Former Madoff finance chief could cut deal and reveal his accomplices

Frank DiPascali expected to plead guilty when he faces US court today

Victims of Bernard Madoff's record-breaking fraud are hopeful of a major breakthrough in the case, with the disgraced Wall Street grandee's closest lieutenant expected to plead guilty today to playing role in the $65bn (£39bn) scam.

Court papers suggest that Frank DiPascali has been helping prosecutors in an attempt to lessen his own sentence. Observers believe he could be the key to unravelling exactly how many other people were in on Madoff's fraud. Even though Madoff, pictured, is behind bars serving a 150-year prison sentence, his refusal to co-operate with the investigation means mystery still surrounds how he spun a web of deceit that took in thousands of victims across several continents.

Specifically, angry investors have been demanding to know if other members of Madoff's family were in on the fraud. Mr DiPascali's co-operation could also help the US Department of Justice build cases against a constellation of so-called "feeder funds", run by supposedly sophisticated investment managers who were actually only outsourcing clients' money to Madoff.

Mr DiPascali, 52, was a "point man" for clients calling in to the mysterious 17th-floor office in New York where Madoff Investment Securities was based. He ran a small team of employees fielding client orders, and called himself "director of options trading", but prosecutors believe no trading was ever carried out. In contrast to Madoff, he was known for his laidback style of dress, often turning up to work in jeans, but not for a laidback personality. He was introduced to Madoff a year after graduating from a Catholic high school in Queens, New York, and immediately became one of his closest colleagues. He lives more modestly than his boss – only a five-bed, five-bath house with a pool on seven acres in the New Jersey suburbs, compared to Madoff's many homes and yachts. Earlier this year, Mr DiPascali's lawyer called him "a blue-collar guy, not a Wall Street master of the universe".

So far, only Madoff himself and the small-time accountant who was meant to be auditing his books have charged over the world's biggest Ponzi scheme. Until it collapsed in December, Madoff was pretending to invest money from thousands of clients and generating steady returns of about 12 per cent a year. In fact, he was simply using cash from new investors to pay clients who cashed out. The $65bn they thought they had in their accounts simply did not exist, and many now face ruin.

John Coffee, a law professor at Columbia University, said: "If others – such as Madoff's brother Peter – were aware of either the full scale of the Ponzi scheme or substantial irregularities and they had conversations with DiPascali, they are now in big trouble. Even without knowing of the Ponzi scheme, some of the feeder funds may have had candid discussions with Mr DiPascali about their desired rates of return, which could show securities fraud on their part."

It is not yet known what charges Mr DiPascali faces, or if he has agreed or even proferred a plea bargain, but he has been questioned repeatedly by investigators. Leaked notes of his earliest interviews describe his answers as "evasive" and "incomprehensible". In a court filing on Friday, the Justice Department said Mr DiPascali would waive indictment and plead guilty at a hearing this morning, signalling to lawyers that he is co-operating.

He could be key to determining if other Madoffs broke the law. Peter Madoff, Bernard's brother, was chief compliance officer. Mark and Andrew Madoff, Bernard's sons, worked on the older, stock trading side of the business. Ruth Madoff, Bernard's wife of five decades, occasionally had offices at the firm. Bernard Madoff said when he pleaded guilty to 11 charges that he acted alone. His family deny knowledge of the fraud and any wrongdoing.

PROMOTED VIDEO
Arts and Entertainment
booksPhotographer Richard Young has been snapping celebrities at play for 40 years - but he says it wasn’t all fun and games...
News
i100
Sport
Aguero - who single-handedly has kept City's Champions League dreams alive - celebrates his dramatic late winner
footballManchester City 3 Bayern Munich 2: Argentine's late hat-rick sees home side snatch vital victory
News
Muhammad Ali pictured in better health in 2006
peopleBut he has enjoyed publicity from his alleged near-death experience
Arts and Entertainment
Tony breaks into Ian Garrett's yacht and makes a shocking discovery
TVReview: Revelations continue to make this drama a tough watch
News
news
News
ebooksNow available in paperback
News
peopleSinger tells The Independent what life is like in rehab in an exclusive video interview
News
The assumption that women are not as competent in leadership positions as men are leads to increased stress in the workplace
science... and it's down to gender stereotypes
Arts and Entertainment
Inner sanctum: Tove Jansson and friends in her studio in 1992
booksWhat was the inspiration for Finland's most famous family?
News
i100
Arts and Entertainment
Singer songwriter Bob Dylan performs on stage
films
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: Product Development - Asset Management

£Attractive: Citifocus Ltd: High calibre individual with significant product d...

Citifocus Ltd: Credit Ratings - Banking Sector

£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...

Citifocus Ltd: Economic Crime Investigation & Analysis

£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...

Citifocus Ltd: Snr Risk Analyst - Capital & Liquidity

£Attractive: Citifocus Ltd: High calibre individual with superior academics an...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital