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Ex-Madoff CFO pleads guilty in court in NYC

August 12, 2009|Zachary A. Goldfarb | Goldfarb writes for the Washington Post.

Bernard Madoff's right-hand man pleaded guilty Tuesday to fraud, conspiracy and other criminal charges, making him the first of Madoff's employees to confess to helping the infamous money manager orchestrate a Ponzi scheme worth up to $65 billion.

Frank DiPascali Jr., who was the chief financial officer of Madoff's firm and oversaw his investment strategy, faces 10 criminal charges that could send him to prison for 125 years.

Madoff pleaded guilty in March and was sentenced to 150 years in prison.

DiPascali's guilty plea is part of a mix of criminal and civil cases that federal and state regulators have filed to go after firms and people who may have had a hand in the largest Ponzi scheme in history.

The targets of these cases have ranged from Madoff and his associates to hedge funds that funneled money to him.

DiPascali said he was cooperating with the government, which is trying to locate billions of dollars of fraud money and figure out who else was in on it. Madoff has reportedly not cooperated with that probe.

"From the early 1990s until December 2008, I helped Bernie Madoff and others carry out a fraud," DiPascali told the court, according to Bloomberg News.

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

DiPascali apologized to victims of the fraud, his family and the government.

"I know my apology means almost nothing. But I hope my actions going forward with the government will mean something," he said.

Also on Tuesday, DiPascali agreed to settle Securities and Exchange Commission charges that he was a key Madoff "lieutenant" who helped generate false annual returns of 10% to 17% by fabricating backdated and fictitious trades.

The complaint alleges that he helped prepare fake trade statements, customer confirmations and other records.

Madoff's auditor, David Friehling, pleaded not guilty to criminal charges last month. But he also waived his right to indictment by a grand jury, signaling that a guilty plea may still be in the works.

Prosecutors are investigating others who may have committed wrongdoing in connection with the Ponzi scheme.

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