1 Boring Old Man

Madoff Aide Reveals Details of Ponzi Scheme
New York Times
By JACK HEALY and DIANA B. HENRIQUES
August 11, 2009

On Tuesday, Mr. DiPascali stood in a federal courtroom in Lower Manhattan and admitted that, for at least the last 20 years, he had helped Mr. Madoff carry out one of the biggest frauds in Wall Street history. Indeed, he detailed for the first time how he and unidentified others helped Mr. Madoff perpetuate the crime — using historical stock data from the Internet to create fake trade blotters, sending out fraudulent account statements to clients and arranging wire transfers between Mr. Madoff’s London and New York offices to create the impression that the firm was earning commissions from stock trades…

A few hints of how helpful his cooperation would be emerged on Tuesday, when he offered one of the most detailed accounts yet from inside the Midtown Manhattan office tower where Mr. Madoff ran his decades-long Ponzi scheme. Mr. DiPascali described how he, Mr. Madoff and unidentified “other people” created fake account statements, shuffled money between bank accounts and perpetuated a years-long fairy tale that they were making money for clients of Bernard L. Madoff Investment Securities. “No purchases or sales of securities were actually taking place in their accounts,” Mr. DiPascali said. “It was all fake. It was all fictitious. It was wrong, and I knew it was wrong at the time”…

And, from his account, keeping the scheme afloat and investors and regulators duped was a full-time job. To give the appearance that Mr. Madoff’s firm had mastered the markets, Mr. Madoff and his employees would track stock prices and then simply pretend to buy stocks whose trajectories matched the firm’s investment goals, Mr. DiPascali said. They created and mailed out reams of account statements and trading slips for trades that had never taken place. Prosecutors said that the ruse extended as far as designing a fake computer stock-trading platform and using a random-number generator to assign times and amounts to trade records, so that no one would detect any pattern…

But “at least as early as the 1980s,” the S.E.C. asserted, Mr. DiPascali was helping Mr. Madoff create fictitious trades to generate phantom returns for particular accounts — specifically, accounts set up by some early feeder funds, which steered money from other investors into Mr. Madoff’s hands…

In the end, Bernie was just a flim-flam artist – nothing more, nothing less. End of the month, pick the winners, make up a stock history, run off statements. What a grind!  Mr. DiPascali said, "I knew it was wrong at the time" but…  "blah, blah, loyal, blah, blah, thought he would pay it back, blah, blah, sorry, blah, blah…"

It’s ironic to me that Bernie did no investing – nada. Why put all of this perfectly good money in the market? You might lose it. Just put it in the Bank and pay dividends out of the principle [and make sure the investors kept signing on].