NEW YORK (CBSNewYork) — The cross-examination of the government’s star witness in the trial of five of Bernard Madoff‘s former empoyees has given the jury new insight into the way the disgraced financier ran his massive Ponzi scheme and how some employees were kept in the dark about it.
As WCBS 880’s Irene Cornell reported, Frank DiPascali, Madoff’s right-hand man for 33 years, testified that he used a variety of cover stories in ordering staff members to process nonexistent trades, including that the trading was being done in Europe. DiPascali also would tell workers, “Bernie’s a little crazy, but this is the way he wants it done,” he testified Thursday in Manhattan.
DiPascali said his job involved lying on a daily basis to customers, regulators and employees.
“You made a lot of money with your lies,” said Larry Krantz, one of the defense attorneys in the case.
DiPascali admitted he panicked when Madoff’s $17 billion scheme collapsed.
“I was catatonic,” he testified.
As Madoff’s chief financial officer, DiPascali said he couldn’t claim he didn’t know what was going on — he was right in the middle of the fraud. So he set out to cut a cooperation agreement with prosecutors that has made him the government’s key witness.
DiPascali pleaded guilty in 2009 to 10 counts, including conspiracy, fraud and money laundering, and is also expected to testify at the trial.
Krantz argued DiPascali was so desperate to strike a deal that he cast his net as wide as possible and, in the process, falsely accused the two computer programmers who prosecutors say designed a special program that supported the fraud.
DiPascali, 57, insisted he was telling the truth, knowing if he didn’t, he would spend the rest of his life in prison.
His guilty plea has cost him all his worldly possessions — his $7 million-a-year earnings, his home, the $790,000 fishing boat Madoff bought for him, the family jewelry and car, which were all seized by the government.
When he was asked if he won the lottery, where would the money go, DiPascali replied: “To the government.”
Prosecutors have described the defendants as “necessary players” in Madoff’s scheme.
They allege that Annette Bongiorno and account manager JoAnn Crupi used old stock tables to fabricate account statements and other fake records intended to dupe clients by showing steady returns even during economic downturns; that computer programmers Jerome O’Hara and George Perez developed a software program that automated the scheme; and that Daniel Bonventre, director of operations for investments, kept three separate books on the business designed to fool the Securities and Exchange Commission, banks or anyone else who examined them.
The defendants also rewarded themselves with tens of millions of dollars in salary and bonuses from a “slush fund” of stolen money, prosecutors say.
The defendants have denied the charges.
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