Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, August 11, 2009

Madoff Associate Pleads Guilty

Frank DiPascali Jr., longtime associate of Bernard Madoff, pleaded guilty today to 10 criminal charges, including securities fraud, investment adviser fraud, mail and wire fraud, and conspiracy.  He admitted that he helped Madoff to defraud his customers from 1990s-2008.  DiPascali reportedly is cooperating with prosecutors.  He will not be sentenced until next year.  WSJ, Madoff Aide Pleads Guilty.

The SEC also settled charges with DiPascali today. According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, DiPascali helped generate bogus annual returns of 10 to 17 percent by fabricating backdated and fictitious trades that never occurred. The SEC further alleges that DiPascali helped Madoff cover up the fraud by preparing fake trade blotters, stock records, customer confirmations, Depository Trust Corporation (DTC) reports and other phantom books and records to substantiate the non-existent trading.

Without admitting or denying the allegations of the SEC's complaint, DiPascali has consented to a proposed partial judgment, which if entered by the court would impose a permanent injunction against DiPascali and leave the issues of disgorgement and a financial penalty to be decided at a later time.

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