Madoff’s chief deputy tells a few tales
His name is Frank DiPascali. He was in charge of the smooth operation of Madoff’s Ponzi scheme on Floor 17, a top-secret operation needing a special pass to visit , and featuring an ancient IBM computer server, a bunch of clerks, and little else.
Fortune magazine has a lengthy article featuring DiPascali. The piece mostly recaps already-known facts about Madoff’s history and personal quirks. But there’s a bit of new information, based on reports that DiPascali is starting to do some talking in exchange for a possible plea bargain.
This is what he is alleged to be revealing:
According to a person familiar with the matter, DiPascali has no evidence that other Madoff family members were participants in the fraud. However, he is prepared to testify that he manipulated phony returns on behalf of some key Madoff investors…
It’s a long article, and I read it quickly. But it contains no indications that DiPascali has suggested that these investors-in-the-know actually knew about the Ponzi scheme aspect, or the scope of the fraud—just that they were involved in some fishy bookkeeping for their own benefit. But the part of the article that interested me most was the fact that so far, no evidence—including DePascali’s tale-telling—seems to backup the popular idea of the involvement and/or knowledge of family members.
It’s way too early to say, of course; there’s much more to learn. And whether we ever will know the truth, the whole truth, and nothing but the truth is doubtful. But I’ve been concluding for quite some time that there is a good chance that Madoff kept his fraud from family members. Whether there was enough evidence available to say that they should have known something was amiss is another story.
However, Madoff has hardly protected his family, even if he kept them in the dark about some things. And I’m not just talking about the money they themselves may have lost. Their reputations are ruined just as surely as his, whether a single bit of evidence ever emerges of their complicity or not. There are many kinds of prisons, and my guess is that they already have gotten a life sentence of sorts.
neo– I think you are right on the money (no pun intended). He has ruined the lives of his family. I suspect they will always be suspected no matter what. No one will trust them with anything. I’m certain Mrs. Madoff has only begun to experience the humiliation (which she may or may not deserve. I would go with the latter, because it is at least clear that she knew some things for at least a period of time preceding her husband’s arrest, as was shown by her withdrawal of cash and securities shortly before things blew up)
I don’t know if it hit the national news, but here in NYC, all the local network stations announced about a week ago that she was barred from the beauty salon she had been going to for years. It seems a number of other clients of the establishment were victims, and they were “uncomfortable” when she came in. I also read somewhere, that she had taken to shopping for groceries late at night — apparently she is not welcome in many places.
If somehow the courts allow her to claim their residence in Palm Beach as her home — tho’ it’s clear their primary home was the NYC penthouse — and keep it under the Florida homestead act which protects one’s primary residence from creditors in bankruptcy filings, actions to attach liens, etc. she’s REALLY going to have a tough time. The number of people in Palm Beach that he destroyed is very significant. I heard the other day that some bakery had in its window a big chocolate cake with Madoff’s head on top with knives sticking into it. Even I, a victim, find that rather gruesome and over the top. Safe to say, there will be few places whe will be welcome.
(Come to think of it, the fact that she applied for homestead status last year (or the year before) seems to be more evidence of her knowledge and complicity. Really, the fact that a man as wealthy as Madoff put all the properties that the couple bought in his wife’s name is suspect, and that is something they had been doing for years, as they acquired their various homes, boats, cars, etc. She has claimed to the court that she had some money of her own with which she bought certain big assets — such as their penthouse in NYC, and home in Florida, but when her husband had assets far exceeding some $17 million in cash and securites (which she also claims she should be able to keep), it just doesn’t pass the logic test. If she did inherit a little money — “little” being a relative description in relation to Madoff’s assets, why would he have her buy their homes? (If he bought them and just had them owned in her name, they would be subject to confiscation by receiver as they were bought w/ funds he obtained through fraud). The whole point of all of this being that it’s clear that both she and her husband were getting all their ducks in row in preparation for something for quite a while — at the very least a couple of years; well before her withdrawal of millions in cash.
Rightly under suspicion, I would say. Again, the family should be prepared for extreme scrutiny of their finances and practices as beneficiaries (which they almost certainly are) of a massive crime. The way to get out from under suspicion is active participation with the process of disgorging the proceeds from a criminal enterprise. That means that they will not be in a position to defend their rights in an adversarial process AND escape suspicion. They either end up much poorer (and humiliated by disclosure) or socially outcast (and humiliated by ongoing suspicion of criminality).
And they can thank Bernie for that.
We’ll see how it all shakes out in the end, but I bet she gets to keep a bunch of stuff and money, no matter how much or how little she was actually involved.