NEW YORK, N.Y. – The former right-hand man of disgraced financier Bernard Madoff told a jury Tuesday that a crying Madoff revealed to him 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 Madoff, a former Nasdaq chairman, had spent staring out his window.
“Crying, he said: ‘I’m at the end of my rope. I have no more money,'” DiPascali told jurors in federal court on the eve of the five-year anniversary of Madoff’s arrest.
He said he asked his boss what he meant.
“I don’t have any more goddamned money! Don’t you get it?” DiPascali said Madoff responded.
As DiPascali testified, his voice rose and accelerated so fast that the judge directed him to slow down and speak more softly.
DiPascali said he continued challenging Madoff, asking what he was talking about and telling him the firm could meet the redemption demands of investors.
“That’s when he just said: ‘The whole goddamn thing is a fraud. I don’t have any money. Don’t you understand what I’m talking about to you? Don’t you get it?'” DiPascali recalled, saying his own knees were buckling at the time.
He said he spent several hours listening to a delirious, incoherent and rambling Madoff recount a detailed plan to reveal the true nature of a private investment business that had blown nearly $20 billion entrusted to him by thousands of investors, including charities, Hollywood actors and producers and the owners of the New York Mets.
DiPascali said Madoff asked repeatedly if DiPascali’s wife had money and would be OK and said his own wife, Ruth Madoff, had money from her family that was untainted by the business. Madoff predicted that his brother Peter Madoff, a lawyer, “is probably going to get disbarred, but, hey, I’m not going to worry about that.”
Peter Madoff pleaded guilty last year to falsifying documents and lying to regulators as part of the Ponzi scheme and is serving a 10-year prison sentence.
Bernard Madoff, just days after sending out statements implying the money he managed had more than tripled since he began investing decades earlier, 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 can’t let that happen. I want to do this on my terms.”
DiPascali said Madoff’s revelations hit him hard and they realized “the whole shootin’ 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 he said began after the stock market crashed in 1987. He’s co-operating with the government, hoping he wins 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 apartment by FBI agents after he invited them in and acknowledged knowing why they were there.
An FBI agent wrote in a criminal complaint lodged against Madoff: “After I stated, ‘We’re here to find out if there’s an innocent explanation,’ Madoff stated, ‘There is no innocent explanation.'”
Several months later, Madoff 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.