Madoff Relied on Key Deputy, Stationery to Hide Scam

Madoff Relied on Key Deputy, Stationery to Hide Scam - 8/12/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Madoff Relied on Key Deputy, Stationery to Hide Scam
David Scheer and Joshua Gallu

Bloomberg. August 12, 2009
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EXCERPT: Bernard Madoff used a random-number generator, old stationery, a “phantom” trading platform and an aging computer to hide for decades the world’s biggest Ponzi scheme, U.S. regulators said in claims against the person they called his “key lieutenant,” Frank DiPascali. An uncontested lawsuit filed yesterday against DiPascali includes the Securities and Exchange Commission’s most detailed account yet of how Madoff, 71, concealed a fraud leading to more than $64 billion in investor losses. DiPascali, 52, and employees at Madoff’s firm spent “significant time and effort” preparing for inquiries from authorities or investors, the complaint says, without identifying any conspirators. “DiPascali and Madoff ran an extraordinary and massive counterfeiting operation that concealed their fraud from investors and regulators,” the SEC’s enforcement chief Robert Khuzami, said in a statement. The SEC is taking heat from lawmakers and investors over its failure to catch the fraud after years of warnings. The agency is overhauling its enforcement unit and how it screens tips while awaiting release of Inspector General David Kotz’s internal examination of the handling of Madoff’s New York firm before his scheme collapsed in December. “It certainly does help the SEC’s case in the public eye to indicate the degree of fairly sophisticated subterfuge, and show that they weren’t just a bunch of bumblers,” said James Cox, a securities law professor at Duke University in Durham, North Carolina. Madoff Report Awaited Lawmakers including Paul Kanjorski, a Pennsylvania Democrat, have sought Kotz’s report as soon as possible as they overhaul financial regulation. The report, scheduled to be published this month, may provide the “definitive” explanation of the SEC’s handling of Madoff, Cox said. DiPascali, who didn’t complete college, joined Bernard L. Madoff Investment Securities LLC as a 19-year-old research clerk in 1975 and later won promotions.

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