BERNIE’S ‘STING’: Frank DiPascali Jr. Pleads Guilty In Madoff Case; Officials Say He Developed Phony Computer Platform That Appeared To Reflect Real Trading

In the movie “The Sting,” accomplice J.J. Singleton read from a surplus tickertape wire into a microphone to create the  impression that horse races that already were over were being run live on the radio.

J.J.’s bogus radio calls from the back room helped Henry Gondorff and Johnny Hooker fleece Doyle Lonnegan of $500,000 in an elaborate scheme.

The movie won seven Oscars.

The Securities and Exchange Commission now says Bernard Madoff had a back room of his own — and that Frank DiPascali made sure it was staffed in an elaborate bid to sustain the world’s largest Ponzi scheme should customers or regulators ever drop by unexpectedly.

“Madoff and DiPascali even went so far as to develop a phantom computer trading platform that would appear to reflect real trading,” the SEC said. “In the event of a surprise visit from outsiders requesting to observe real-time trading activity, one BMIS employee was to enter trades on a computer screen and another employee was to go into an office nearby and play the role of a counterparty trader in Europe.”

The SEC filed numerous civil charges for securities fraud against DiPascali, Madoff’s chief financial officer, yesterday.

And DiPascali, 52, pleaded guilty yesterday in New York to numerous criminal charges brought in a separate complaint by the FBI, the IRS and other agencies. He faces up to 125 years in prison.

DiPascali pleased guilty to conspiracy, securities fraud, investment adviser fraud, falsifying records of a broker-dealer, falsifying records of an investment adviser, mail fraud, wire fraud, international money laundering, perjury and attempting to evade federal income taxes.

Unlike Gondorff, Hooker, Singleton and other fictional characters in “The Sting,” it did not pay in the end to be an accomplice of Madoff, prosecutors said.

“[DiPascali] also subject to mandatory restitution and faces criminal fines up to twice the gross gain or loss derived from the offense,” prosecutors said. “Additionally, the criminal information to which DiPascali pleaded guilty includes forfeiture allegations that would require DiPascali to forfeit the proceeds of the charged crimes, as well as all property involved in the money laundering offenses and all property traceable to such property.”

In the SEC case, the agency said DiPascali “helped generate bogus annual returns of 10 to 17 percent by fabricating backdated and fictitious trades that never occurred.”

To sustain the deception, which dated back to the 1980s, “DiPascali helped Madoff cover up the fraud by preparing fake trade blotters, stock records, customer confirmations, Depository Trust Corporation (DTC) reports and other phantom books and records to substantiate the non-existent trading.”

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One Response to “BERNIE’S ‘STING’: Frank DiPascali Jr. Pleads Guilty In Madoff Case; Officials Say He Developed Phony Computer Platform That Appeared To Reflect Real Trading”

  1. Expect more shoes to drop in the coming months. All of the players have not been charged yet, and this is far from over. I think the Feds have a canary, and the canary is singing and singing and singing.

      (Quote)

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