Saying ‘It Was All Fake,’ Madoff’s|CFO Pleads Guilty to 10 Felonies

NEW YORK (CN) - Bernie Madoff's CFO pleaded guilty Tuesday to 10 felony counts, including conspiracy, securities fraud and falsifying records, for his role in helping Madoff pull off his $64 billion Ponzi scheme. "It was all fake. It was all fictitious," Frank DiPascali Jr. said in court.

DiPascali, 52, of Bridgewater, N.J., said that from the early 1990s until December 2008, he helped Madoff and others "carry out a fraud" that cost investors more than $64 billion.

"It was wrong, and I knew it was wrong at the time," DiPascali said, according to Bloomberg News.

Madoff pleaded guilty in March and was sentenced to 150 years in prison.

The SEC claims DiPascali helped Madoff cover up the sham with fake trade blotters, stock records, customer confirmations, Depository Trust reports, and other counterfeit books and records to support phantom trading.

According to the SEC complaint, the phony books and records were kept separate from the records at Bernard L. Madoff Investment Securities (BMIS).

When funds were sent to BMIS for investing, they were allegedly deposited or wired into a bank account at JPMorgan Chase that wasn't connected to BMIS.

The SEC claims there were thousands of advisory accounts that would have required SEC registration, but Madoff, DiPascali and others presented only a shifting subset of 10 to 25 accounts to the agency.

DiPascali prepared phony documents to give regulators information about only these accounts to conceal the true size of the advisory business, the complaint states.

DiPascali also was accused of misappropriating investor money by setting up an account at BMIS for himself in 2002, named after his fishing yacht, Dorothy Jo.

DiPascali withdrew more than $5 million from the account between 2002 and 2008 for personal expenses, including a new boat, the SEC says. The withdrawals came directly from investors, and investor money paid DiPascali's salary and bonuses each year, the SEC says.

DiPascali joined BMIS as a clerk at age 19 after dropping out of college, according to the complaint. He was eventually put in charge of day-to-day operations on the now-infamous 17th floor of BMIS.

As Madoff increasingly talked about his fear of being found out, DiPascali began preparing for regulatory crackdowns - particularly the SEC's examinations in 2004 and 2005 and its investigation in 2006, the government says.

In response to the government's criminal information, DiPascali pleaded guilty to one count each of conspiracy, securities fraud, investment adviser fraud, falsifying books and records of a broker dealer, falsifying books and records of an investment adviser, mail fraud, wire fraud, international money laundering, perjury and federal income tax evasion.

He faces up to 125 years in prison, along with forfeiture, restitution and criminal fines.

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