Madoff’s ‘Street-Smart’ Aide DiPascali Was Investors’ Go-To Guy

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Madoff’s ‘Street-Smart’ Aide DiPascali Was Investors’ Go-To Guy

By David Voreacos, David Glovin and Patricia Hurtado

Jan. 16 (Bloomberg) -- Frank DiPascali Jr. joined Bernard Madoff’s firm a year after graduating from a Catholic high school in Queens, New York. Over a 33-year career, he rose through the ranks, eventually calling himself chief financial officer.

For investors like Tim Murray of Minnesota, DiPascali was a “street-smart New Yorker” who fielded calls about the millions of dollars he entrusted to the firm.

“To a Madoff customer with a discretionary account, he is the guy,” said Murray, 57, a real-estate developer. “There is nobody else.”

Now, U.S. prosecutors and regulators are probing whether DiPascali, 52, played a role in an alleged $50 billion Ponzi scheme that led to Madoff’s arrest on Dec. 11, people familiar with the matter said. Victims include banks, hedge funds, charities and wealthy investors such as director Steven Spielberg and philanthropist Carl Shapiro. Madoff, who hasn’t responded to the charge, is under house arrest at his New York apartment.

Madoff often told investors that options trading was a key to his success. DiPascali, who is not charged, became director of options in 1986 at the firm and CFO in 1996, according to a resume he prepared in 2002.

“Mr. DiPascali is a blue-collar guy, not a Wall Street master of the universe,” said his attorney Marc Mukasey, a former federal prosecutor now at Bracewell & Giuliani LLP in New York. “He is devastated by the losses to investors.”

DiPascali, who grew up in the middle-class enclave of Howard Beach in Queens, now lives in suburban Bridgewater, New Jersey. He and his wife have raised four children. They live in a five-bedroom, five-bathroom house with a pool and cabana on seven wooded acres. They have two black Mercedes vehicles and a 61-foot boat built by Viking Yacht Co.

Hockey Dad

DiPascali has been active in the community, coaching hockey, sponsoring the local baseball program and seeking an appointment to the Bridgewater school board in December 2002.

For that job, DiPascali submitted a resume that said he graduated from Archbishop Molloy High School in 1974 before taking classes at St. John’s University and Brooklyn College. He joined Madoff’s firm in 1975 and spent five years as assistant to the managing director and then six years as director of research, according to the resume.

He was also a director of Madoff Securities International in London and former chairman of the Nasdaq Stock Market options committee, according to the resume. The Nasdaq never had such a group, according to spokeswoman Bethany Sherman. The Nasdaq didn’t begin trading options until 2007, she said.

DiPascali worked on the 17th floor of Madoff’s midtown Manhattan-based firm, where his boss ran an investment-adviser business that was off-limits to most employees, said a person familiar with the matter. DiPascali met often with Madoff, the person said.

SEC’s Madoff Lawsuit

Madoff conducted a Ponzi scheme through the investment- adviser business, according to a complaint filed by the Securities and Exchange Commission on Dec. 11 after Madoff’s arrest. DiPascali was interviewed briefly on Dec. 12 by the SEC.

“We are trying to sort through the facts, like everybody else,” said Mukasey, the son of U.S. Attorney General Michael Mukasey.

Marc Mukasey declined to comment on DiPascali’s possible knowledge of the fraud, his work at the firm, his personal life, and his resume.

Boyer Palmer, a retired real estate developer from a suburb of Minneapolis, Minnesota, said he spoke often with DiPascali after opening an account with Madoff in the 1980s.

A Funeral

Palmer, who is Murray’s father-in-law, said he sat next to DiPascali at the 1994 funeral of Mike Engler, an investment counselor. Murray said Engler directed many Minnesotans into accounts with Madoff. Palmer, 86, said his family accounts had grown to $12 million in value by last month, according to statements from Madoff’s firm.

Murray, who spoke with DiPascali two to three times a year about deposits or withdrawals, said he wasn’t a “typical Wall Street” adviser.

DiPascali once responded “very brusquely” to Palmer when asked about the stock market, Murray said.

“He said ‘I don’t know, Boyer; tell me what you think,’” according to Murray.

DiPascali, who often wore blue jeans to work, was harried on the day Murray dropped by the firm’s office in Manhattan. He asked Murray what had prompted the visit.

“I said, ‘Frank, we happen to do business with you,’” Murray said. “I want to see your office.”

The Office

DiPascali escorted his client through offices that Murray said were “quieter than any library I’ve been in.” Two dozen traders sat at desks spaced evenly apart, he said. No phones were ringing. DiPascali said he had 20 computer programmers working for him, according to Murray.

Murray said he once told Madoff he wanted to pay DiPascali a bonus after a year of high returns.

“Bernie said, ‘Don’t give him a bonus; he’s well paid,’” Murray said.

Joan Sinkin, 75, said she spoke with DiPascali several times after opening a Madoff account about 30 years ago.

DiPascali, who was “not warm,” gave the impression that he worked directly for Madoff, said Sinkin, who owns a condominium in Melville, New York. She asked once about her portfolio.

“He said ‘I have to report my returns to Madoff, and he’s got to be happy with it,’” said Sinkin, whose extended family had assets valued at almost $10 million by Madoff’s firm. “It was a curt remark. You got the feeling of take it or leave it. After that, I didn’t talk much to them.”

Howard Beach

The two-family home in Howard Beach where DiPascali once lived is wedged between two highways bisecting the middle-class neighborhood. It’s just blocks away from where Michael Griffith, 23 and black, was beaten in 1986 by white men after his car broke down. He was chased onto the Shore Parkway, where he was struck and killed by a car, triggering racial strife in New York.

DiPascali married a woman named JoAnne and has a sister with the same name. DiPascali and his wife bought a house in Bridgewater in 1987 and raised their children there. In 2001, DiPascali moved into the house on seven acres, which is assessed at $1.38 million. His brother-in-law, Robert Cardile, bought his former house for $400,000, according to real-estate records.

Cardile, who married another DiPascali sister, began working for Madoff in 1985, according to Financial Industry Regulatory Authority records. An investor who declined to be identified said in an interview that Cardile fielded phone calls when DiPascali wasn’t available. Cardile didn’t return a call for comment.

A contractor named Charlie the Mason is replacing the siding at DiPascali’s house with stones in a $40,000 renovation, according to township records.

A Visit

On Jan. 8, no one answered the house’s double doors, adorned with two Christmas wreaths. DiPascali, wearing sunglasses, drove up in a black Mercedes sedan and declined to comment. He wore blue jeans and a sweatshirt and appeared to speak on a mobile phone as he walked to the house.

A motorboat and red jet ski sat in the yard near the circular driveway. In front of the three-car garage were a snow blower and another black Mercedes, a sports utility vehicle, with the license plate “DOJO II.”

Six years ago, DiPascali sought an appointment to a vacant seat on the Bridgewater-Raritan Regional School District.

“My wife and I are extremely pleased with the quality of education the district is providing our four children,” DiPascali wrote in applying on Dec. 2, 2002, saying the board would face “many challenging issues” in the future.

“I am confident that the experience I have in my business career will enable me to contribute ideas that will help the Board meet these challenges,” DiPascali wrote.

The post went to someone else.

Biggest Tuna

DiPascali’s boat is registered to Dorothy-Jo Sportfishing LLC at his home address, according to BoatInfoWorld.com. Based in Monmouth Beach, New Jersey, its crew reeled in the biggest tuna, a 191-pound bluefin, during a July 2007 fishing tournament, according to the South Jersey Marina in Cape May.

The Internal Revenue Service filed a tax lien against DiPascali in January 2005 for an unpaid balance of $77,479 for the 1996 tax year. He satisfied the lien three months later, records show. An IRS spokesman said the agency couldn’t comment.

New Jersey filed an action against DiPascali in 2000 for unpaid taxes of $72,943, which he has satisfied. The New York State Tax Commission also filed an action against him in 1993 for $21,685. That lien was also later satisfied.

The case is U.S. v. Madoff, 08-mag-2735, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Voreacos in Newark, New Jersey at dvoreacos@bloomberg.net; David Glovin in New York federal court at dglovin@bloomberg.net; Patricia Hurtado in Manhattan State Supreme Courthouse, at pathurtado@bloomberg.net.

Last Updated: January 16, 2009 00:01 EST
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