DiPascali, who pleaded guilty to $17.3 billion fraud and hopes to reduce the 125-year maximum prison term he faces by cooperating with the government, has helped prosecutors give Manhattan federal court jurors a firsthand look into how the scheme operated. He has also provided details of alleged wrongdoing by the defendants.
They include Annette Bongiorno, Madoff's former administrative assistant; ex-operations manager Daniel Bonventre; JoAnn Crupi, who helped supervise a key Madoff bank account, and former computer programmers George Perez and Jerome O'Hara.
The former co-workers have maintained they were unaware of the scam and were among the thousands of ordinary investors, celebrities, charities and others hoodwinked by Madoff.
Although the disgraced financier's ex-lieutenant has testified he lied repeatedly to regulators, auditors — and even the defendants — DiPascali's overview of the fraud's many intricate details and players might not be easily replicated by other prosecution witnesses.
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"He's building his credibility with the jury by admitting he lied, and also telling them, 'Here's what happened,' " said William Shepherd, the former Florida statewide prosecutor who just ended his term as chairman of the American Bar Association's criminal justice section. He has no involvement in the case.
Yet during seven days on the the witness stand so far, DiPascali also has provided admissions and statements that could make prosecutors' job more difficult.
Answering questions from Assistant U.S. Attorney John Zach last week, DiPascali testified he had to give Bongio! rno Madoff's Dec. 2008 order for employees to close their investment accounts. But he couldn't tell her why — Madoff was running out of funds and planned to surrender to authorities, triggering the scam's implosion. The mastermind pleaded guilty without standing trial and is now serving a 150-year federal prison term.
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Instead, DiPascali testified he concocted a false cover story. "That was the only logical thing I could come up with so Annette wouldn't jump out the window," he said.
That testimony could be interpreted to mean the co-worker and former next-door neighbor who helped DiPascali land his Madoff job would be distraught at the specter of arrest and prosecution. But it could also offer the possibility Bongiorno didn't know Madoff was secretly running a fraud.
Similarly, DiPascali was asked by defense attorney Larry Krantz under cross-examination if he lied to Perez and O'Hara because he needed the programmers to help produce documents that were falsified. Krantz asked if he manipulated the pair "to participate in what you knew to be a massive fraud without them knowing it."
After pausing, DiPascali replied, "Yes."
Krantz followed by asking if DiPascali, as the programmers' boss and a friend, "owed them better than that."
"Yes, sir," said DiPascali.
"He definitely helps the defense when he makes statements that these guys didn't know what they were doing because I was lying to them," said Shepherd, now in private practice at law firm Holland & Knight in West Palm Beach.
But testifying to defense-friendly details could also boost DiPascali's overall credibility, aiding the government, said Neil Barofsky, a former federal prosecutor and special inspector general who's now a partner at Jenner & Block in New York.
Defense lawyers have suggested Madoff strategically hired employees who lacked secur! ities ind! ustry experience or were just out of high school and didn't know that some of the work they were told do was illegal. Even if that's true, Shepherd suggested the defense team faces a seemingly insurmountable task.
"When you're helping create false statements, you don't have to be a Wall Street veteran to know that a lie is a lie," he said.
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