Thursday, 2 October 2014
Last updated 30 min ago
Dec 12 2013 | 12:00pm ET
As if it had been so scripted, prosecutors at the trial of five former Bernard Madoff employees arrived at the day of his arrest on the fifth anniversary of that event.
Under questioning, Madoff finance chief Frank DiPascali described Dec. 11, 2008. Earlier, he told the jury that Madoff had alerted him a week earlier that the decades-long fraud was about to collapse. But five years ago yesterday, he said, Madoff woke him up at home.
"He said, 'Frank, the FBI is in the office with my brother,'" DiPascali testified yesterday. "I said, 'Why are you calling me?' And I threw my phone across the room." DiPascali, who worked for Madoff for 30 years and who has said it was "impossible" not to know that something was amiss at the firm, previously testified that when Madoff tearily confessed to him on Dec. 3, 2008, he knew he'd be going to jail.
Prosecutors showed the jury DiPascali's diary entry from the fateful day, Dec. 11: "Madoff Implodes."
While DiPascali has said it was "obvious" that the Madoff operation was a sham, the five employees—Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O'Hara and George Perez—have denied knowledge of the fraud. And during his days on the stand, DiPascali has said that he sought to shield the five from knowing about at least parts of the fraud. But he insisted that the five each knew that no trading of any kind was going on, and that each did their part to hide that fact from investors and regulators.
DiPascali said he went to the office later on the 11th to find it crawling with "all sorts of regulators and federal authorities," to whom he lied. He also testified that he heard someone in the office "scream out" when word of Madoff's arrest that day appeared on television.
Perez's lawyer, Larry Krantz, had the first crack at cross-examining DiPascali, the government's star witness. Krantz pointed to several inconsistencies between DiPascali's current testimony and previous sworn statements, suggesting that he lied even at his 2009 plea hearing.
"Is it fair to say you became very good at conning people?" Krantz asked.
"I never took a survey," DiPascali responded.
At one point, Krantz asked, "How did it feel to commit perjury before the SEC?" DiPascali conceded that it "did not feel wonderful."
DiPascali also sought to explain the difference between his earlier statement that Madoff's business had been legitimate for the first 10 years or so after he began working there, and his testimony at trial that bogus trading went on "for as long as I could remember." He said that his views about how Madoff's Ponzi scheme worked have evolved since he pleaded guilty.
DiPascali also said that he had a "moral transformation" since the scheme fell apart, and that, "As I sit here today, I undoubtedly consider myself to be an honest man."
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
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