Legal News

DiPascali, Madoff ?CFO,? to Plead Guilty to Criminal Charges

By Ashby Jones

UPDATE: That was fast. Not only will Madoff associate Frank DiPascali face criminal charges and waive his right to indictment by grand jury. He will plead guilty to those charges on Tuesday before U.S. District Court Judge Richard Sullivan, according to a court filing by prosecutors late Friday. It’s unclear whether the plea will be part of an agreement with prosecutors in which DiPascali will testify against other individuals.
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Kerplunk. That’s the sound of another shoe dropping in the Madoff case. Frank DiPascali, self-proclaimed chief financial officer at Bernard Madoff's investment advisory business, will be charged by the U.S. in connection with the multibillion-dollar Ponzi scheme. The announcement came Friday afternoon from the U.S. attorney’s office in Manhattan. Click here for the Notice of Intent to File and Information. Click here for the Bloomberg story; here for a feature article from the WSJ on DiPascali from January.

DiPascali has been under investigation by federal prosecutors since Madoff was arrested Dec. 11 of last year. The government's notice, signed two days ago, said that DiPascali will waive the right to an indictment.

An information is often used when a defendant agrees to admit guilt and cooperate with authorities in exchange for leniency. Prosecutors filed a similar document in March, before Madoff pleaded guilty to the charges against him.

"That means he is agreeing to plead guilty to criminal conduct in connection with the Madoff fraud," said Jacob Frenkel, a white-collar criminal defense lawyer, to Bloomberg.

Rachel Silverman, a spokeswoman for DiPascali's law firm, Bracewell & Giuliani LLP in New York, told Bloomberg the firm wouldn't comment. The firm’s Mark Mukasey has handled the matter for Dipascali in the past.

"There will be no comment from Mr. DiPascali or his lawyers," said Silverman, to Bloomberg.

For many of Madoff’s investors, DiPascali was the person they contacted regarding their investment accounts. He also supervised a group of roughly half a dozen other employees involved in taking and keeping track of client orders, according to people familiar with the company.

DiPascali, who joined Mr. Madoff's firm soon after graduating from high school in 1974, referred to himself as the “director of options trading” at Madoff’s firm. Madoff told investors DiPascali executed trades, despite the fact that since at least 1995 the firm did no actual trading for its investment clients, prosecutors say.

Full post as published by Law Blog - WSJ.com on August 07, 2009 (boomark / email).