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Madoff right-hand man DiPascali stays in jail
2009-10-28
NEW YORK (Reuters) - Epic fraudster Bernard Madoff's longtime deputy Frank DiPascali must stay in jail at least until more is disclosed about his cooperation in the government's investigation of Wall Street's biggest investment fraud, a U.S. judge said on Wednesday. U.S. District Judge Richard Sullivan reserved decision on whether to grant motions for DiPascali's release following denial of bail in August when he pleaded guilty for his role in the fraud. Judge Sullivan said he was unconvinced by the bail requests from prosecutors and DiPascali's lawyer that he would not flee. The judge sought more details on the "quality" of DiPascali's cooperation and asked whether "this is the last saga in a decades-long scheme to defraud investors, regulators and now this court." Sullivan also said during a 50-minute hearing in Manhattan federal court: "I'm hoping for more information, getting to the truth of what happened and recovering more for the victims." DiPascali, 53, a lynchpin for prosecutors and FBI agents probing Madoff's decades-long worldwide fraud of as much as $65 billion, has been held since pleading guilty to 10 criminal charges before the same judge on August 11. "The only people he could cooperate with are in a prison in Butner or in the bottom of a swimming pool someplace," Sullivan said, referring to the federal prison where Madoff, 71, is serving his 150-year sentence. The remark was also a reference to Jeffry Picower, the billionaire philanthropist identified in a lawsuit as the biggest beneficiary of Madoff's fraud. Picower, 67, who was sued over allegations he made $7.2 billion from his investments in Madoff's funds, was found dead in his Palm Beach, Florida swimming pool on Sunday after suffering a heart attack. He had not been criminally charged. MORE SUBMISSIONS Sullivan said he would take more written submissions on DiPascali, whose lawyer said his cooperation would continue whether or not he was in jail or under house arrest. DiPascali, in gray-blue prison garb and wearing gold-rimmed glasses, leaned on his elbows in court as family members, including his four children, sat in the public seats of the courtroom. He had worked at the Madoff firm since 1975, rising through the ranks to become chief financial officer and right-hand man until the fraud collapsed on December 11 with Madoff's arrest. Prosecutors and DiPascali's lawyers had asked Sullivan to release him into house arrest with electronic monitoring on a bond of $10 million. DiPascali faces the rest of his life in prison, but hopes for leniency because of his cooperation. In court, the judge told U.S. prosecutor Marc Litt and DiPascali's lawyer Marc Mukasey that they were asking him to trust them that DiPascali would not flee. "When people start telling me to trust them, I generally watch my wallet," Sullivan said. "Until December 2008 nobody here had the slightest clue of the greatest fraud in U.S. history." Both Madoff and DiPascali admitted to lying to investigators from the U.S. Securities and Exchange Commission market regulators, which was criticized by legislators and investors for missing the massive fraud. The case is USA v DiPascali, U.S. District Court for the Southern District of New York, No. 09-00764. (Reporting by Grant McCool; Editing Bernard Orr)
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