NEW YORK (CBSNewYork/AP) — The former right-hand man of disgraced financier Bernard Madoff told a New York City jury Tuesday that a crying Madoff revealed to him that his financial empire was a gigantic fraud just before the rest of the world learned the truth nearly five years ago.
Frank DiPascali, Madoff’s former lieutenant and the government’s star witness at the trial of five former Madoff employees, said Madoff called him into his Manhattan office and told him to close the door behind him on a day that Madoff, the former Nasdaq chairman, had spent staring out his window.
“Crying, he said: ‘I’m at the end of my rope. I have no money,'” DiPascali told jurors in federal court on the eve of the five-year anniversary of Madoff’s arrest.
When it seemed DiPascali did not understand, Madoff said: “I don’t have any more goddamned money! Don’t you get it?” DiPascali recalled, his own voice rising and accelerating so fast that the judge had to direct him to slow down.
DiPascali said he spent several hours in the office listening to Madoff recount his detailed plan to reveal the true nature of a private investment business that had blown nearly $20 billion of money entrusted to him by thousands of investors, including charities, Hollywood actors and producers and the owners of the Mets baseball team.
Just days after sending out statements implying that the money he managed had more than tripled in value since he began investing decades earlier, Madoff revealed his biggest worry amid his description of “a little game plan” to reveal his house of cards, the witness testified.
“One of the last things I want is to go out of this office in handcuffs in front of all of the employees,” DiPascali said Madoff told him. “I want to do this on my terms.”
DiPascali said Madoff’s revelations hit him hard, making him realize “the whole shooting match is going right down the toilet, and we’re all going to get arrested.”
DiPascali, 57, has been testifying for the past week about his role in fabricating trades that he said began after the stock market crashed in 1987. He is cooperating with the government in the hopes that his testimony leads to a major reduction in any prison sentence. Among those being tried are Madoff’s former longtime secretary, his director of operations, an account manager and two computer programmers.
On Dec. 11, 2008, Madoff was arrested at his Manhattan apartment by FBI agents after he invited them in and acknowledged knowing why they were there.
“After I stated, ‘We’re here to find out if there’s an innocent explanation,’ Madoff stated, ‘There is no innocent explanation,'” an FBI agent wrote in a criminal complaint lodged against Madoff five years ago.
Several months later, he pleaded guilty to fraud charges, maintained he had acted alone and was sentenced to 150 years in prison. Madoff, 75, is imprisoned in North Carolina.
DiPascali testified he always believed Madoff had investments in foreign banks and major real estate projects to cover the accounts of his investors, even as he and others in Madoff’s office created elaborate fake trading programs to fool investors, auditors and government regulators into believing lots of trading was causing their accounts to steadily grow in value. He said he knew the revelations would shock the workers, most of whom had their life savings with Madoff.
“I reminded him he had 200 some employees on the street,” DiPascali said. “Not only out of a job but broke.”
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