Madoff finance chief doctored clients’ accounts

NEW YORK — For many Americans, Christmas-to-New Year's week is a time for family and friends. For Bernard Madoff finance director Frank DiPascali, it was time to add phony trading gains or losses to year-end account reports for his Ponzi scheme boss's investment clients and workers.

Testifying Thursday in the conspiracy and fraud trial of five former Madoff co-workers, DiPascali said he performed the year-end financial sleight-of-hand for approximately 15 years. Beneficiaries included Ed and Richard Glantz, Steven Mendelow and Joel Levy — large investment clients who DiPascali said Madoff had guaranteed 17% annual gains, plus large bonus payments.

"In essence, a commission payment for bringing in clients" to Madoff's firm, DiPascali explained.

The year-end account doctoring was so routine that the Madoff lieutenant used a Yiddish term to describe it: to shtup.

The word means to push or shove, but in the U.S., it has become slang for having sex. In DiPascali's parlance, it meant "to put funds into clients' accounts."

The star prosecution witness provided new firsthand details about the inner workings of a scam that produced too-good-to-be-true gains for decades before collapsing in an implosion that stole more than $17.3 billion from celebrities, charities and ordinary investors. Dec. 11 will mark the five-year anniversary of the day Madoff disclosed the teetering scheme, leading to his subsequent guilty plea and 150-year prison term.

Wealthy investors weren't the only beneficiaries of the year-end account doctoring. DiPascali said he gave many Madoff employees an annual bump in their investment returns to ensure their gains were near the average for the firm's overall client base.

The accounts of JoAnn Crupi, a former Madoff aide now among the five co-workers standing trial in Manhattan federal court, got individual attention. Jurors watched on courtroom computer monitors as prosecutors displayed copies of calendar entries in which she wrote apparent referenc! es to financial entries later engineered by DiPascali.

Crupi discussed the annual issue with him, said DiPascali, who testified he put year-end losses as high as $15,000 into her Madoff account.

"She had other gains in other arenas she wanted to offset," said DiPascali, who explained the changes "would reduce the tax consequences of her ordinary income ..."

Separately, DiPascali testified that defendant Annette Bongiorno, Madoff's former executive assistant, helped oversee an effort to reduce the level of risk in an account held by Jeffry Picower, a large investor who faced an audit. The account statement was changed to add hundreds of millions of dollars in non-existent U.S. Treasury holdings, said DiPascali.

He also alleged that Bongiorno was involved in falsified account transaction changes that helped Norman Levy, another major Madoff client, shift hundreds of millions of dollars to two children without being hit with a massive tax bill.

Bongiorno, Crupi and the other defendants maintain they were unaware of the scam and were hoodwinked by Madoff.

Before the trial adjourned for the week, Assistant U.S. Attorney John Zach questioned DiPascali about Madoff's 2004 effort to fool Securities and Exchange Commission investigators who'd raised questions about the firm's operations. At Madoff's instructions, DiPascali said he got two computer programmers now among the defendants to create new false documents for the SEC.