Ex-Madoff lieutenant tells of his rise and fall

NEW YORK — Until this week, relatively little was known publicly about Frank DiPascali, the former finance chief for Ponzi scheme architect Bernard Madoff.

But testifying as the star prosecution witness against five former co-workers as the fifth anniversary of the scam's collapse approaches, DiPascali, 57, has started filling in some of the blanks in his college dropout-to-financial-world-millionaire background.

On the surface, the two might seem an unlikely match. Before his downfall, Madoff was a former Nasdaq chairman and Wall Street eminence. The Brooklyn-born DiPascali graduated from Archbishop Molloy High School in Queens, the New York City borough where he grew up. He dropped out of nearby St. John's University after one semester.

STAR WITNESS: DiPascali begins testimony

His only work experience before joining Madoff in 1975 consisted of menial summer jobs at another Wall Street company and making pickups and deliveries for the Howard Beach, Queens laundry service run by the father of next-door neighbor Annette Bongiorno.

While working as Madoff's executive assistant, Bongiorno got DiPascali the job interview that led to his hiring. Nearly 40 years later, they face off across a Manhattan courtroom as DiPascali testifies against her and four others accused of knowingly aiding Madoff and profiting from the scam that siphoned more than $17 billion from thousands of investors.

Recounting the job interview for jurors on Monday, DiPascali said Peter Madoff, his ex-boss's younger brother and business partner, "grilled me on a bunch of simplistic mathematical equations."

"I aced it, and they gave me the job," said DiPascali, speaking in a gravelly New York accent and sporting a light gray suit, red patterned tie and white shirt for his first day on the witness stand. "They liked me, and they were doing Annette a favor."

At first, he worked for the younger Madoff writing "book reports" — summaries of Securities and Exchange Commission reports filed by ! companies whose stocks the firm traded. But, telling jurors that work was "boring," DiPascali during the early 1980s angled for a role on the Madoff firm's trading desk.

He passed the stockbroker exam in 1986 and eventually got his own trading book, the group of stocks he focused on buying and selling. DiPascali went on to learn about options trading from two office colleagues. With that knowledge DiPascali said he was entrusted with handling the accounts of several wealthy Madoff friends and clients, including New York Mets owner Fred Wilpon and his relatives.

In 1987 Bernard Madoff tapped DiPascali as quasi-general contractor for the growing firm's move from Wall Street to larger offices in the Midtown Manhattan tower known as the Lipstick Building for its distinctive shape. Telling jurors he knew the office layout and trading desk setup his boss wanted, DiPascali said he relished his growing work role and responsibility.

Now more established at work, he and wife Joanne, who'd wed in 1984, left Queens for suburban New Jersey. The couple raised four children and ultimately lived in a five-bedroom, 6½-bathroom home in Bridgewater, where recent U.S. Census Bureau data reported median income of $113,910.

Growing wealth also brought them a 61-foot Viking yacht named Dorothy Jo, a 17-foot Boston Whaler runabout and three luxury cars.

But DiPascali admitted to jurors he'd known since the late 1980s-early 1990s that Madoff's operation was a long-running scam with none of the sophisticated trading promised to clients. Instead, money from some clients was used to pay others.

"Did you know you were committing fraud?" asked Assistant U.S. Attorney John Zach during Monday's questioning.

"Yes," said DiPascali.

He now faces up to 125 years in prison, a sentence he hopes to shorten via his cooperation with prosecutors. The fancy home and boats were forfeited, leaving him with nothing "except my clothing." DiPascali told jurors.

When he pleaded guilty to conspirac! y, fraud,! perjury, tax evasion and other charges in 2009, DiPascali apologized and said he hoped his work aiding prosecutors to uncover all facets of the scam would "bring some small measure of comfort to those who have been harmed."

It's unknown whether many of the thousands victimized by the scam would agree.

Laurence Leif, a former client who opposed bail for DiPascali, wrote in a 2009 letter that Madoff's ex-lieutenant "was the INSTRUMENT for taking my life away."

"Whatever he tells the authorities will not help the victims in any way," wrote Leif.