Bernard Madoff planned every detail of his firm’s demise in the days before he was arrested five years ago Wednesday to avoid being marched past his 200 employees in handcuffs, the con man’s former finance chief told a jury.
Madoff, in papers spread across his desk, wrote a series of names and dates in a schedule of events leading up to the exact day his $17 billion Ponzi scheme would finally come to light, Frank DiPascali, the former executive, testified Wednesday in Manhattan federal court in the trial of five ex-colleagues.
DiPascali, who joined Madoff’s company as a researcher in 1975, when he was 19 years old, said he learned of the plan during a private meeting on about Dec. 3 in the con man’s office, after Madoff had been “staring out the window all day.”
“He turned to me and said, crying, ‘I’m at the end of my rope,’” DiPascali told a jury. When DiPascali expressed confusion, Madoff shouted that he didn’t have any more money and that the operation was “a fraud.”
DiPascali is the highest-ranking former Madoff executive to testify in the first criminal trial stemming from the scheme, which was exposed after Madoff’s arrest by federal authorities at his Manhattan apartment on Dec. 11, 2008. Five of his former employees are on trial in federal court in Manhattan, accused of aiding his fraud for decades and getting rich in the process.
Madoff, 75, is serving a 150-year prison sentence in North Carolina.
At the meeting, Madoff told DiPascali to close his office door before revealing the fraud they’d worked on together for decades was actually a Ponzi scheme that would soon collapse, DiPascali said. The former finance chief said that while he knew he’d been lying to customers and regulators for years about fake trades, he didn’t know the firm was out of money.
“Do you have any money?” Madoff asked DiPascali, according to his testimony. The con man then asked DiPascali if his wife had money, which was his way of asking if she’d be all right when he was in jail, DiPascali said.
Madoff told him his own wife, Ruth, would be taken care of because she had $30 million of her own money saved, as well as houses that were in her name, DiPascali said.
Asked how he responded to the news, DiPascali said, “My knees were buckling.” He said he realized, “I was going to jail.”
Madoff’s fraud collapsed faster than he expected, according to DiPascali’s testimony. The con man planned for his money to run out just before the holidays, giving him until at least Dec. 26 to “explain to his family that he was busted,” DiPascali said.
“He also said, ‘I don’t want to ruin anyone’s Christmas,’” DiPascali testified.
DiPascali said he knew Madoff had gone off his schedule on the morning of Dec. 10, when Ruth Madoff came into the office on the morning of the company’s annual holiday party to leave presents on the desks of some employees, as she did every year.
“He told her, which was not in the game plan,” DiPascali said. “She looked catatonic” with red eyes “and couldn’t even look at me.”
He said he followed her into an elevator and “told her it was going to be OK.”
In the week before his arrest, Madoff confessed to his two sons, Mark and Andrew, who worked for the firm, telling them he used money from new investors to pay off earlier ones.
Madoff told the same story to two FBI agents who showed up at his apartment the morning of Dec. 11, 2008. Special Agent Theodore Cacioppi testified at the trial in October that he assembled a team of agents at 4:30 a.m. after receiving a late-night call from his supervisor alerting him that a massive fraud had been uncovered.
“We’re here to find out if there’s an innocent explanation,” Cacioppi told Madoff. Madoff, with Ruth present, responded that there wasn’t such an explanation and that he expected to go to jail. Cacioppi told the jury he interviewed Madoff for about an hour before taking him away.
Mark Madoff, the con man’s elder son, committed suicide by hanging himself in the living room of his Manhattan apartment on Dec. 11, 2010 — exactly two years after his father’s arrest. Neither he nor his brother Andrew was ever charged with a crime.
Before Madoff’s tearful confession, DiPascali said he always thought Madoff had customer cash invested somewhere else, such as in real estate or French banks, he said.