Madoff ex-CFO pleads guilty

NEW YORK | The former chief financial officer for Bernard Madoff has been ordered jailed after pleading guilty to conspiracy in a cooperation deal.

Frank DiPascali entered his plea Tuesday in federal court to charges including securities fraud, falsifying records and international money laundering.

Afterward, U.S. District Judge Richard Sullivan jailed him without bail on charges carrying a potential penalty of 125 years in prison. It is unusual for a cooperator to be jailed, especially after pleas by a prosecutor and defense lawyer to keep him free to assist investigators.

DiPascali had apologized, saying he had followed Madoff too loyally since 1975.

Madoff is serving 150 years in prison for a Ponzi scheme that demolished thousands of people’s life savings, wrecked charities and shook confidence in the financial system.

DiPascali admitted to helping 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.

“I was loyal to him. I ended up being loyal to a terrible, terrible fault,” DiPascali said as he pleaded guilty in U.S. District Court in Manhattan.

The plea deal could earn him leniency at sentencing.

Customers say DiPascali, 52, 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.

He 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 that were not.

DiPascali said the transactions were “all fake.”

“It was all fictitious. It was wrong, and I knew it was wrong at the time,” he said.

DiPascali said he thought “for a long time” that Madoff had other assets to cover the claims of any investors who might demand their money back.

“That’s not an excuse. I knew everything I was doing was wrong and criminal,” he said.

He added: “I don’t know how I went from an 18-year-old kid who just happened to have a job to someone standing before you today.”

Mariam Siegman, who described herself as a 65-year-old Madoff victim, was the only victim to take up Judge Sullivan’s invitation to speak at the hearing.

She said she opposed acceptance of the plea because it prevents a trial and “the kind of justice that allows truth to be spoken out loud in a courtroom.”

The judge said he did not think “the quest for truth ends today” and that he expected to learn much more before a sentencing not scheduled to take place before May.