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Madoff CFO, Frank DiPascali, Singing Like a Canary

Posted by Larry Doyle on August 9, 2009 11:54 AM |

Frank DiPascali, CFO for Bernie Madoff, is widely expected to plead guilty this Tuesday. DiPascali has waived his right to be indicted by a grand jury in a sign that he is looking to cut the best deal possible.

How high a pitch and how many tunes will investigators receive from the canary known as Frank DiPascali? Do you think there are a whole host of people not sleeping very well lately wondering what notes Mr. DiPascali may reach?

Who might some of these people be?

1. Walter Noel: head of Madoff’s largest feeder fund, Fairfield Greenwich.

2. Sandra Manzke: formerly headed Tremont Advisors, another large feeder fund. Manzke left Tremont in 2006 and launched a money management firm Maxam.

3. Andrew and Mark Madoff: Bernie’s sons ran the Madoff broker-dealer operation.

4. Peter Madoff: Bernie’s brother and general counsel.

5. Shana Madoff and husband Eric Swanson: Shana, Bernie’s niece, married former SEC lawyer Swanson in 2007. Swanson was with the SEC for ten years prior to departing in 2006. Ms. Madoff served on a committee at the Wall Street regulator FINRA.

6. Robert Jaffe: vice-president of Cohmad Securities. Jaffe was instrumental in signing up a multitude of investors with Madoff.

7. Sonny and Marcia Cohn: this father-daughter team owned Cohmad Securities, which was physically located within the same space as Madoff’s operations.

8. Certain large Madoff investors with whom DiPascali had regular contact. How much did they know?

9. Who were the regulators from FINRA and the SEC responsible for monitoring the Madoff operation? Are they nervous as well? Will investigators dare to pursue this angle?

Obviously, if any of these individuals (and any others) are implicated by DiPascali, they are entitled to due process.

I would love to see Mr. Harry Markopolos reintroduced into this equation. Mr. Markopolos clearly knew the inner workings of the Madoff operation. Will investigators have the courage to engage him and expose the shortcomings in our regulatory oversight?

No stone should be left unturned!!


  • miriam

    I am a Madoff victim (innocent).
    Deprived of open, public trials (which the Obama Justice Department clearly did not want) (not to mention the “Industry), politicians, lobbyists, white-glove law firms whose paymasters need to keep the SEC just where it is…
    We are forced to depend on “other sources” …for the information we need and deserve.
    My question to you:

    There is not a single politician listed on your post..yet we know that Madoff gave several hundred thousands of dollars to Chuck Schumer’s Campaign Finance efforts and additional funds to Schumer…that Schumer was in and out of that office constantly, that Schumer (other than before rolling cameras during a committee hearing (Finance) has said nothing about Madoff and refuses to say anything..we know that during the 90’s Schumer constantly fought the kind of regulation in Congress that might have helped prevent this kind of fiasco..

    I have pretty much always voted Democratic…voted for Obama…but the political involvement in this on-going corruption (for that is what it is) is all tied up with campaign finance.

    Why do so many saavy people — like yourself — avoid this..

    Only political solutions will prevent it from happening again…

  • Larry Doyle


    I fully empathize with your position. Please do not think for a heartbeat that I care to give anybody a pass on this investigation.

    I should have been more specific in highlighting the potential for political connections. Honestly, I view those as part and parcel of the questionable regulatory oversight or lack thereof.

    Under the “for what it is worth” category, I have written extensively about the vast conflicts and problems embedded in the incestuous relationship between Wall Street and Washington. One such post is “How Wall Street Bought Washington.”

    I stand with you in calling for ‘no stone be left unturned, regardless of where that stone may lie.’

    Rest assured, I have no interest or desire in providing any cover for anybody involved in this massive fraud.

    I thank you for your comment.

    • miriam

      thanks for response..I read your piece and salute you for it..
      Tomorrow I will have the opportunity (I hope with other victims) to at least speak up for a minute or two on the plea deal that Frank is looking to cut (has cut)..and object to it…object to the lack of a trial…
      The impact of this no-trial operation is horrific….less even on victims, than on our change to make real change…
      This network of greed and conspiracy is so deep, it is virtually impenetrable..
      We need daylight…trials will be a start..

  • Larry Doyle


    I stand with you. Our country and our future needs true transparency, accountability, and integrity. For those reasons and more, I decided to launch this site and utilize my Wall Street experience to help people more fully understand financial and economic issues.

    I am glad that our paths crossed. I hope you will revisit Sense on Cents regularly and share your thoughts and opinions. Information and publicity are critical to promoting good corporate governance.

    I do know that blogs have become very powerful and are making a real impact. That said, blogs are only as good as the information and insights provided.

    Stay the course.

  • Mr. Doyle,
    Thank you for your insight into the needs for transparency,accountability and integrity. Imagine how different Madoff victims would be living today if only those 3 words were truly practiced.

    As a former Madoff investor, I have been involved in working with other investors in an effort to find the justice that we are legally entitled to. We have come together and united as a group. We have overcome the initial shock of losing our financial security and have organized our efforts. We have educated ourselves and want to educate the public.

    To that extent, we are working with our elected officials in the Congress and Senate to ensure that the laws, as currently exist, are followed. However, we are not seeing that happening, specifically in regard to the SIPC trustee’s actions.

    Not only do we feel his actions are illegal, we fear that his actions send a strong message to every American investor saying that they are not covered by the SIPC protection. Needless to say, this will have a monumental effect on our financial system.

    You say that blogs are powerful and are making a real impact. I’m wondering if you’d be willing to help us warn other American investors of the potential danger they are facing as a result of how SIPC is handling the Madoff (and Stanford) investors.

    Thank you for your consideration.

    Ronnie Sue Ambrosino
    Coordinator, Coalition

    • Larry Doyle

      Ronnie Sue,

      Thanks for writing. I empathize with everybody involved directly or indirectly in this tragic situation.

      I welcome the opportunity to raise the level of debate and dialogue on these issues.

      Please write to me at with your info so we can coordinate.


  • klerg

    Because I’m personally curious about the mechanics of money, I’ve been thoroughly researching the Madoff scandal since it came to public view last December. I’ve read the various articles from Newsday, Time Magazine and the NY Times. I’ve watched almost all of the Madoff-related videos on Fox Business’ video archive as well as the various TV interviews on Charlie Rose and CNBC, along with many others. And, of course, by reading many many blogs. After seven months of research, I’ve developed the following personal thesis:

    The Madoff victims that were direct investors have a good shot of winning their net equity argument with SIPC; however, there will be sacrifice on their part. That sacrifice will be in the form of non-reimbursement to feeder fund investors and, possibly, wider reaching clawbacks.

    First, let’s be fair: SIPC do say in their brochure that they insure “money, stocks and other securities are stolen by a broker”. Also, the New Times Securities case may help the victim’s as far as precedent for full SIPC reimbursement goes (Madoff Help has a pretty good basic definition of that case here). And yes, the SEC did screw up.

    But on the other hand, SIPC also says that clawbacks are OK and this is also backed by a legal precedent set by the Bayou case (that can be reviewed here.) Furthermore, SIPC/SIPA laws clearly state that individual investors in feeder funds don’t qualify for a SIPC reimbursement.

    Both of these sides will go against each other in some judicial setting. Whoever presents the best argument wins. If the victims side wins and a judgment is made that they should get a SIPC check based on what their final statements say, they will have to realize that there is not enough money in the various SIPC funds to fully reimburse them. The only way that I can see them getting a full reimbursement is if taxpayers cover the loss. And after a year of TARP, Wall Street bailouts and widespread unemployment, it will be very hard for taxpayers to accept that they are covering security losses based on securities that were non-existent. Because of that, I think that taxpayers will insist that the clawbacks be wider than they already are.

    • Larry Doyle

      Klerg….Wow. You are all over it. Lots of angles in this travesty. Thanks for highlighting and sharing these insights and perspectives.

    • SneVictim

      Thanks Klerg for one of the first outside perspectives that was right on. I believe i speak for all the victims when i say that we appreciate it when a person who is not a victim informs themselves before making comments on our situation.

      Having said that, i must correct your last sentiment. If SIPC runs out of money it won’t be the tax-payer who has to pay the bill, it will be the brokerage firms. In fact, if i remember correctly, the SIPC has already taken the first step and changed the fee structure for the Brokerage firms from $150 per year to a small percentage of their gross. I can check my facts on this but it’s definitely a percentage of their actual trading activity. Therefore, in future years, the SIPC will be super-well funded and there will never be this question again. In the meantime, i’m sure that if the SIPC needs money on the interim, it will be structured as a loan from the government with virtually no possibility for the SIPC to default. Do you realize how many brokerage firms are out there and how much the transact? The SIPC will soon be the richest agency out there! If they’d thought of this sooner rather than only charge Goldman Sachs, JP Morgan and the rest of them $150 a year to be able to put SIPC on their propaganda materials, we wouldn’t even be discussing this because the SIPC would have tens of billions to work with and why shouldn’t they? There is much more fraud out there yet to be discovered, this is only the tip of the iceberg!

      • klerg


        I hope you’re right. The only thing that concerns me is if the those awaiting reimbursement are dependent on SIPC funds that are increased by increased membership dues, it may be a while for those funds to be high enough to cover everyone. It would take years for that happen and Madoff victims are demanding that payments come faster than that. We’ll see.

  • Mr. Doyle,

    Thank you for opening the line of communications with me.
    I will send you some information within the next day or two.

    I appreciate the value and quality of discussion on this site and look forward to sharing our thoughts as well.


  • Ralph

    I’m a retired Madoff victim. Kudos to you for this, especially your point 9 regarding the SEC and FINRA,the supposed watchdogs who facilitated the Madoff fraud. And what about Mary Schapiro, who headed FINRA (failed to do its job on Madoff), and was then promoted to the SEC (failed to do its job on Madoff.) How does one get promoted for failure? How did I miss this when I was building a career? Does one have to work for our government?

  • Bernie, Frank and friends will soon be partying 24/7 on the taxpayer dollar. Read this post by a recent former inmate at the same “camp” as Joe Nacchio is currently hanging out at on the grounds of the Federal Bureau of Prison’s Schuylkill FCI in Minersville, Pennsylvania:

    This is called “justice” in America.

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