Wall Street financier Bernard Madoff arriving at federal court on March 12, 2009.
(Photo: Timothy A. Clary, AFP/Getty Images)
NEW YORK - Five years after Ponzi scheme mastermind Bernard Madoff's arrest, his claim that he alone was responsible for the more than $17.3 billion fraud is being demolished in the conspiracy trial of five former employees charged with helping him.
During five days of testimony, star prosecution witness Frank DiPascali has implicated his former co-workers in fabricating decades of arbitrarily backdated trading records and gains, crafting bogus financial documents to fool auditors and other alleged wrongdoing - all while collecting millions of dollars in salaries and company perks.
The portrayal by the former Madoff finance lieutenant showed that the scam that vaporized investments, savings and plans of thousands of ordinary investors, celebrities, charities and others was so intricate, it required willing or unwitting record alterations and other work from dozens of employees.
Wednesday marks the five-year anniversary of the collapse of the scam that exploded on front pages, broadcasts and electronic postings, instantly transforming Madoff from Wall Street titan to international pariah.
The defendants - former Madoff assistant Annette Bongiorno; Daniel Bonventre, the firm's ex-operations chief; financial aide JoAnn Crupi, and former computer programmers Jerome O'Hara and George Perez - have maintained they didn't know their actions were wrong and insisted they were hoodwinked by Madoff.
In new testimony on the eve of the scam's collapse, DiPascali said O'Hara and Perez sought payment in diamonds after announcing in 2006 they were "uncomfortable" with continuing to produce the falsified records that successfully deceived four sets of auditors in two years.
They delivered the request after declaring, "they didn't want their fingerprints on this crap any longer," said DiPascali, who pleaded guilty and cooperated with prosecutors in hopes of winning a lenient sentence.
"Where am I gonna get a bag of diamonds?" DiPascali said he snapped in reply.
Instead, testifying that a "belligerent" Madoff told him to do whatever necessary to quell the revolt, DiPascali said he gave O'Hara and Perez a "fairly substantial percentage increase" to their salaries. The pay hikes, on top of previous $100,000 bonuses the programmers got for their efforts, defused the crisis, and the fraud rolled on, DiPascali testified.
The payments weren't unusual. Madoff gave him $800,000 from scam proceeds to finance construction of a more than $2 million New Jersey home, admitted DiPascali. He said he got millions more in ill-gotten funds to buy a series of ever-bigger boats - culminating with a 61-foot sport fisherman yacht that was ultimately seized by federal marshals.
Defense lawyers are expected grill the ex-Madoff aide later this week in cross-examination.
But Madoff, the now 75-year-old fraud mastermind - who DiPascali said wept as he confessed he was out of money five years ago - will have to wait for trial updates. He's serving a 150-year prison term in a North Carolina federal lockup.