Madoff's Right-Hand Man: Scheme Was Obvious To Everyone

As the trial of five of Bernard Madoff's closest employees entered the seventh week, jurors heard testimony from the government's star witness, Madoff's former right-hand man, that Madoff's scheme was an obvious scam and that "it was virtually impossible not to know what was happening."  The "Madoff Five," as they have been referred to, consist of long-time employees Daniel Bonventre, the firm's back-office director of operations, Annette Bongiorno, an account manager and supervisor, and Joann Crupi, an account manager, as well as computer programmers Jerome O'Hara and George Perez.  Each of the five face a series of charges, including conspiracy to defraud, securities fraud and falsifying records of a broker-dealer, which could result in a potential prison term of several decades.  

Frank DiPascali, the former chief financial officer of Bernard L. Madoff Investment Securities, took the stand in the latest part of his extensive cooperation with the government since his arrest and subsequent guilty plea shortly after Madoff's scheme was exposed.  Under questioning from Assistant U.S Attorney John Zach, DiPascali indicated that multiple red flags were apparent after he began working for BLMIS in 1975 fresh out of high school.  DiPascali explained how employees worked to retrieve historical stock price movements to create investor account statements that seemingly displayed constant and steady returns.  While stopping short of accusing the Madoff Five of direct complicity in the scheme, he has attempted to illustrate the overwhelming signs that the employees had to have known of the fraud.  

Defense attorneys have openly scoffed at DiPascali's credibility, touting his extensive cooperation with the government.  Indeed, by DiPascali's own admission, he has spent hundreds of hours trying to explain the scheme to criminal and civil authorities.  In opening statements, DiPascali was branded as a compulsive liar who would say anything in the face of a potential 125-year sentence.  Defense attorneys will have the chance to cross-examine DiPascali following his direct testimony.

A copy of the indictment against the Madoff Five is here.

A copy of the indictment against DiPascali is here.