US & World

Madoff's ex-finance chief released on bail in NYC

This court drawing shows Frank DiPascali (C), Bernard Madoff's right-hand man, taking the oath before being charged at the New York Federal court on August 11, 2009.
This court drawing shows Frank DiPascali (C), Bernard Madoff's right-hand man, taking the oath before being charged at the New York Federal court on August 11, 2009.
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The former finance chief for jailed financier Bernard Madoff was released on $10 million bail Tuesday, months after he admitted his role in an epic fraud that cost thousands of investors billions of dollars and agreed to cooperate with investigators.

Frank DiPascali, 53, left U.S. District Court in Manhattan without speaking to reporters after meeting the terms of a bail package that a judge had set in February.

DiPascali pleaded guilty in August to helping with Madoff's multi-decade Ponzi scheme until it collapsed in late 2008, when Madoff revealed to his sons that his private investment business was a fraud and they notified the FBI.

DiPascali walked in front of his lawyer Marc Mukasey as he left the courthouse. Mukasey and prosecutors have said DiPascali has provided substantial information that contributed to the arrests of two computer programmers for the firm and Madoff's longtime auditor.

Madoff, 72, is serving a 150-year prison term after admitting that his secretive investment advisory service at Bernard L. Madoff Investment Securities never bought any securities. Instead, he used new investments to pay returns to existing clients.

DiPascali's cooperation has delayed his sentencing on his guilty plea to securities fraud, money laundering and other charges that carry potential penalties of up to 125 years in prison.

"I was loyal to him. I ended up being loyal to a terrible, terrible fault," DePascali said during the plea.

DiPascali began working for Madoff in 1975, just after he finished high school. He has said he became aware of the fraud by the 1980s or early 1990s.

After his plea, U.S. District Judge Richard Sullivan twice turned down bail packages that were arranged for DiPascali and were supported by prosecutors. He call DiPascali's role in the fraud "crucial" and the potential sentence "astronomical." He asked for proof that DiPascali's cooperation had been significant.

He agreed to the $10 million bail in February but ordered that DiPascali remain under house arrest after his release and required that he and his wife forfeit all family assets except for an amount less than $300,000 to be agreed upon by the government, the defendant and the judge.

The government filed papers in April saying DiPascali's wife could keep $178,000 after the family gave up assets estimated to be worth more than $6 million. The government said the sale of three cars and a yacht alone totaled nearly $1 million.

It was unclear where DiPascali was headed Tuesday. In January, he and his wife, Joanne, agreed to the sale and forfeiture of their Bridgewater, N.J., home, which is being prepared for its marketing and sale.

Items also surrendered by the couple included a Jet Ski, two motorcycles, two minibikes, a scooter and a snow blower, along with watches and jewelry.

Sullivan has asked prosecutors to notify him by letter before Nov. 17 whether DiPascali's cooperation has concluded and whether the parties are prepared to proceed with sentencing.

In a May 14 letter to the judge, prosecutors said DiPascali's cooperation "remains active and is ongoing."

It confirmed that DiPascali's cooperation had been partly responsible for the charges brought against Madoff's former director of operations and the two computer programmers. The government said it expects to call DiPascali as a witness should those cases proceed to trial.

The government redacted several paragraphs from the letter, saying disclosure of all its parts would "unfairly prejudice subjects of the investigation who have not been indicted."

Prosecutors have said they expect to request leniency at sentencing in return for the cooperation.

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