Madoff employee testifies on office
Company’s inner workings detailed
NEW YORK — The modest office at110 Wall Street didn’t look special, but it was the breeding ground of Bernard Madoff’s $17 billion Ponzi scheme, says longtime employee Frank DiPascali.
Madoff “would very loudly proclaim” that he had made a killing on an investment in Europe, DiPascali once told the FBI. He later began to suspect the words were calculated to give the impression the business was “somehow backed up by his deals and investments overseas.”
Whether Madoff’s inner circle actually believed that lie has become central to a trial of five former Madoff employees in federal court in Manhattan.
DiPascali, the government’s star witness, took the stand Monday. He had started working for Madoff in the mid-1970s, and he began his testimony, which is expected to last for days, by discussing how business was done then.
He served as a utility player in the firm.
“Even though I got yelled at lot, I wandered into the trading room,” he said Monday. “It was virtually impossible not to know what was happening.”
DiPascali described the trading scene in the late 1970s and early 1980s — when the firm still did legitimate business — as bustling, busy and fun. But
things changed when the Madoffs moved uptown to fancy new offices in a Third Avenue skyscraper known as the “lipstick building.”
When the stock market crashed in 1987, DiPascali said, Madoff asked him to fabricate some trade numbers. DiPascali testified Monday that some of the employees on trial knew about it, because when trades were happening, you could hear them — they were loud transactions.
Part of DiPascali’s behindthe-scenes account was previewed last year in sections of FBI reports that were turned over to the defense. The reports, based on initial interviews of DiPascali, at times appear to support the contention that the defendants were unwitting dupes led astray by a devious boss.
But the reports also suggest the five had doubts about Madoff and his investment wizardry. DiPascali says two became convinced it was all a scam — and even confronted Madoff about it — but ultimately did nothing to stop it.
Defense attorneys have al- ready attacked DiPascali’s credibility, calling him an equal partner in crime with Madoff.
“The evidence will show DiPascali is a pathological liar, and the government’s case relies on you believing DiPascali,” Andrew Frisch said in opening statements. “And now, instead of Madoff, DiPascali’s bosses are the government lawyers at this table.”
Madoff, 75, admitted that accounts he had told investors were worth nearly $68 billion actually held only a few hundred million dollars. Hepleaded guilty to fraud charges and was sentenced to a 150-year prison term in Butner, N.C.