Frank DiPascali, Madoff Deputy Aided U.S., Dies at 58

(Bloomberg) — Frank DiPascali, the finance chief for BernardMadoffwho turned on former colleagues to cooperate with the federal government, died before he could be sentenced for his role in the biggest Ponzi scheme in U.S. history. He was 58.

He died last Thursday of lung cancer, his lawyer said.

He was grateful to have been able to make some amends by helping the government these past few years, attorney Marc Mukasey said Sunday in an e-mailed statement.

DiPascali joined Madoffs firm as a teenager, without formal finance training, before going on to assist in the $17.5 billion fraud. He was the star government witness in its prosecution of five employees ofMadoff, who is serving a 150- year sentence in federal prison. The judge in their trial assailed testimony by DiPascali, who defense lawyers said was far more culpable for the fraud than their clients.

DiPascali, who called himself Madoffs right-hand man, is a glib storyteller and an admitted and convicted perjurer, U.S. District Judge Laura Taylor Swain said in Manhattan federal court last year.

DiPascali was the highest-rankingMadoffaide to testify at the trial, the only one ever conducted on the Ponzi scheme, which collapsed after Madoffs arrest Dec. 11, 2008. The five former employees were convicted of aiding the fraud for decades and getting rich in the process. They were sentenced to between 2 and 10 years in prison.

Madoff, 77, pleaded guilty in 2009. At least seven others also pleaded guilty, including his brother PeterMadoff, who is serving a 10-year term.

Seeking Leniency

DiPascali, who faced as long as 125 years in prison at sentencing, was seeking leniency by testifying against his former colleagues, all of whom claim they were duped by him andMadoffinto believing his business was legitimate. Their lawyers claimed DiPascali was lying to win less time behind bars.

The other defendants are Joan Crupi, who managed large accounts; Annette Bongiorno, who ran the investment advisory unit; Daniel Bonventre, Madoffs ex-operations chief; computer programmer Jerome OHara, who allegedly wrote code to print millions of fake account statements and trade confirmations; and George Perez, who automated the scam as it grew rapidly in the 1990s.

Joined Firm

Frank DiPascali was born in October 1956 and attended Archbishop Molloy High School in New York City. He joined Madoffs firm in 1975, when he was 19.

DiPascali had offered several answers to the question of when he knewMadoffwas orchestrating a monumental fraud.

He told prosecutors at one point that he knew about the fake trading for as long as I could remember. Later, he testified he didnt know until 1992, the yearMadoffand his inner circle devised a wide-ranging scheme to trick the Securities and Exchange Commission about the nature of the firms trading.

DiPascali has said that, even after he discovered the trades were fake, he believedMadoffwas investing client funds in other ways, including in real estate deals and French banks.

He had also said he didnt realizeMadoffwas running a Ponzi scheme — paying investors with money from other investors — untilMadoffconfessed to him in the days before his arrest.

Perpetrate Scheme

To perpetrate the scheme, the five defendants convicted in last years trial used millions of fake trading confirmations and false account statements to trick customers into believing their money was being used to buy securities — under the direction ofMadoffand DiPascali.

No trading took place in the investment business, which collapsed whenMadoffran out of money to pay withdrawals.

DiPascali agreed with a defense lawyer during testimony last year that he had lied to several of the defendants at various times to prevent them from discovering the fraud, including when the group created fake trading records to trick regulators and auditors.

Did you consider yourself to be pretty good at fooling people? the defense lawyer asked.

Yes, DiPascali said.