December 2008, during a walk down a midtown Manhattan street.

After Madoff's arrest, he said, he hugged her and they exchanged Christmas greetings when they encountered each other outside a lawyer's office. He said she emerged from a conference and told him: "I'm going to stick to my story."

Read more on:    bernard madoff  |  us

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